No, it was the regulator who overshot his limit!
Sir Gideon Rachman's "Conservatism overshoots it limits" October 7, evidences that so many are still fooled by appearances. Rachman writes about the "fervent faith in the market" while blithely ignoring the fact that the single most important origin of the current crisis was that the financial regulators put their whole faith in the credit rating agencies to measure adequately risks, whatever they meant by that, and that in doing so they empowered the credit rating agencies to exercise undue influence over the markets.
Instead of speaking about the investment bankers as the shock-troops of the Reagan-Thatcher revolution, I wonder where he gets that from, he should better speak about the shock-troops of those who held such a fervent faith in regulations they believed they could drive risks out of the financial system for ever. The fact that credit rating agencies are dressed in private clothing should not confuse anyone, for all practical purposes, they are just risk measuring Kommissars bureaucrats working for a financial regulator who clearly overshot his limit.
The only reason why "regulators and politicians [and investors] believed so firmly in the magical and self regulating qualities of the market" was that everyone believed the sentries sent out to keep an eye on it would always be awake.
Rachman quotes Greenspan rhetorically asking "Why do we wish to inhibit the pollinating bees of Wall Street?" It is now high time to ask Greenspan´s successors "Why should we keep on inhibiting the risk measuring diversity of the market?"
Instead of speaking about the investment bankers as the shock-troops of the Reagan-Thatcher revolution, I wonder where he gets that from, he should better speak about the shock-troops of those who held such a fervent faith in regulations they believed they could drive risks out of the financial system for ever. The fact that credit rating agencies are dressed in private clothing should not confuse anyone, for all practical purposes, they are just risk measuring Kommissars bureaucrats working for a financial regulator who clearly overshot his limit.
The only reason why "regulators and politicians [and investors] believed so firmly in the magical and self regulating qualities of the market" was that everyone believed the sentries sent out to keep an eye on it would always be awake.
Rachman quotes Greenspan rhetorically asking "Why do we wish to inhibit the pollinating bees of Wall Street?" It is now high time to ask Greenspan´s successors "Why should we keep on inhibiting the risk measuring diversity of the market?"
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