Sunday, August 21, 2011

Spreading prosperity or spreading dust all over the world

Several years ago the Fraser Institute spearheaded a drive to deregulate Canadian banks so they could act more like U.S. banks. That potential disaster was in line with the Fraser Institute objective of economic freedom, a concept that can be interpreted simply as "deregulation good - regulation bad."

It is a popular cry among libertarians and modern day corporatists. At least in Republican years, the American White House supported the cause by routinely appointing people who scorned the concept of government regulation as heads of regulatory agencies.

Matt Taibbi, writing at Rolling Stone, reports how the SEC has been perverted by corruption, incompetence and lack of resources. According to Taibbi, the agency,
"devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation."
As a result,
"By whitewashing the files of some of the nation's worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG."
Reuters published special reports that provide examples of what seem to be purposely feckless financial regulations. In The bonds that turned to dust,
"Reuters has followed a paper trail from [Italian economics professor Alberto Micalizzi's] hedge fund's offices in the upmarket London neighborhood of Kensington to the dusty American southwest, from the fund's registered home in a Caribbean tax haven to a suburban house in Canberra, Australia.

"The story's cast includes an Arizona businessman on the run from U.S. authorities, a Russian allegedly convicted for fraud, and the Italian at the center of it all: a 42-year-old specialist in options pricing who teaches economics at the respected Bocconi University in Milan.

"What emerges is a cautionary tale from the wilds of offshore finance, a lesson to investors about how easy it is to be drawn into a global maze of paper companies with little substance.

"Micalizzi's saga shows how America's role in the global proliferation of anonymous shell companies may enable fictitious assets to be magically transformed into real ones for a time, siphoning money from unwitting investors along the way."
I conclude that humans must evolve a considerable degree before we are ready for laissez-faire economic systems. Ineffective regulation and deregulation are enablers of widespread financial fraud that inevitably makes victims of the weak and the uninformed, the people least equipped to protect themselves.
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3 comments:

  1. Sheesh Norman, you just don't get it do you? Regulations get in the way of wealth creation. Who gives a damn about the environment or your neighbours' children and their wages? The problem is those pesky public workers and the pensions. Public pension, yup that is by far the most pressing problem of today. Bad NDP type thinking to have such a benefit to old people. Old people should make their own way in the world. Bad government for regulations (note to self, buy off government for ease of control).

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  2. Not all pensions are bad. Right, Gordon Campbell? That 6-figure retirement paid by BC taxpayers will nicely supplement the new posh London lifestyle paid for by Canadian taxpayers.

    I hear little outcry from from economic freedom fighters over Jim Shaw's $6 million annual pension, starting at the ripe old age of 53, not means tested or adjusted if he has other earnings. Shaw will merely increase their cable charges to consumers, saying their 'worker' costs are rising.

    This was in the Globe & Mail's story on Shaw's $16,000 a day pension:
    "Jim Shaw walked into an Italian restaurant in Vancouver last November for a lunch with a small group of investors. On the menu: drunkenness, with a side of verbal assault. He was inebriated enough, witnesses say, to mock his guests (calling one a “lightweight”), to snap at his fellow Shaw Communications executives in order to get them to shut the hell up, and to turn the affair into a bizarre, awkward occasion."

    Remember this when you pay your monthly cable bill Shaw consumers.

    I guess the reality is that huge pensions for executives and politicians are ok, those little ones earned by employees stuck near minimum wage are the bother.

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  3. This entire country is so corrupt, all I feel is disgust.

    My opinion is, Campbell and all the evil dirt bags like him belong in prison.

    Harper should be kicked right off the planet. What a mess he has made of this country. That Harper would embarrass Canadians, yet again, by sending scum like Campbell to Britain, just blows me away.

    The English politicians, are blaming the riot on everyone else but themselves. They too, are far too stupid to see. When people lose everything, and have lost everything they have. They lose it.

    This is happening all around the globe. But, it's not the corrupt politicians fault, it's the peoples fault. We are to accept their lies, deceit, corruption and thieving every penny the people have.

    Is there one politician who has, taken a cut in salary, until the recession is over? Not on your Nelly. They still have their faces right in there. Still thieving away. The recession, is for the citizens only. There is no recession for the thieving politicians. Is there?

    This entire globe is sick, and it's the fault of corrupt politicians. Every time.

    There are very few politicians, that are worth the powder to blow them to hell.

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