Thursday, June 26, 2008

The Specter of Speculators

Chance is a word devoid of sense; nothing can exist without a cause.~ Voltaire

Whenever regulatory schemes of the state go awry, urgent campaigns are undertaken to find scapegoats upon whom to unload explanations for the ensuing failures. We saw this in the so-called "savings and loan scandals," when governmental restrictions on the industry combined with rapidly growing inflation that raised interest rates into double-digit numbers, produced disastrous consequences. Because the state knew that the regulatory system had to be protected at all costs, a number of S & L executives were singled out for the blame. This practice continues today, with managers of hedge funds facing criminal prosecutions for the investment decisions they made during periods of economic tumult. Someone other than government regulators must be held to account for such dislocations, and the prosecution of those who failed to respond adequately to the state-generated confusion will be used to convince Boobus that state regulation does work to instill order and protect his interests!

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