Comment of the Day

Comes from Observer over at this post on the splendid Baseline Scenario blog. The topic is bank nationalization.

Does the government know enough about banking to conduct an adequate “stress test”? Recent news indicates that investigators on the Madoff scandal found that Madoff never invested any of the $50 billion over the decade plus that he ran his Ponzi scheme. If the SEC can’t even determine if an investment business is making investments, why should I have any confidence that the federal government is competent enough to conduct a valid stress test of large banks? I seriously doubt that the government has intelligent and sophisticated enough regulators to conduct an effective stress test of the major financial institutions they are bailing out. It seems that one of the conclusions of the melt down must be that the government is either too incompetent to regulate large, financial businesses or too partial due to political contributions, conflicts of interest and/or out-right personal relationships with financial executives to effectively regulate their activity.

Fans of the government stepping in to control this or manage that or bailout the other would do well to read this. The government is not run by people with extraordinary skill or foresight, it's run by people like you and me.