Streetwise Professor

The CEO of the Australian Stock Exchange (ASX) hit the nail on the head.  Hell, he drove it right through the board:

The chief executive of the Australian Securities Exchange has criticised the Obama administration’s planned regulatory reforms of the US financial system, arguing they are “draconian” and out of touch with market developments.

Robert Elstone, head of the  ASX, said the reforms were too broad, targeting parts of the securities markets – such as the over-the-counter swaps market – that had not been big contributors to the global financial crisis. [Emphasis mine.]

Emphasized, because true.

More truthiness:

The best hope for regulators and governments, he said, was to develop market-oriented people and market-oriented skills to stay abreast of developments in the securities industries.

The OTC swaps market was already transparent, he said, adding that to compel that market to come “on exchange and be centrally cleared” was “overkill”.

“Compel” is the key word.  If somebody builds it, and the market comes, more power to them.  It’s the compulsion in the near complete absence of a plausible, let alone convincing, identification of a market failure that is deeply troubling–and the recipe for future trouble.

Legislators should be forced to watch this line played before their eyes, A Clockwork Orange-stye, until it penetrates their skulls:

“I think that the notion that any corporate or government regulatory agencies are always going to be one or two steps ahead of the market is a flawed notion.”

That’s worth repeating:

“I think that the notion that any corporate or government regulatory agencies are always going to be one or two steps ahead of the market is a flawed notion.”

Right now our generals in Washington are assiduously deconstructing the last war.  Not a good way to prevent the next one.  Especially inasmuch, as Mr. Elstone notes, they aren’t even properly deconstructing the last one.

Where’s our Robert Elstone?  Nowhere to be found.  Not in DC anyways.  And today, that’s where it matters.