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While many think that we had time to posture and ponder about the ethics of bailing out Wall Street (and let's be blunt, that's what we're doing), the truth is that the drastic remedial measures just implemented are all that stands between us and the gaping jaws of Hell. Thankfully, Treasury Secretary Paulson had a prior career at Goldman Sachs and knew how trades were executed, how deals were cut, and how things really work behind the closed doors. This was no virgin in charge of the whorehouse. If we get through this mess, his decisive action should get much of the credit.  It we don't, well, at least he tried.  No second-guessing from me. 

In recent discussions with the Press, I have tried to explain why failed regulation and incompetent regulators share the blame for our present mess. By no means, BY NO MEANS, am I suggesting that the industry itself didn't produce the toxic paper, fraudulently sell it, and then cover up the nastiness. Is that clear enough? However, isn't that the whole point of regulation that if left to their vices, we humans have a tendency to go nuts and that we need to be protected from our own folly?  

The United States is burdened by nearly four levels of securities industry regulation: the states, the SEC, FINRA, and more recently a hodgepodge of state and federal criminal prosecutors. I view that as an occupation of Wall Street, and one that hasn't worked and never will.  Wall Street never lacked for regulation. We likely have millions of pages of regulations issued by state, federal, and self regulators. What Wall Street lacked and is still lacking is competent regulators and effective regulation.  Worse, even if the troops in the field know what they're doing, the command structure is hopelessly riddled with political hacks, academics, and career regulators. Look at the clarity that a Paulson brings to the scene.  Then look around at the other regulators he deals with and see whether they have even worked in the industries they regulate.  Street savvy doesn't come from mere osmosis.  It certainly helps to have taken an order, entered it into the system, and executed it, if you're going to try to effectively regulate that transaction.  All that I see in the upper echelons of regulators are the same folks who cycle in and out of the same revolving door.  They had their chance. They failed. It's time to throw the baby out with the bathwater. We desperately need new blood at the helm.

Do me a favor. Look at the little, round plastic device hanging from your ceiling if you want to understand the gist of my annoyance with our regulatory system. What do you call that alarm? Yeah, it's called a "smoke" detector. You ever think about the fact that it's not called a "fire" detector? Why is that? Well, duh, because by the time your home is aflame it's likely too late to get to safety. We want a warning of danger, and we want it sufficiently ahead of time to give us a chance to survive. We don't need confirmation of a fire. We need warning about smoke.

Frankly, I don't think it's much more complicated than that. All the brokerage firms and banks and insurance companies that dot our economic landscape had fire detectors, and those devices were  installed by all those incompetent regulators. By the time the alarms went off, the place was burning down. Great -- now those idiots go on television, point fingers, and complain about how they never saw it coming and did the best that they could. Of course you never saw it coming.  You weren't looking. And if this is the best you can do, then it's time we junked the entire system and you and found a better way that actually works.

For starters, let's put in smoke detectors.