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Eh. The regulations are improved but when this happens: http://www.ft.com/cms/s/0/08cafa70-e24f-11e3-a829-00144feabdc0.html#axzz32m5tZQdg http://www.ft.com/cms/

Eh. The regulations are improved but when this happens: http://www.ft.com/cms/s/0/08cafa70-e24f-11e3-a829-00144feabdc0.html#axzz32m5tZQdg http://www.ft.com/cms/s/0/08cafa70-e24f-11e3-a829-00144feabd... "The UK’s Financial Conduct Authority fined the British bank £26m on Friday and reprimanded it for nine years of lax controls for its failure to rein in an options trader who in 2012 drove the gold price lower to avoid paying £2.3m to one of the lender’s clients." They were caught once in 2012, but its pretty clear the fact it took two years to catch them at it means they probably got away with it for as long as Mt Gox did, given the environment that enabled it lasted 9 years. That doesn't count LIBOR, etc. When the incentives to break the system exist, it will get broken from time to time even with regulation. Regulation just reduces the frequency and generally requires multiple bad actors to truly manipulate the entire system. And when 'breaking the system', basically gets you fined [not put in jail for 5+ years], you can generally calculate the degree of risk you are taking and effectively have a chance of just breaking even if you get caught...:/ Mt. Gox wouldn't happen, but the type of people that ran it would have found a different way to 'cheat'.

phillmv 12y ago
Libor is an example of lack of regulation, though. There was no oversight involved; some dude at Reuters called up some handfuls of banks and then averaged out the responses, and it was self-regulated via an industry group. Regulations are about shifting incentives and in the case of Libor the banks involved were both investment and commercial banks and thus had enormous temptation. Anyhow, you can't eliminate bad actors and thus reducing their frequency and intensity is the whole point. These crises have negative costs to everyone, and for most of these the inefficiency cost of regulations is utterly dwarfed by the cost of big crises. Won't argue against how much easier the justice system is on you if you're rich.
- opendais 12y ago
  It was why I wasn't using Libor as the primary example. ;) But ya, it would have been stronger if I hadn't noted it at all I suppose. Anywho, best of luck :)

phillmv 12y ago

Libor is an example of lack of regulation, though. There was no oversight involved; some dude at Reuters called up some handfuls of banks and then averaged out the responses, and it was self-regulated via an industry group. Regulations are about shifting incentives and in the case of Libor the banks involved were both investment and commercial banks and thus had enormous temptation. Anyhow, you can't eliminate bad actors and thus reducing their frequency and intensity is the whole point. These crises have negative costs to everyone, and for most of these the inefficiency cost of regulations is utterly dwarfed by the cost of big crises. Won't argue against how much easier the justice system is on you if you're rich.

opendais 12y ago
It was why I wasn't using Libor as the primary example. ;) But ya, it would have been stronger if I hadn't noted it at all I suppose. Anywho, best of luck :)