DIGRESSION 2A - STAND YOUR GROUND

Children of the Lesser God, Regulatory Failure: An essence of the social contract is that we all agree to the framework, including those assessing the application of regulation. Using the Medieval model, the village/town works because we all accept it. There is no king, or god, or any ruling deity....we exist within this boundary, because we define this boundary. Life following art, the thesis of the current TV concept of "the Dome", society totally self defined, implies that all power is endogenous and does not brook outside influences. But there seems something broadly inevitable about regulators failing to carry out their tasks at present. Case in point, the Fed saying that it will be reviewing the policy on banks' ownership of commodity trading, and related warehousing entities. Unlike FERC, no hairy chested disgorgement action here. Just an examination of the five year grace period as it applies to the investment banks who had received the tax-payer funded lifeline of the banking licence which hadn't been extended to Lehmans. What grace period? The policy that banking entities could not equally own commodity manipulation businesses. If someone had said to me that "you are under a grace period", particularly since my very existence has been preserved through arbitrary largesse of the extension of a banking licence, I would take that to mean I am being granted grace in relation to any commodity related businesses that I had owned PRIOR TO 2008, i.e. the granting of that licence. If I then decided to abuse the privilege by subsequently buying a business which is the subject of some complaints of market manipulation, the I would expect that the benevolent regulator would pull me to one side, and quietly ask me to stop, and to also dispose of my subsidiary. I have abused the benevolence which has been shown to me. BOTH Goldmans and Morgan Stanley are guilty here of buying these types of businesses, post 2008. There is nothing short of regulatory failure here. The Fed has to stand up here, and enforce the social contract. Anything less would mean that not only does the Fed not have the ability to feel sorry for past regulatory oversight, but that when confronted with a policy clear and present danger, it refuses to Stand its Ground. It is a pity that Trayvon Martin was not confronted by similar people.