An excellent piece here on the uselessness of regulation generally. The Wirecard affair has brought out a rash of articles about how German regulation has failed, as though regulation in other countries might be better.
Wrong.
If anybody can make regulation work Germans, precise, efficient, un-corrupt and indomitable can do so.So, the problem must be, not that German regulators are inept, but that regulation as a whole cannot catch fraud. As 2008 proved, it cannot catch sophisticated cutting-edge scams, either. So wouldn’t we be better off without it?
Right. Mrs Eumaeus is trying to persuade me to get a new car, against my protests that the current one, though 11 years old (and German) works perfectly well, and in any case it’s very hard to find a good car that is not German. See picture. If anyone can make regulation work, it’s the Germans. But they couldn’t make it work either.
It’s a good article, though I take issue with the claim that “Regulators by and large are not the best and brightest in the financial arena – they are not paid to be. ”
Not true. I worked in regulation for some time, where there are plenty of very smart people. The question is what they are being paid to do, namely protecting the regulator from blame by erecting a whole series of firebreaks around the process. They generally do it very well, although big failures like Wirecard can be a problem.
Even with big failures they are adept at rearranging deckchairs and presenting the appearance of fixing things, with the fix often making things worse.
I always told regulatory colleagues never to complain about things that needed fixing, in case our employer tried to fix them. Not advised.