The guys at J.P. Morgan lost a few billion. You'd think the anti-money crowd would be happy about that. Instead, they want to make a federal case out of it. Practically every pundit is calling for more regulation. "If even good bankers can lose so much," they say, "we've got to get control of them!"

Non-Sequitur. Who ever said the guys at JPM were good bankers?

The whole idea that they can regulate risk out of the system is loony. It doesn't work that way. The more they regulate, the more they distort the market, and the more mistakes investors make.

If I (meaning the taxpayer) insure a bank against losses, then I have a right to regulate (limit) the kind of risk that bank takes on. This is a point libertarians miss completely. The present situation is not the result of too much regulation but too little - the effect of allowing banks with either explicit or implicit guarantees to engage in risky behavior.

We can have a debate about how much (or how little) the public should insure against private losses, but to argue that regulation caused those losses is not only disingenuous, but plays right into the hands of the people who caused them in the first place.

ebear