Tnx for posting this op ed...its thought provoking. I enjoyed reading it. I've read subsequent Agoracom replies to this, and a few things yet bother me:

"Looking back, the lesson policy makers should take from the Enron-to-Madoff era is that regulators must have the power to constantly look in the dark corners of the financial market for risks to the entire system. It's no place for laissez-faire."

IMO its not the power of the regulators! Its that the regulators aren't doing their job! Appropriate controls are obviously not present. Its a bit like accepted accounting standards. The goal is to have absolutely perfectly accurate financial reporting. Not half-assed, half overlooked, favors given to whomever, for whatever reason, whenever and whereever the overlooker can invent. Nope. Audit it, give an opinion based on reputation and credentials of the auditor, and publish it. Perfectly accurate doesn't happen without due diligence in exactly how the compilation of info happens: who is doing it, how, when and why. Its not really any more rocket science than keeping the cash box honest at a retail shop that has been having low new cash coming in while the inventory is disappearing. Put some cameras up and watch what everybody does. Let all workers know that honest endeavor is required and place severe consequences for failure to comply. Mice play when the cat is away. Or....strong rules keep honest people honest. This has been allowed to happen. It didn't "just happen". Or if it really did, there is a huge majority of inept idiots in charge of stuff anymore. LOL.

...and...the idea that asset portfolios haven't really shown disappearing asset bases because when somebody lost, another gained is true only for equities. Not true for many personal assets. Real estate, jewelery, boats, cars, etc.etc. Nobody has gained on these valuation losses. I suppose it COULD be upwardly revalued, but I doubt it, at least not soon. Otherwise it is a net loss with no offsetting gain. Some say these valuation declines will push against the fed's monetizing debt and will greatly cancel inflationary pressure. Interesting comment. We'll see.

One other likely soon to appear pressure point I've heard nothing about is all the insurance companies that parked excess funds in equities and now have portfolio shock. Banks were bailed out, insurance companies weren't. Back in the dot com bubble burst, auto insurance and homeowners insurance premiums approx doubled in one year and the insurors(the ones I talked to) tried to blame natural disaster claims for it, but it was the equities markets losses they had to get back.