On 29/12/08 23:37, Kyle Hamilton wrote:
This comment is likely going to be viewed as being in poor taste...
It is rather on point. It is also likely to be viewed as poor taste :)
Wasn't it a lack of regulation that managed to put the US and the rest of the world into this economic semi-meltdown that we're in? Wasn't it untrustworthy auditing (from Arthur Anderson) that led to the implementation of Sarbanes-Oxley and such?
Enron was an early harbinger of over-dependence on simplistic signalling, and a consequent careful manipulation of that signalling by the players. Which lead to the failure of Arthur Anderson as a conspirator in that manipulation ("are we properly following our document destruction policy?").
Which then led to a call by the ignorant and the insiders, both, for increased regulation. Hello Sarbanes-Oxley. You will never find auditors willing to resist more complicated requirements for auditing, and you will not find the public resisting more calls for more checks.
However, Sarbanes-Oxley (and about 6 others) added more complexity and further obscured signals, when the problem was already too much complexity and too little value in signals and too little effort by relying parties. (I dissemble here, for brevity.)
According to my (very brief) checking, not one auditor signalled even one failure in the current meltdown. Yet, all of the failures were basic, finance-101 mistakes, easily described. Go figure...
So, whatever. The USA is about to enter an enhanced, increased burden of regulation, in a time where we have just basically proved that the last round of regulation obscured the basic problems, and did nothing but increase the costs (basically, double, and the IPO market moved to London).
It is *extremely helpful* to watch the world of regulated finance, when considering the world of CAs. The structure is basically the same, the only difference is that when we make a mistake, nobody notices; when they make a mistake, a million pensions are wiped out.
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