Today’s headlines of accounting fraud, deceit, and financial manipulation were a product of the boom years of the last decade. At its root was greed. Plain and simple. As long as the markets went up, nobody was willing to question it. It was only when stocks fell that it became a problem. The fact remains that investing has always been an uncertain endeavor. There are no guarantees only degrees of risk. An American President and Congress can’t guarantee investment outcomes. Nor will they be able to replace the trillions of dollars lost in this bear market. The more they try to interfere, the more they try to legislate, the more they try to tax, the worse things will become. There are plenty of laws on the books. We don’t need more laws. We need stricter enforcement of the laws we already have on the books.
Regarding the current bear market, there is nothing that Congress or the President can do to prevent it. In my opinion, the greatest risk now lies with government intervention. The risk of moral hazard has never been greater.
The point that needs to made here is that all sectors of the economy -- the government, business, and the consumer -- are addicted to credit to keep them functioning. However, there will come a time when the financial system is unable to provide the ever-increasing amounts of credit to keep the economy and the financial system afloat.
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