White Knight Misses Battle

Treasury Secretary Henry Paulson's 218-page regulatory blueprint was released today. Sure, I bet some regulatory tweaking would make a difference, but one can only hope that at least 100 pages suggest some common sense and reading a newspaper once a week.

Even as early speculators were making money hand over foot during the real estate bubble they knew a day of reckoning would come. Everyone can't get rich on the same exact scheme, that isn't how the economy works. Press coverage on the issue started ages ago. Home prices were surging. Home builders were getting bolder and bolder, buying huge tracks of land. Experts questioned the wisdom of ARMs. Well-off people were putting their retirement funds into condos and vacation homes with the overt goal of flipping. Sound familiar? Built to flip? Tech bubble? Come on, seriously, we all knew this was coming.

Perhaps the big financial institutions didn't get burned enough by Enron or the tech bubble. It was their clients, after all, that bore the brunt of all that vaporized stock equity. This time around the implosion of Bear Stearns has taught them a hard lesson.

Yet we never apply lessons learned in one area to our future actions in another. Don't think for a moment that we won't suffer another financial debacle within the next decade. Our economy seems to be programmed this way.

So now Henry Paulson has arrived on the battlefield, a white knight mounted on his war horse. Yet he has missed the battle. All he can do is watch the dying get carried off the field and the dead get buried where they fell.