[ExI] Replacing Government Oversight, Deregulating Stock Exchanges

Tom Nowell nebathenemi at yahoo.co.uk
Wed Apr 9 21:24:02 UTC 2008

Lee's been on fine form, so I feel the need to reply
to another of his posts as well:

Lee wrote: "Is *every* society and *every*
civilization composed of historical type human beings
necessarily capable of self-regulation,
self-government, and almost unrestrained capitalism?
I ask that as a general sort of question which you and
other readers may or may not wish to explore. I myself
don't think so."

Well, historical type human beings are a diverse
bunch, but they *could* take to self-regulation and
self-government, and some form of market-based
Take my fine people, the British. Some people would
like to have you believe that this blessed people were
a Chosen People who developed the industrial
revolution and built a large empire, and settled
America to form a Nation guided by Providence,
Manifest Destiny and other Wooly-Minded Concepts with
Arbitrary Capitals. Some think there is something
special that led the British and their
English-speaking descendents to their place of
 I take the opposite view. If the violence-loving
people from a bunch of rainy islands on the Northwest
of Europe could overcome much bigger and more populous
nations like France and Spain, and have their creole
of Romantic and Germanic languages become one of the
world's dominant languages, then there's hope for
everybody. If we could do it, there's no reason any
other culture/people/nation/arbitrary grouping of
humanity couldn't achieve a great deal too.

In response to Rafal, Lee also wrote: " Now it would
be nice if the U.S. today had an 1855 type small
federal government, and so could conduct up to 50
separate experiments towards the self-regulation in
stock markets you speak of. Even now, I would promote
step-by-step reductions in the oversight of the SEC
provided that the most knowledgeable people involved
would anticipate no debacle."

Rafal wrote:
" A prime example is Sarbanes-Oxley, which imposed
 costs that disproportionately afflict smaller
businesses, and thus serve to limit the competition
against entrenched large companies - exactly the
companies that lobby the government and hire former
SEC employees (the "revolving door" phenomenon)."

Well Lee, global competition is providing an example
of lighter market regulation. When Sarbanes-Oxley hit
US business (as Rafal mentioned), some businesses
based in both New York and London dropped their New
York listing. A couple of years ago, it was widely
trumpeted that London had overtaken New York as a
global financial centre as it had a mix of US and
European investment banks in a place with fairly light
touch regulation by global standards. With the current
"credit crunch", it remains to be seen where the
global financial centres are, as everybody's banking
businesses seem to be in trouble.
 In fact, the UK leads in low-regulation stock
To quote

"The AIM has also started to become an international
exchange, often due to its low-regulatory burden,
especially in relation to the Sarbanes-Oxley Act
(though only a quarter of AIM-listed companies would
qualify to list on a U.S. stock exchange even prior to
passage of the Sarbanes-Oxley Act[1]). As of December
2005 over 270 foreign companies had been admitted to
the Alternative Investment Market."

The AIM is so colossally low-regulatory that London's
becoming a haven for people seeking to raise funds to
go drill for oil,gold,copper or anything else that
requires highly speculative prospecting and in most
markets would require massive disclosures. It's also
been the home of a £375million fraud, and a haven for
offshore financial vehicles. Time will tell if this
low-regulatory regime survives or if pressure from
other countries persuades the UK to tighten up.

As an aside, many stock markets are themselves
publicly quoted companies, and there is a process of
consolidation going on around the western world -
there's a bidding war for the London Stock Exchange,
and other stock exchanges/bourses are under bids at
the moment.


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