Spoken like a true shill, Miko.

I’d go even further discreditting Miko’s comments.

For one, he’s using a Nobel laureate in economics when CDOs, CDSs and derivatives are
all direct products of Nobel laureate work.  Without the use of Nobel-winning work on
the quantification of risk, collateralized debt obligations and their subsequent abuse
would never have occurred.  One has to be extremely careful bandying about “experts” in
order to shut down thought and questioning.  Often using the term Nobel is used to shut
critics up. 

But too bad even Miko’s comments are not even borne out by reality.  What new financial
regulation has been implemented at all in the last year, much less to the detriment of
smaller entrants?  That’s right, none and even the proposed regulations have turned out
to be a minor joke.

While I think you are mostly on glue Miko (the big problem is that regulations
require lawyers that small companies can’t afford? really…), I agree that regulations are the problem in the sense that the term regulation has become a euphemism for bending the rules toward large corporations.

A nice sentiment, but it won’t work for the simple
reason that “too big to fail” companies exist only
because of regulation, and so creating new
regulations will just make the problem worse.  Put
briefly, if the paperwork from a regulation means
that a company has to hire a full-time attorney to
deal with it, a company with 100,000 employees
already won’t be hurt too much, while a company with
five employees will be forced out of business,
forcing their former clients to deal with the 100,000
employee company instead.  As the Nobel laureate
Ronald Coase discussed in great detail, optimal firm
size is determined by the competing forces of
economies of scale (i.e., savings obtained by using
capital-intensive technology that only makes fiscal
sense if you’re selling a lot of product) and dis-
economies of scale (i.e., losses due to the
calculational chaos that makes it impossible to run a
large firm efficiently).  The primary effect of
regulation is not to hamper large firms, but to allow
them to grow larger by imposing extra costs on
smaller competitors.  This is why, for instance,
Enron was one of the strongest supporters of the
Kyoto protocol.

If the government was serious about taking on “too
big to fail” companies, they’d be removing existing
regulations, not creating new ones.  But of course
they aren’t serious about this, since “too big to
fail” companies are funding their campaigns.  So
instead they do exactly what those companies want
while using populist rhetoric of “taking on” the
companies, hoping that the majority of the people
will take their statements at face value instead of
looking closely at what they’re actually doing.