As I have previously written, I am a supporter of financial regulation. I know that may conflict with my repetitive complaints about keeping the government out of financial markets. Consider this my allowance for the hypocrisy that I am constantly pointing out.

Just because I support regulation does not necessarily that I want a ton more of it. We already have a lot. Like many other American laws, we just do a shitty job of enforcing existing regulation.

Consider all the hype about naked short selling and the SEC’s temporary ban for a select group of financials. We already have regulation against naked short selling. We just didn’t enforce it.

The danger of creating new regulation comes when everyone believes that is enough to solve the problems.

In some areas, like Credit Default Swaps, we need regulation because there is none. In other areas, we had excellent regulation and got rid of it. My best example is the repeal of Glass-Steagall.

I always get a kick out of the people who throw out unquantifiable terms about how regulation is going to stifle financial innovation and slow our economy or reduce our competitiveness. Okay!?!  So how much exactly? It’s similar to the argument against reducing carbon emissions.  It’s easy to fearmonger and create opposition without facts.  But how much exactly will it cost?

Look back at the last year of the credit crisis.  How much did it cost in terms of dollars or as a percentage of GDP? How much of the growth in the past few years by having massive liquidity and lax financial regulation was worth what we have gone through the past 14 months, what we are going through, and what we will continue to go through?  We may benefit from unregulated and deregulated markets, but at some point we pay the price.