Enjoyed your article in the Freeman. I think I spotted the error in your second quote . . . perhaps Paulson is smart but I think he has demonstrated he does not understand the financial markets.

I think one could also argue that the Bernard Madoff investment fraud is further evidence of our slow comfortable drift towards socialism. A common refrain I've read in the news about Madoff and his victims is that the SEC was warned, that the SEC investigated, that the regulators didn't do their jobs. I'm wondering, how do people who make millions of dollars hand over substantial sums of money to a person without understanding what that person is doing with their money (apparently he would not disclose his investment strategies to his investors). Perhaps they all were relying on the government to do their homework for them. I have seen interviews with some of the victims and virtually all of them have said something along the lines of (a) I didn't really understand how the investment scheme worked because Madoff said the information was confidential, and (b) how could the government let this happen. I wonder how many of these gullible investors were assuming he was safe because he made a lot of money and the government had already sniffed him out? My ultimate point is that the more the government interferes the less responsible people become because they assume the government is doing their job for them. This seems to be evident on a grand scale (Freddie and Fannie Mae) and on a smaller scale (the Madoff scandal and others like it).
 

Right, the existence of the SEC makes investment fraud more likely, because it lulls people into a false sense of security while the SEC itself is corrupt / incompetent / subject to political objectives.