Fisher Investments MarketMinder: New Rules for the Street?

Originally published by Fisher Investments MarketMinder on: 4/1/2008

As Shakespeare said, “We must take the current when it serves.” Treasury Secretary Henry Paulson may have had a touch of the Elizabethan flu as he took advantage of the intense focus on all things financial to unveil a range of recommendations to overhaul the regulation of U.S. financial markets.

Markets responded positively Monday and there’s been a great deal of reaction to the announcement. As mentioned in our 03/28/08 story, “Goldilocks Government,” governments have attempted to fine-tune economic markets for centuries—usually with unintended negative consequences. So why the cheery response? Paulson’s selling the plan as a streamlining of regulatory burdens. Should we be going all Falstaff and knocking back some mead? (Yes, we realize we’re mixing our Shakespearean metaphors.) Nah. Though we see Paulson’s recommendations as mostly fairly rational, it’s way too early to jump to conclusions.

Part of the positive reaction could be tied to the fact this plan might distract legislators. Debating this plan could forestall some of the more rash, short-term measures that have been kicked around of late—and that in itself is indeed a positive. And Paulson’s plan is no knee-jerk reaction. It’s been long in the works—for almost a year—long before liquidity fears made constant front page headlines . . . .

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