I recently read a couple articles in the Sunday edition of The International Herald Tribune that set me to thinking about the similarities in the genesis of the Dairy Scandal in China and the meltdown of Wall Street in the States. The statement that opens the article about how Fannie Mae fell under the weight of its own risk-taking says it all:

“Almost no one expected what was coming. It’s not fair to blame us for not predicting the unthinkable.” - Daniel Mudd, former chief executive of Fannie Mae.

That’s really really lame. After all, there’s been a reason these guys – and they’re almost all guys – were put in the positions of responsibility they accepted and why they were paid stratospheric salaries: they’re supposed to manage risks that will harm stakeholders and, of course, find opportunities that maximize returns. They are suppose to manage growth, not plant explosives with timers.

“Fannie Mae faced the danger that the market would pass us by,” he [Mudd] said. “We were afraid that lenders would be selling products we weren’t buying, and Congress would feel like we weren’t fulfilling our mission. The market was changing, and it’s our job to buy loans, so we had to change as well.”

In other words, controls that had been put in place specifically to protect stakeholders – and I mean here American home buyers and investors – were ignored and circumvented because the market was HOT. No one wanted to play the role of Chicken Little, for whom the sky did eventually fall. In other words, the “checks and balances” that the American government is proud of, and with which it tweaks the noses of unelected governments the world over, were removed. Systematically. Because that’s what the people wanted, the Great and the Good assure us.

The IHT Dairy article reports:

“Regulatory loopholes and corruption are believed to be part of the problem. Many dairy farmers in the region said bribery was common at milking stations. And dairy experts say local regulators are also known to take bribes or favor companies that are partly owned by a local government entity, which sometimes means the regulator and the regulated are virtually one and the same.”

In other words guidelines, policies and regulations the Chinese government put in place were ignored – by those charged with policy-making, those in the role of enforcers, and those in whom a level of trust was placed that they would never do anything that would melt them down; that is, the dairy companies themselves.

Another article a couple days before in the 3 October 2008 edition of the IHT,  entitled “How US Regulators Laid the Groundwork for Disaster”, cites the US government’s misplaced sense of trust in an illusory instinct for self-preservation private companies are supposed to have:

“‘We foolishly believed that the firms had a strong culture of self-preservation and responsibility and would have the discipline not to be excessively borrowing,’ said Professor James Cox, an expert on securities law and accounting at Duke School of Law (and no relationship to Christopher Cox).”

http://www.iht.com/articles/2008/10/03/business/03sec.php

The point of a government as a caretaker of society seems to have been lost at the outset of this century, no matter the system of government one cares to name. Greed, speculation, and Get-Rich-Quick schemes have come to the fore on an order unprecedented in world history. Globalization has become the excuse for many of the transgressions: the Markets made me do it; the People pressured us. Hence, few will actually be brought to justice for such gross and purposeful negligence. Real people have been seriously wounded by the dismantling of systems meant to promote their well-being.

A simple tut-tut and slap on wrists sinched by Rolexes are simply not enough for crimes of these magnitudes, on either shore.