We’re all in the best of hands, aren’t we? The Wall Street Journal reports that the Commodity Futures Trading Commission (CFTC) has mad a bit of a boo-boo. Just how much of the swaps contracts have snuck under the radar of our government watch dogs? How does $55 Trillion sound? That is not a typo; the government somehow failed to recognize $55 trillion dollars of trading activity:
Regulators aren’t sure how much the repositories are undercounting. One CFTC official familiar with the matter said the discrepancy could be as high as $55 trillion, though another official said the figure is closer to $10 trillion once regulators cancel out certain transactions to prevent double counting.
Does $10 trillion make you feel better? I didn’t think so. Anyway, there is no need for concern as they promise to do much better in the future. If it wasn’t so preposterous, it would be amusing:
One just has to laugh: the total US swaps market is what – roughly $400 trillion? So… just add enough notional to that number equal to the GDP of the entire world - or 4 times the size of US GDP – and call it a day. And in this environment somehow the Fed and other central planners are expected to have any clue what they are doing on a day to day basis?
OK, yes, it is actually kind of funny. But it is also a bit scary as those swaps are part of what caused the trouble in 2008. Does anyone expect our government to be competent? Probably not, but a $55 Trillion miss is notable even for a bureaucracy. But one activity that the CFTC has learned as a government agency is how to shift blame. And what better way to do so than ask for more money –it kills two birds with one stone. And sure enough, they are ready to roll with an answer to their incompetence:
The official said the error also reflects the agency’s chronic lack of resources. Just two employees at the agency are charged with putting together the weekly swaps report and it takes them 12 days to prepare the data for publication compared with three for another report the agency publishes. The agency is reviewing the matter and hopes to have firmer figures by next week’s report, due Thursday.
Ah, well then that explains it. Now, you may be thinking that maybe those two employees that missed $55 trillion might be incompetent idiots, and you might be right. But, alas, in Washington that is not what concerns people. What concerns them is that the two poor dears had to take twelve days to report their results, instead of three. The fact that that is besides the point is just the kind of explanation that a good bureaucracy loves. And if the lowly peons (that would be us!) don’t get it hen that is clearly their problem. The fact that the Dodd-Frank law was supposed to empower the CFTC to do this about, oh say, five years ago, has also gone unmentioned in their blame game…uh…response. So, apparently it’s business as usual in Washington. But don’t worry, if things go spectacularly bad, you can rest assured that all of the respective agencies responsible will have their excuses (and blame) ready to go at lightening speed.