The Testimony of Benjamin Graham - Part III

I have been posting recently on testimony that Benjamin Graham gave to Congress in the early 1950's. Here are some interesting comments that he made on speculation and how to deal with it:

“Regarding feasible ways of controlling undue speculation in the future, I believe the committee should consider carefully and cautiously whether any plan of control is feasible. Speculation has not gone too far yet, but there may be a grave danger that it will do so. Assuming that measures could be found that are useful and feasible, it would be wise to agree to such measures in advance of the necessity for their use – rather than to begin discussing them while the fire is raging.”

Good advice, plan ahead of time not in the heat of things. Our leaders had years to plan for what was coming and did little. Why didn’t we build the FDIC fund during the boom times instead of in 2009 when banks have less to spare for assessments?

If Mr. Bernanke knew that AIG was running a closet "Hedge Fund" and it posed systemic risk to our financial system, then why didn't he say something before two days ago?

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