The short answer: “No”

The somewhat longer answer: “Well, at least not yet.”

It’s true that our citizens are not dropping dead in the streets of disease and starvation. Nor have Skynet’s robots begun ravaging the landscape. Much to the consternation of many Republicans, President Obama has stubbornly refused to declare America a Muslim Nation and set fire to the Constitution on the East lawn. That doesn’t mean we shouldn’t be concerned, though.

This week Tim Geithner has laid out his five point vision for the future of government regulation of the financial industry. Unlike many of my conservative correspondents, I do not view the current collapse of the economic system as a failure caused by too much regulation. There are some areas where some regulation is clearly needed and was found lacking, as Geithner points out.

Our framework for financial regulation is riddled with gaps, weaknesses and jurisdictional overlaps, and suffers from an outdated conception of financial risk. In recent years, the pace of innovation in the financial sector has outstripped the pace of regulatory modernization, leaving entire markets and market participants largely unregulated.

There were aspects of the continually evolving financial services sector where regulation was nearly non-existant. Left to their own devices, some of the largest actors were faced with a choice of exercising restraint and prudent practices or making as much money as they possibly could as fast as could be managed, regardless of exposure or risk to their clients and the larger system. We already know which path they chose.

The existing framework also allowed criminals such as Bernie Madoff to act out in the open while they ripped off thousands of people to the tune of billions of dollars, and nobody was the wiser. Obviously some rules and regulations are in order.

Geithner’s five point plan, however, carries an ominous tone. It is entirely possible to expand existing regulation to cover emerging markets and sectors without effectively turning the industry into a subsidy of the Federal government. Two parts in particular have my antenna raised. First there is this bit:

[W]e will establish a resolution mechanism that allows for the orderly resolution of any financial holding company whose failure might threaten the stability of the financial system. This authority will be available only in extraordinary circumstances, but it will help ensure that the government is no longer forced to choose between bailouts and financial collapse.

We certainly need more tools than just bailouts, but who will define and establish what constitutes an extraordinary circumstance? What limits, checks and balances will be put on their authority to act?

I’m also not to sure about this one:

Fifth, and finally, we live in a globalized world, and the actions we take here at home — no matter how smart and sound — will have little effect if we fail to raise international standards along with our own. We will lead the effort to improve regulation and supervision around the world.

I’m not even sure what that means, but leading supervision around the world has exactly the wrong ring to it. Some good may come from this, but given the administration’s appetite for expanded centralized power (the exact complaint I had about Obama’s predecessor, by the way) I believe we need to keep a very close eye on exactly what Geithner is cooking up here.