First there was Madoff, and his massive fraud.

On a slightly smaller scale last week was the arrest of Marc Dreier, an American lawyer who sold $100 million plus of bonds to clients that simply did not exist.

Of course, these events happened in New York. But let's not forget New York is, like London, a tax haven. It's hard to split them off from their satellites. These are systemic failures in a financial world where places like Cayman and New York are effectively inseparable.

Second, let's note that this proves that whatever systems are in place at present they are ineffective.

Third, let's speculate about whether effective regulation of the system we've had is possible, and therefore whether we can afford to keep it. I suggest we cannot regulate it and as a result root and branch reform of the system is needed. Tinkering with regulatory reform will not be enough.

Finally, as the First Post says:

The lesson to be drawn from Madoff's and Dreier's downfall is not that of two rotten apples. Nor were these a couple of befuddled geezers lost in the new financial universe. The lesson is that anyone who became insanely rich these past few years providing financial services is now under suspicion.

This is correct. We hear the 'rotten apples' argument too often. After Enron, Parmalat, et al. But it's wrong. The orchard is diseased. That's the real problem. And the canker has to be eliminated.