Fifty-some years ago, the UK recruited America’s help to overthrow the government of Iran to protect BP’s stake in that country because that was seen as the appropriate role for government by those mid-century Anglo-American Masters of the Universe. Now, we’re at that point where our government and BP appear to agree that it is the appropriate role of the corporation that caused a massive disaster to take charge of cleaning up that disaster.

The Securities and Exchange Commission, virtually moribund for the last decade while giant vampire squids looted local, state and union pension funds and misled investors, has finally chosen to take on Goldman Sachs for conning everyone. Who knew?

Stability is the primary purpose of financial regulation. Efficiency is a distant second. Too bad for all of us economists and the likes of Alan Greenspan got it backward.

Econned by Yves Smith shows how economists persuaded the political and media elites that they knew what they were doing. Smith shows that they didn’t, and then shows how Wall Street traders and their bosses exploited the world those economists and their corporate sponsors created. The result was financial collapse. Economists aren’t held accountable, and neither are the people who profited.

The worst is the folks at the Fed clearly believe the bogus stress tests were a meaningful exercise. That alone should disqualify them from getting a bigger role in bank supervision. And if you read their pronouncements, they plan to continue to use them, and have the process run by….a monetary economist! Help me! Bernanke also conveniently ignores the fact that the rally might also have a wee bit to do with the fact that he threw a bit over $1 trillion at the markets, as announced in mid-March.

I could go on, but you get the picture. The Fed seems to believe its own PR.