It's called a market, Einstein.

"We do need a methodology that can discover fair pricing for atypical assets, which will be held to maturity..."

Thus spake former Securities and Exchange Commission Chairman Harvey Pitt, as reported recently by the New York Post.

With bright lights like this running the SEC, it's no wonder people like Bernard Madoff can carry on gigantic schemes for a decade without being detected -- depsite several promptings for the SEC to scrutinize him.

About those atypical assets: it's called a market, Mr. Pitt, something a securities and exchange regulator ought to be at least casually familiar with. Even if the assets themselves are held until maturity, they have components and/or proxies that are tradeable. Just ask the financial engineers about it.

Months ago, we proposed that the government invest in the infrastructure of exchanges, in order to bring a market value to the assets that seem to be ruining everyone's lives.

Instead of throwing money into a void, the administration could incentivize creativity in the formation of derivatives exchanges, and then cash out. We suggested that it would be a cleaner, more productive "intervention" -- and one they'd probably turn a profit on for the taxpayers (take a look at the values of exchanges that have gone public in the last decade), while upholding the foundations of world economies -- markets -- instead of replacing them by legislative fiat (i.e. the administration cutting deals with giant pools of capital in order to buy loans at a nickel on the dollar).

Perhaps after they have thrown a few trillion into the money pit they'll give it some thought. More likely it will take an administration that isn't a thinly veiled dictatorship to really get behind the concept of "markets," and the creativity of free people, the engine of all prosperity.