And then came differentiation (i.e., "niche products"). Having a regular old stock fund suddenly wasn't good enough anymore. We had to have small-cap stocks, growth stocks, value stocks, emerging markets, small-cap value semiconductor makers from India stocks. But no sooner did someone make a mint launching a "new" kind of fund than he had 50 imitators offering to do the same thing for less. The longer the funds' names got, the further along the commoditization process we were. It meant that newcomers were running out of room to create anything worthwhile and were simply looking for add-ons, bells and whistles to existing products to differentiate themselves. How about the Eaton Vance Tax-Managed Equity Asset Allocation Fund (EAEAX)? Or the Allegiant Multi-Factor Small-Cap Focused Value Fund (ALUCX)? Or the ING Index Plus LargeCap Equity Fund VIII (IAIIX)? How many different ways can they find to slice the same bread?

Once you start seeing names like this you know an industry is in trouble. It is glutted with product and inevitably there will be some sort of crash. But before that happens there is usually some form of corruption. Executives who've run out of ideas on how to sell product to consumers glutted with it will inevitably try to cut a few corners and add to their bottom lines by skirting the law or pushing the envelope as far as possible without breaking it. The only thing stopping them is how heavily regulated the industry is.

Thankfully, the mutual fund industry is heavily regulated. The Investment Company Act of 1940 is as strict as they come for financial products. We had one major scandal involving illegal trading during the 2000-2002 bear market, but other than that the industry's been pretty quiet of late. One could argue it is overdue for its own Madoff-like meltdown. But hedge funds' claim to fame was always their secretive cache and lack of regulation. That is a recipe for corruption.

The same could be said of the banking industry, which became increasingly deregulated and opaque in its dealings during the Bush era. And the same cycle of "new" products glutting the market place occurred. Executives created every kind of kooky mortgage they could think of, and when they couldn't think of any more they started offering these mortgages to borrowers who had no means whatsoever to repay them. They then packaged these mortgages up in CMO bonds, created derivatives on those bonds and added leverage to the mix -- and boom! -- a spectacular meltdown.

So what's next? After the meltdown inevitably there are layoffs and consolidation. The healthy fish consume the weaker dying ones. Already, in the fund world we've seen massive layoffs at fund giant Fidelity and more are sure to come. And when the weakest have laid off as many people as possible only to find they still can't survive, a suitor will come a-callin' and such-and-such tiny fund company with the longest fund names in history will disappear.

Conservative pundits might call this process "creative destruction." I just call it destruction. The idea that the world somehow needs these economic bubbles is a cruel joke on people who actually work for a living and now suddenly find themselves without one. 7,000 plus mutual funds and 500 different kinds of mortgages and 80 different brands of deodorant would all be fine and dandy if there were no such thing as hunger. But there is.

Why do we need 7,770 mutual funds in America when the lines at food banks grow longer every day? I would like someone to answer that question.