 PhoenixDown-- Wants FIOSPremium
join:2003-06-08
Fresh Meadows, NY
kudos:1 | reply to cornelius785_nli
Re: Apples to Oranges... The idea of too big to fail needs to go... if a company is too big to fail, then we need to introduce competition to balance out the market. but yeah I agree, it will suck if these companies fail. The only question is whether it will hurt more now or later. |
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 Jafo232You Can't Spell Democrat Without Rat.Premium
join:2002-10-17
Boonville, NY
1 edit | How about the idea of not taking all this money in the first place? Where did that idea go? If they would just leave this money in the economy instead of trying to use it to fix it, I think we would all be amazed at where we would be.
We are all bitching about how the Government should spend the money, when in reality, the Government should not have so much of it in the first place.
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| said by Jafo232:How about the idea of not taking all this money in the first place? If we learned anything from this experience, it's that "free markets" (in the literal sense) don't work. Sure, it works fine when I negotiate with my landscaper to have my lawn mowed. But, just because that works doesn't mean every application of "free markets" does.
If it did, we wouldn't have the SEC, banking regulations, food- and drug-quality laws or building codes and zoning laws.
Libertarianism may be a fine religion. But, it has no practical place in reality.
Mark |
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Jafo232You Can't Spell Democrat Without Rat.Premium
join:2002-10-17
Boonville, NY | said by amigo_boy:If we learned anything from this experience, it's that "free markets" (in the literal sense) don't work. Sure, it works fine when I negotiate with my landscaper to have my lawn mowed. But, just because that works doesn't mean every application of "free markets" does. If it did, we wouldn't have the SEC, banking regulations, food- and drug-quality laws or building codes and zoning laws. Libertarianism may be a fine religion. But, it has no practical place in reality. Mark Really? So the legislation passed "regulating" institutions like Fannie Mae to loan money to deadbeats worked out so great huh? Exactly what regulation would have kept us out of that mess? Deregulation perhaps..
In fact, the biggest problem here is not the lack of regulation, it is the fact that we are telling corporations that if they fail, we will bail them out. If we just let them go bankrupt, it might foster a thriftier corporate environment out there.
This idea that the free market has failed is laughable at best.
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1 edit | said by Jafo232:If we just let them go bankrupt, it might foster a thriftier corporate environment out there. Sure. And if we didn't have the SEC, everyone would have to face the "true" consequences of their choices (caveat emptor, and their own responsibility for due diligence).
The same could be said of food- and drug-quality laws. And, environmental protection. And state-creation of corporate entities. And building codes and zoning laws.
These all produce outcomes that a free market wouldn't. Causing (good and bad) behaviors that wouldn't otherwise occur.
It's just a reality that we have these socialized markets. Nobody is calling for their dissolution. So, referring to "if" (as if it's realistically possible) is just a Libertarian sleight of hand.
Mark |
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4 edits | reply to Jafo232
said by Jafo232:So the legislation passed "regulating" institutions like Fannie Mae to loan money to deadbeats worked out so great huh? Exactly what regulation would have kept us out of that mess? Deregulation perhaps.. That's an extremely simplistic representation of how we got into this mess. You're leaving out the role of
- Wall St. banks who bundled collateralize debt obligations for investors who couldn't buy enough of them (with no care about risk).
- Ratings agencies (Fitch, Moodys, Standard & Poors) who fudged the ratings due to the competitive nature of their business. (Go slightly more optimistic on the ratings in order to get other business from that customer seeking a rating).
- Credit Default Swaps. This was the big one. An unregulated insurance system which took on the nature of a betting parlor. Anyone could write CDS policies. With no regulation to ensure they had sufficient capital to pay claims. (Unlike traditional state-regulated insurance companies.).[1]
This industry facilitated the market for liar loans. It allowed purchasers of mortgage securities to sell risk to someone completely incapable of absorbing the risk. The resulting "policy" helped the ratings agency give a positive rating to the bundled obligations. The rating helped investment banks bundle the bad loans with good ones, and sell the resulting CDO. The CDO helped investors pour more money into the market for those securities.
That was a perfect mix of non-regulation. The fact that Congress may have gone too far in its long-standing legislation to prevent "redlining" (the practice of denying loans based upon geographic location turned into granting loans because of it), the vast majority of those loans wouldn't have been made if investors weren't willing to buy those loans on the open market. Nobody held a gun to *their* heads.
Even Greenspan (who used to espouse libertarianism) admitted to Congress he'd seriously overestimated the role of self-interest in markets/business to keep a mess like this from occurring.[2]
[1] 60 Minutes did an informative piece on CDSes a couple weeks ago. »www.cbsnews.com/video/watch/?id=4546583n
[2] »gothamist.com/2008/10/23/greensp···bout.php
Mark |
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agreed |
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