You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
McCain: Wall Street woes point to regulation need
- Thread starter walter4
- Start date
You think ibank leverage caused the bubble? Wrong.Quote from vhehn:
if regulations only allowed ibs to leverage 10 their capital instead of 30+ times we wouldnt be in this fix. so yes regulation can prevent bubbles.
I use up to 50 times leverage last time I checked I didnt cause any bubble.
And who prevents the bureaucrats at the gummint from doing foolish things that end up benefiting themselves and their cronies and hurting others. Duh!Quote from a_person:
the whole idea of regulations is to prevent people and businesses from doing foolish things that end up hurting themselves and others. Duh!
Public oversight, government watchdogs, elections etc, at least in democratic societies. Duh!Quote from buzzy2:
And who prevents the bureaucrats at the gummint from doing foolish things that end up benefiting themselves and their cronies and hurting others. Duh!
Nothing is perfect of course, least of all governments and bureaucrats but people and businesses when left unregulated tend to do pretty foolish things - run red lights, cut corners on safety, pollute environment...oh and play stock market/housing bubbles of course usually with quite predictable outcome of hurting themselves and others.
Quote from buzzy2:
And who prevents the bureaucrats at the gummint from doing foolish things that end up benefiting themselves and their cronies and hurting others. Duh!
I'm going to do a quick run down for you because you seem to legitimately not know: (this is just a rough overview and is not exactly how it works)
Deregulated financial companies on Wall street were leveraged 50:1 on BILLIONS of dollars
They used that money to buy large pools of mortgages.
The intermediary lenders who sold them the loans were lax on their borrower requirements because the overleveraged secondary market was buying everything in sight. The held no risk, so did not care.
Builders built houses by the hundreds bc everyone was buying. Financial companies booked great profits, everyone and their grandma had a house or 2.
Then we all know it all came down like a house of cards. Of course we could also mention the fact that builders were building as fast as possible, as housing were selling fast because loans were so easily attainable. Now we have all these excess houses, including the ones that are foreclosing-couple with the fact that now credit restrictions are so tight even well qualified people are having trouble-and you get a housing slump. That it turn carries over to pretty much every other aspect of our economy imaginable.We could also go into inflation which is due in no small part to the fed dropping rates to boost an anemic stock market...anemic because these irresponsible companies are so large they impact the entire sector and market.
Now look at our economy, due in large part to the greed of one sector. Still thinkwe dont need any regulation?
IB's ABS arbitrage plays could have never been possible without ultra low interest rates, FNM and FRE.
Even with thousands of regulations, IBs would have found a way to profit from this so called "arbitrage".
Troublesome lack of regulation is a myth created by socialist ideologues like Paul Krugman and socialist fools like Obama.
Even with thousands of regulations, IBs would have found a way to profit from this so called "arbitrage".
Troublesome lack of regulation is a myth created by socialist ideologues like Paul Krugman and socialist fools like Obama.
It seems there are people here who have never studied the Great Depression.
The 1920s were characterized by excess and when the Depression hit the theories that were most popular were associated with classical economics those advanced by the likes of Adam Smith and David Ricardo over a century earlier the spiritual fathers of even the current laissez-faire the market is always right school of thought. What was the medicine this theory prescribed to deal with the excesses of the 1920s? It said to let the market work itself out because an equilibrium would eventually be reached. But something unexpected happened. That equilibrium did not appear. The vicious cycle kept going and going contrary to expectations of the classical theory. After the shock of the fall in the stock market the economy had gotten stuck in a downward trajectory and it would take another shock to shake the country out of it.
This was the background when Keynes, who was trained and very well versed in classical economics, formed his theory and gave birth to what is now known as Keynesian economics. Those who ridicule Keynesian economics clearly do not understand history or the circumstances of its conception. It was created because classical laissez-faire economics had FAILED and failed miserably. These policies favored by free market advocates have their downside and it is stunning to see how many people seem completely oblivious to the dangers even with an example like the Great Depression in history to point to.
It is no wonder that the 1930s were a time when socialism rose in popularity and even the thought of communism in the United States could not be entirely dismissed. That left wing ideas did not go even further than they did under FDR is the wonder not that such policies showed up.
The 1920s were characterized by excess and when the Depression hit the theories that were most popular were associated with classical economics those advanced by the likes of Adam Smith and David Ricardo over a century earlier the spiritual fathers of even the current laissez-faire the market is always right school of thought. What was the medicine this theory prescribed to deal with the excesses of the 1920s? It said to let the market work itself out because an equilibrium would eventually be reached. But something unexpected happened. That equilibrium did not appear. The vicious cycle kept going and going contrary to expectations of the classical theory. After the shock of the fall in the stock market the economy had gotten stuck in a downward trajectory and it would take another shock to shake the country out of it.
This was the background when Keynes, who was trained and very well versed in classical economics, formed his theory and gave birth to what is now known as Keynesian economics. Those who ridicule Keynesian economics clearly do not understand history or the circumstances of its conception. It was created because classical laissez-faire economics had FAILED and failed miserably. These policies favored by free market advocates have their downside and it is stunning to see how many people seem completely oblivious to the dangers even with an example like the Great Depression in history to point to.
It is no wonder that the 1930s were a time when socialism rose in popularity and even the thought of communism in the United States could not be entirely dismissed. That left wing ideas did not go even further than they did under FDR is the wonder not that such policies showed up.
Mr Capablanca:
You did not study the Great Depression on your own. You are just repeating the same lies that Keynesian professors tell their students over and over.
The Federal Reserve was created in 1913. The Fed is not a free market institution. The Fed caused the Great Depression through its creation of the 20's bubble by monetary largesse.
How could you say the free market failed, when the monetary system was not operating under free market principles?
The Keynesian explantion - restricted monetary supply - is absolutely wrong. It was obvious that printing more money would have re-energized the bubble so inflating was not an option.
Socialist ideas were already present in the US when the Fed was created. It is Socialism not Capitalism the true cause of the Great Depression.
Anyway, why do people keep insisting on Keynesianism and Socialism? Just 20 years ago the USSR collapsed!!! Do you need more evidence that SOCIALISM DOES NOT WORK!!!
You did not study the Great Depression on your own. You are just repeating the same lies that Keynesian professors tell their students over and over.
The Federal Reserve was created in 1913. The Fed is not a free market institution. The Fed caused the Great Depression through its creation of the 20's bubble by monetary largesse.
How could you say the free market failed, when the monetary system was not operating under free market principles?
The Keynesian explantion - restricted monetary supply - is absolutely wrong. It was obvious that printing more money would have re-energized the bubble so inflating was not an option.
Socialist ideas were already present in the US when the Fed was created. It is Socialism not Capitalism the true cause of the Great Depression.
Anyway, why do people keep insisting on Keynesianism and Socialism? Just 20 years ago the USSR collapsed!!! Do you need more evidence that SOCIALISM DOES NOT WORK!!!