Seems as though the banks are already starting to pay back a sizeable amount of the TARP money.

Quote :

"WASHINGTON - A key government effort to ease the credit crisis reached a milestone Wednesday as 10 large banks said they had repaid a total of $68 billion in bailout funds. Treasury said last week that the banks could begin repaying money they received under the $700 billion financial system bailout known as the Troubled Asset Relief Program, or TARP. The government created the program in October as its flagship effort to address the global credit crisis and teetering financial markets. Meanwhile, officials hustled to prepare an announcement about the pricing of stock warrants Treasury holds — a final barrier to the banks’ ending their ties to the bailout program. The warrants allow Treasury to buy the banks’ stock at a fixed price at some future date. The banks now want to buy back those warrants. "

http://www.msnbc.msn.com/id/31406802/ns/business-stocks_and_economy/

Maybe we're not completely fucked after all.

6/17/2009 8:34:14 PM

OH MY GAWRSH SOCIALISM

6/17/2009 8:39:49 PM

Awesome.

Now if only it were possible for GM and Chrysler to pay back their money.

The US govt will probably never see a dime. If they do I don't see it happening for at least six years.

6/17/2009 8:51:59 PM

because it's not like the government has lent a car company money before and gotten it back promptly or anything.

6/17/2009 9:05:32 PM

Quote :

"Now if only it were possible for GM and Chrysler to pay back their money. "

Go buy a GM/Chrysler. Profit.

6/17/2009 9:13:08 PM

Quote :

"Now if only it were possible for GM and Chrysler to pay back their money. The US govt will probably never see a dime. If they do I don't see it happening for at least six years."

GM and Chrysler don't "owe" the gov't anything. Now that the gov't owns 60% of GM, after bankruptcy, the way to get the money back would be for the stock value to rise, then the gov't sells it off to investors. Of course, like was pointed out in the bailout thread, to regain all the input, the GM market cap would have to rise to something like 150% of the highest market cap it's ever hard.

6/17/2009 9:23:27 PM

Quote :

"because it's not like the government has lent a car company money before and gotten it back promptly or anything."

This time, both entities said they would have to go into bankruptcy if they didn't get some money, then asked for more money, then went into bankruptcy and asked for more money.

I'm just saying that they're pretty damn far in the hole, and with the rate at which GM is breaking up and being sold off/downsized it's going to be a lot harder for the government to get that money back with what they've got left.

Quote :

"Go buy a GM/Chrysler."

Have new stats that explain whether or not they're going to be able to make a profit on each car they sell now, or is their business model still not adaptable to low-volume sales? I remember a few years ago hearing that they were losing money on each car they sold because they had to keep offering massive incentives to keep sales up.

6/17/2009 9:46:51 PM

Quote :

" This time, both entities said they would have to go into bankruptcy if they didn't get some money, then asked for more money, then went into bankruptcy and asked for more money."

Chrysler of 1979 had around 1.3 billion in debt and got around that much in loans. GM is like 90 billion in debt and bondholders had to forgive 27 billion of their obligations.

There is really no way in hell that we the taxpayer gets paid back on this, it was barely more than a ploy to secure a HUGE voter base and avoid more shocks to the fragile economy.

6/17/2009 9:58:55 PM

Maybe I'm just being too cynical.

I do sincerely hope that every company that got money from the government can pay it back. I just see politics as a wholly corrupt business with shit like this happening too frequently (i.e. pork disguised as economic aid, a cultural project, or however the hell else they can spin it).

6/17/2009 10:01:20 PM

Quote :

"it was barely more than a ploy to secure a HUGE voter base "

GM was merely a payoff to the UAW. This president is typical.. beholden to special interests. For a liberal: unions and trial lawyers.

I still can't wait to see what kind of car will be offered from the combination of gov't and a labor union. A car, not designed to compete for the consumer, but to fulfill gov't mandates, political influence and union demands.

6/17/2009 11:37:21 PM

[Edited on June 17, 2009 at 11:38 PM. Reason : .]

6/17/2009 11:38:00 PM

^^ Scientists have polled the public, UAW workers, and GM engineers and have come up with this concept sketch:



[Edited on June 18, 2009 at 12:35 AM. Reason : rs, i'm clearly tired]

6/18/2009 12:20:12 AM

Perhaps more foreign interests will buy the rest of our car companies.

6/18/2009 1:32:11 AM

Quote :

"There is really no way in hell that we the taxpayer gets paid back on this, it was barely more than a ploy to secure a HUGE voter base and avoid more shocks to the fragile economy. "

And the really frustrating thing is, I'm not sure that we've avoided any shocks. The companies are still going bankrupt, people are still losing their retirement funds (see the unsuccessful attempt to stay the sell off of chrysler), and the tax payers are still getting hit with massive socialized losses that they will likely never recover.

6/18/2009 7:57:25 AM

Quote :

"I'm not sure that we've avoided any shocks."

We have. A bankrupt GM in December would have made he March lows look like a near term peak. I really don't know what would have happened had the government not stepped in all over the place to try and support the economy. I think there is a very real possibility that the economy would have ground to an absolute halt for many days to a couple weeks until they got it all figured out. And maybe we'd be better off for it now, no one really knows. It was expensive as hell, but all the money they poured in bought them time to engineer a slow let down. From here, GM will just keep slowly unwinding, selling pieces, letting people go.

6/18/2009 8:06:15 AM

1 step away.

then 2 steps towards it via universal healthcare and the new financial regulations

6/18/2009 8:14:12 AM

I'm not the quickest of cats at the best of times, but why are universal health care and financial regulation bad ideas again?

SIGNED,

CURIOUS IN RALEIGH

[Edited on June 18, 2009 at 8:35 AM. Reason : ,,,]

6/18/2009 8:16:59 AM

let's see. UH will destroy our healthcare system. the proposed financial regulation will severely damage our economy (even more) while giving more power to an unaccountable government entity

6/18/2009 8:20:01 AM

citation needed

6/18/2009 8:24:47 AM

Quote :

"Go buy a GM/Chrysler. Profit."

I thought everyone in the USA already had. I'm still waiting to pick mine up though.

6/18/2009 8:28:40 AM

Quote :

"the proposed financial regulation will severely damage our economy (even more) "

rofl

Thats always the conservative in la la land answer. IF WE HAVE THIS MORE REGULATION, THAT 50% IN LOSSES WOULD ACTUALLY BE 75%.

If anything is clear by now, it's that we really have no idea what will happen under in regulatory regime.

We do know that when regulations were relaxed, the economy blew up, so it's quite the cognitive dissonant leap to say more regulation will make things worse when the exact opposite happened.

6/18/2009 8:36:20 AM

Quote :

"We do know that when regulations were relaxed, the economy blew up"

The economy blew up because politicians like Barney Franks used gov't power to get lenders to give loans to people unable to pay them back.

Instead of allowing lenders to make decisions based on profit/loss, Barney got them to do the "socially acceptable" thing instead- "Everyone who wants to own a home should be able to" was the cry of do-gooders.

Our troubles stemmed from the gov't and its political goals interfering with capitalism.

6/18/2009 10:02:27 AM

yes, because Barney Frank has the power to do that!
ha

come on - if you're going to blame this entire crisis on banks lending to poor inner-city black folks, which seems to be what you're implying, at least spread the blame around to every President in the last 30 years, all of who have pushed for some form of "ownership society" (Bush II appears to be the most enthusiastic about this, from his 2001-2002 speeches) and all members of Congress for the same time period.

Of course, if you're going to blame the whole crisis on loans to people who "couldn't pay them back", then maybe you should explain how loans specifically covered under the CRA have a no worse default rate than mortgages in general, or how mortgages in well-off areas in CA and FL (i.e. to "people who could pay back normal mortgages") are exploding faster than any inner city or poor areas of the country

6/18/2009 10:09:20 AM

^ it's because of corruption and shady practices in the banking industry that caused it, not poor people.

Private sector isn't somehow magically less corrupt than any other human institution.

6/18/2009 10:24:29 AM

Quote :

"The economy blew up because politicians like Barney Franks used gov't power to get lenders to give loans to people unable to pay them back."

Right, in other words REGULATIONS WERE RELAXED.

Quote :

"Instead of allowing lenders to make decisions based on profit/loss"

They absolutely made decisions based on profit and loss, starting with the brokers who only had to see a loan make it past default for 90 days and they were free and clear on the commissions they made selling the loans for the securitization process. Ninety days on a 30 year loan. Now, if they would have needed to be default free for say 5 years for a 15 or 7-10 for a 30 and brokers would be on the hook if not, do you think they would have given loans to people that couldn't afford it, nope. This btw is the type of regulations you don't want to see because of your blind ideology.

Quote :

"Barney got them to do the "socially acceptable" thing instead- "Everyone who wants to own a home should be able to" was the cry of do-gooders"

This has been hashed over soo many fucking times and yet you refuse to see the reality. THE LOANS MADE VIA THE ACTUAL CRA MADE TO PEOPLE OF SHAKY CREDIT STOOD UP BETTER THAN EVERYONE ELSE IN THE INDUSTRY. Why? Because they still did more intensive checking than the greedy brokers making liar loans to speculators and everyone else. Do you get this? Or will you for the 20th fucking time make the stupid, and dead point about your your fantasy fuck Barney Frank causing the crisis?

Quote :

"Our troubles stemmed from the gov't and its political goals interfering with capitalism"

In some ways, maybe. But you're a drunk delusional fuck if you can't see what happened when regulation was REMOVED.

[Edited on June 18, 2009 at 10:25 AM. Reason : .]

6/18/2009 10:24:42 AM

But you must answer why the regulation in question was removed: it wasn't because the libertarians of the world clamored for it. It was to clear the way to sell houses to people that should not buy them and George Bush and his ilk believed throwing more fuel on the housing fire was a good idea.

This was a confluence of perfect storms, no one law caused it. But one thing is certain: changing back the laws you have in mind will not prevent or even delay the next catastrophy. No bank will sign broker contracts the same corrupt way for a long time.

6/18/2009 10:51:25 AM

Quote :

"But one thing is certain: changing back the laws you have in mind will not prevent or even delay the next catastrophy."

This is so retarded I don't even know where to being.

6/18/2009 10:56:58 AM

I think we should start with the fact that he spelled catastrophe like a jackass.

6/18/2009 3:15:50 PM

One step further, two steps back kinda thing.

6/18/2009 3:24:12 PM

^^ What, I likes me a trophy.

^^^ ???
Investors got burned, they are not likely to need another lesson for awhile. By the time bank managers have forgotten this lesson, so will it have been forgotten by the government, which will scrap the regulation to make way for the sacred cow we call housing.

One might argue that it is the law which makes the regulation deadly. If not for the law, then every now and then a single bank would forget the lesson and act stupid and get itself killed, re-teaching everyone the lesson. But because it is outlawed, then time passes until everyone has forgotten the lesson, so eventually when the law is changed back everyone rushes in and acts stupid, killing a large chunk of the banking sector in one go.

Might it not be better to re-learn a small lesson every few years than learn a potentially civilization wrecking lesson every few decades?

[Edited on June 18, 2009 at 3:52 PM. Reason : .,.]

6/18/2009 3:48:28 PM

Quote :

"If not for the law, then every now and then a single bank would forget the lesson and act stupid and get itself killed, re-teaching everyone the lesson."

That is the popular free market thinking and it falls flat on its face. When the brilliant minds on Wall Street are clever enough to concoct a scheme like CDS, and they do business with a counterparty that can't make good on their obligations if the perfect storm hits, a storm that they assume won't hit, then they will absolutely rape and pillage investors as much as they can until the system is no longer sustainable because they'll get fantastically rich as fuck up until the party stops because the game that is being played is the one that they invent.

In the free market, these investors that were burned would never go back to the scumbags that smoked their investments. They'd go to the next set of greedy capitalist until the new system blew up in their faces, rinse and repeat.

It's really convenient as hell for the libertarians to just sit back and hide in their academic shell and claim "its the government that is killing it all" because there really is no good way to test you're pure free market theories in the modern age. We had economic panics before the Fed and all this gosh darnit regulation, we have them with the Fed under all sorts of regulatory regimes. It seems to me that it really doesn't matter what we do, lack of information on one side (and this will nearly always been the case in some form) + greed gets people burned.

[Edited on June 18, 2009 at 4:10 PM. Reason : .]

6/18/2009 4:09:51 PM

bullshit. Those guys knew for a fact that the fed would bail their asses out if they got into any problems. In fact, if it weren't for the fed giving out loans left and right to people who cant afford them, then people dont default on their loans and credit default swaps aren't an issue.

The problem here is that the average american does not understand how credit works. The solutions to the financial crisis are to educate the populace on how and when they should get credit and/or create rules that outright deny credit to those who aren't up to snuff.

6/18/2009 4:20:40 PM

Quote :

"Those guys knew for a fact that the fed would bail their asses out if they got into any problems. "

Yeah, so they can continue to make profit going forward. That doesn't imply that they wouldn't have been happy with their fantastic wealth absent the fed in some sort of completely unregulated system.

No, they would have just come back in a different suit selling a different ware.

6/18/2009 4:26:01 PM

Quote :

"We had economic panics before the Fed and all this gosh darnit regulation, we have them with the Fed under all sorts of regulatory regimes."

Are you suggesting there was a time before regulation? I'm sorry to break your bubble, but government regulation of finance predates finance. Afterall, the first bonds to be traded in any form were government bonds. So you are no where near breaking the libertarian academic shell if you don't even know the history.

You say it yourself, there is nothing that can prevent the occurance of booms and busts, they are innate to the human condition. As such, all your regulation buys us is socializing losses and amplifying the cycle through various government mechanisms. Sure, in a perfect world the government would push against the boom/bust cycle, but in that perfect world there would be no boom/bust cycle anyways, since if Congress can recognize and push against the bubble then so would individual investors.

6/18/2009 5:41:59 PM

Quote :

"I'm sorry to break your bubble, but government regulation of finance predates finance"

So at best you have untested theory rooted in an ever changing area with which you attempt to base policy on. Man, that is sure to work.

Quote :

"You say it yourself, there is nothing that can prevent the occurance of booms and busts, they are innate to the human condition"

No, I didn't say this at all. As long as the greed of men is allowed to overrule the common fucking sense of the non greedy, it will always be this way. This is like saying at the root of our genetics we want to kill competitive genes and spread our seed anywhere and there is nothing we can do to control it.

Quote :

"As such, all your regulation buys us is socializing losses and amplifying the cycle through various government mechanisms"

No regulation does not socialize losses. It was the removal of regulation that was working quite well and the ignoring of law that has lead to the socializing of losses.

Quote :

"but in that perfect world there would be no boom/bust cycle "

Uh, no, it doesn't have to be a perfect world for the boom/bust cycle to end, unless by perfect you mean those that don't have the power are somehow able to check the power of those that do. The framework exists for us, but Americans aren't really interested in utilizing it.

6/18/2009 5:52:48 PM

Quote :

"So at best you have untested theory rooted in an ever changing area with which you attempt to base policy on. Man, that is sure to work."

As opposed to a system which has been extensively proven to fail repeatedly in a cyclical fashion?

[Edited on June 18, 2009 at 5:55 PM. Reason : .]

6/18/2009 5:54:37 PM

Yeah, so? Busts under the current system don't automatically make any other system or your particular system better.

6/18/2009 5:57:54 PM

...Nor do they automatically make the unproven system worse or not worth consideration.

If something is broken, what should we try to do?
I for one would say "attempt to fix it", though you seem to support an answer of "maintain the status quo".

That, or you maintain that the current system is not broken... which is laughable.

[Edited on June 18, 2009 at 6:05 PM. Reason : .]

6/18/2009 6:01:55 PM

^^ sure they don't. But it's already been shown how massive the busts under the current system are. And, its also been shown the the current system makes the busts far more massive than they otherwise would have been, as LS has been pointing out. THAT is why this new regulation is bad, in addition to the disgusting part of the government being able to declare any business "too big to fail" and then start meddling with it. The latter is how this is a huge running leap towards socialism.

6/18/2009 7:05:13 PM

Quote :

"When the brilliant minds on Wall Street are clever enough to concoct a scheme like CDS, and they do business with a counterparty that can't make good on their obligations if the perfect storm hits, a storm that they assume won't hit, then they will absolutely rape and pillage investors as much as they can until the system is no longer sustainable because they'll get fantastically rich as fuck up until the party stops because the game that is being played is the one that they invent. "

Well things like CDS are invented and popularized precisely because government regulation and interference make other avenues of investing less wealthy. That isn't to say that a CDS wouldn't exist today without government regulation, but that other less risky investments would be more popular because there would be better potential for return relative to the risk. You will also never be able to completely regulate away such constructions because they are built entirely upon the biggest rule of investing which is more risk = better potential returns. People will always seek to maximize their return while reducing their risk.

I wish I could find it again, but sometime in feb. there was an article about the crisis and the histories of the various financial crises and one of the things it pointed out was that after each crisis, we implemented rules to prevent the cause of that particular crisis, but none of those rules and regulations prevented the next crisis because the next crisis was born out of trying to get around the regulations.

6/18/2009 7:12:42 PM

Quote :

"its also been shown the the current system makes the busts far more massive than they otherwise would have been"

Umm, no, that hasn't been shown at all.

Quote :

"as LS has been pointing out"

In fact, I'm pretty sure it was the Impressive Economy thread that he argued the modern day fed policy had insured the recessions were milder and shorter than at any other time in history.

Quote :

"THAT is why this new regulation is bad, in addition to the disgusting part of the government being able to declare any business "too big to fail" and then start meddling with it"

I'm all for a proper regulator to do their job. We don't need the new regulation for this, just enforcement of what was already on the books. Don't pretend the FDIC didn't have the power to step in with any of these banks had they been allowed to do their proper job, something that you would deem highly socialistic in practice.

6/18/2009 7:16:30 PM

Quote :

"This has been hashed over soo many fucking times and yet you refuse to see the reality. THE LOANS MADE VIA THE ACTUAL CRA MADE TO PEOPLE OF SHAKY CREDIT STOOD UP BETTER THAN EVERYONE ELSE IN THE INDUSTRY"

CRA was not the only housing policy Frank, et. al. was involved in. More importantly would be the push for GSE lending.

Quote :

"When the brilliant minds on Wall Street are clever enough to concoct a scheme like CDS, and they do business with a counterparty that can't make good on their obligations if the perfect storm hits, a storm that they assume won't hit, then they will absolutely rape and pillage investors as much as they can until the system is no longer sustainable because they'll get fantastically rich as fuck up until the party stops because the game that is being played is the one that they invent."

Who, specifically, are you referring to?

Quote :

"In the free market, these investors that were burned would never go back to the scumbags that smoked their investments. They'd go to the next set of greedy capitalist until the new system blew up in their faces, rinse and repeat."

So investors, including many institutional investors who are ex-bankers, are defenseless against the mighty selling capacity of bankers?

Quote :

"It's really convenient as hell for the libertarians to just sit back and hide in their academic shell and claim "its the government that is killing it all" because there really is no good way to test you're pure free market theories in the modern age."

How is the omniscient-government test holding up?


[Edited on June 18, 2009 at 7:24 PM. Reason : ,]

6/18/2009 7:18:47 PM

Quote :

"Well things like CDS are invented and popularized precisely because government regulation and interference make other avenues of investing less wealthy"

No fucking shit. Stupid Fed policy and people who committed illegal acts (liar loans) and potentially fraudulent acts (not marking assets properly) got richer than they would have had they obeyed the law. This is not the indictment of regulation you think it is, it's an indictment of criminals. Not properly doing the regulating job and jailing those that broke the law is well after the fact of regulation.

Quote :

"You will also never be able to completely regulate away such constructions because they are built entirely upon the biggest rule of investing which is more risk = better potential returns. People will always seek to maximize their return while reducing their risk."

It isn't that we need to actually regulate away the CDS. We just need to regulate it.

Quote :

"but none of those rules and regulations prevented the next crisis because the next crisis was born out of trying to get around the regulations"

Except for in this instance, they didn't have to fully get around the regulations, they just did what any ole good capitalist would do, they bought what they needed off of congress.

6/18/2009 7:21:43 PM

Quote :

"Umm, no, that hasn't been shown at all. "

actually, yes. it has.

Quote :

"In fact, I'm pretty sure it was the Impressive Economy thread that he argued the modern day fed policy had insured the recessions were milder and shorter than at any other time in history."

i can't argue either way for LS, as I haven't read what you are commenting on.

Quote :

"We don't need the new regulation for this, just enforcement of what was already on the books."

I usually can't disagree with enforcing the laws on the books, and I won't here either, in general.

Quote :

"Don't pretend the FDIC didn't have the power to step in with any of these banks had they been allowed to do their proper job"

I'm not sure the FDIC could have stepped in with some of these institutions, as they weren't really banks in the traditional sense. If they could have, though, I would have loved for them to have stepped in, as that is exactly their fucking job! To stop the collapse of one bank from destroying a successive line of banks. But, these weren't exactly banks. They were investment companies, which puts them in a different playing field, even if we call them "investment banks."

Quote :

"something that you would deem highly socialistic in practice."

don't go putting words in my mouth.

Quote :

"How is the omniscient-government test holding up?"

I know, right?

Quote :

"Except for in this instance, they didn't have to fully get around the regulations, they just did what any ole good capitalist would do, they bought what they needed off of congress."

In a proper federally-limited republic, the capitalists wouldn't have been able to buy off congress or the fed. damn that gov't intervention!

6/18/2009 7:26:42 PM

Quote :

"It isn't that we need to actually regulate away the CDS. We just need to regulate it."

Quote :

"5) As far as CDS being unregulated, they are already regulated in various ways. Federal bank regulators have full oversight authority. For commercial banks, the Office of the Comptroller of the Currency (OCC) has oversight. They can do daily examinations of CDS trading and review its books for stability. The Fed also has authority and was very much involved with CDS in 2005 (albeit, more to do with outstanding trade confirmations). I-banks not registered as a broker-dealer were subject to indirect oversight by the SEC at the consolidated-entity level. Thrift holding companies, such as AIG and GE Capital, are under the supervision of the Office of Thrift Supervision (OTS). To sum up, the regulatory framework was/is in place. Some will disagree, but my explanation for why they were not more active in identifying risk was that they were using the same risk-evaluation techniques as those they regulated. Most used Value-at-Risk (VaR), which assumes a Gaussian distribution and thus vastly underestimates the occurrence of rare market events. As a matter of fact, the SEC institutionalized the use of VaR. Ex post, it is clear this was foolish. Ex ante, legitimate arguments could be used for its use. Like I mentioned above, we seem to forget that regulators are no better at identifying systemic risk than the thousands of market participants with their own money at risk.""

message_topic.aspx?topic=554341&page=1

6/18/2009 7:32:43 PM

Dunno if it was that thread I made the statement, but unenforced regulation is = no regulation.

For examples:

Quote :

"Thrift holding companies, such as AIG and GE Capital, are under the supervision of the Office of Thrift Supervision (OTS)."

6/18/2009 7:35:50 PM

In what way was it unenforced?

6/18/2009 7:39:16 PM

Quote :

" Stupid Fed policy ... Not properly doing the regulating job ... We just need to regulate it. ... Except for in this instance, they didn't have to fully get around the regulations, they just did what any ole good capitalist would do, they bought what they needed off of congress. "

Do you not see your own logical disconnect? You admit that the government policies and regulations, combined with human nature, improper regulation and the ability of people to buy the legislation they want (as opposed to not allowing the government to get involved at all, thus eliminating the ability to buy legislation) and yet you still want more regulation and more legislation.

The point is, more regulation and legislation will solve nothing. It will be poorly thought out legislation designed to make you feel good (see the corporate jet debacle) rather than effective regulation. It will be improperly enforced, in part because it will have unintended consequences that require new regulations to reduce the effectiveness of the original regulation, and in the end, assuming that you manage to still come up with something that might get in the way of people conducting business, then they will simply buy some new legislation that gives the dishonest a loophole and ensures that their honest competitors are left without a chance.

Quote :

"This is not the indictment of regulation you think it is, it's an indictment of criminals."

But it is. The regulation, and subsequent government interference (both in promising to back and uphold lousy agreements and then in bailing out lousy agreements) is what prevented these people from getting eaten alive by their own greed earlier. If people could have made their money doing normal investing instead of using CDS to side step regulations and interference in the market, then the first few idiots who bought into these things would have lost their shirts early on.

6/18/2009 7:40:02 PM

Quote :

"In what way was it unenforced"

I don't know all the details, but AIG writing policies that it had no way of making good on and banks using this as collateral against their MBS is a good start.

Quote :

"Do you not see your own logical disconnect? You admit that the government policies and regulations, combined with human nature, improper regulation and the ability of people to buy the legislation they want (as opposed to not allowing the government to get involved at all, thus eliminating the ability to buy legislation) and yet you still want more regulation and more legislation"

Can you read, at all?





[Edited on June 18, 2009 at 7:42 PM. Reason : .]

Quote :

"The point is, more regulation and legislation will solve nothing. It will be poorly thought out legislation designed to make you feel good (see the corporate jet debacle) rather than effective regulation. It will be improperly enforced, in part because it will have unintended consequences that require new regulations to reduce the effectiveness of the original regulation, and in the end, assuming that you manage to still come up with something that might get in the way of people conducting business, then they will simply buy some new legislation that gives the dishonest a loophole and ensures that their honest competitors are left without a chance."

Thats great. It's just a sad sad shame we don't know what life would be like without it. We do know that before the Fed was around, the boom and bust cycle was worse. So that tends to point in the favor of regulation. We do know that the housing bubble didn't start growing until regulation was removed. There is such a thing as a crappy system better than all the other crappy systems.

[Edited on June 18, 2009 at 7:44 PM. Reason : .]

Quote :

"then the first few idiots who bought into these things would have lost their shirts early on"

No, no they wouldn't have as it still takes housing some time to go up in value, unlike something else like oil. It still takes weeks for a single loan on a single property to be underwritten and closed on. It takes days/weeks to prepare properties for sale, to find buyers, and so on.

[Edited on June 18, 2009 at 7:49 PM. Reason : .]

6/18/2009 7:41:46 PM

set em up

^ you keep saying that the "boom and bust cycle was worse before the Fed," but it really wasn't. Inflation was fairly non-existent. You had deflation at times, which can be a bad thing, but it mainly happened after times of high gov't spending (war) or after other major calamities. At best, the Fed lengthens the time between events, but it does so at the cost of an even larger final correction, which is what we should expect.

6/18/2009 7:46:11 PM