On Sun, Jan 17, 2010 at 9:48 PM, paul stenquist <[email protected]> wrote: > > On Jan 17, 2010, at 9:26 PM, William Robb wrote: > >> >> ----- Original Message ----- From: "paul stenquist" >> Subject: Re: Moved: denial vs doom (was urbanites vs squirrels) >> >> >> >>> Over-regulation has hurt more people and destroyed more economies than any >>> natural phenomena. >> >> As we found out quite recently, under-regulation can do the same thing in a >> fairly major way. >> > Those in favor of more government would have us believe that under-regulation > caused the meltdown. But it was actually more a matter of government pressure > to make bad loans. That mistake was the result of a well-intentioned effort > to make sure that everyone had a home of their own. Mortgages for all. Credit > ratings be damned. Yes, the banks went along with it, and compounded the > error by packaging the loans and reselling them, but congressional pressure > was the motivator. > Paul >
That was a leading factor in the US portion of the meltdown, the reality is rather much more complex but is primarily tied to the concept of 'too big to fail'. Lending policy with low regulation and strong governmental guarantees is the core issue, the government should either have retained the strong regulation (as Canada did, and thus avoided a meltdown) or removed the guarantees at the same time so there was some actual risk to high-level decisions in the banking sector. The fact that many of the morgages being passed off by Fannie Mae and Freddie Mac were fraudulently labelled as low-risk starting as far back as the mid-90's and the credit bubble driving the already massively disrupted car market (the #2 credit market after housing) into the ground at pretty much the same time just made things worse. There are both strong Libertarian and Statist solutions for what happened, either option would have been better than what we got. -- M. Adam Maas http://www.mawz.ca Explorations of the City Around Us. -- PDML Pentax-Discuss Mail List [email protected] http://pdml.net/mailman/listinfo/pdml_pdml.net to UNSUBSCRIBE from the PDML, please visit the link directly above and follow the directions.
