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Soleron on 18 October 2009
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SciFiBoy said:
Soleron said:
...

because the free market big bussiness finances the government so when something goes wrong, in order to stay in bussiness, they say to the government "hey, you want to have money for your election campaign right? okay then, bail us out first and we will pay you back by helping you win the election", not to mention that people have there money/savings in those banks, forcing the government to at least have to protect those people.

also, the example you gave is in the US only, in the UK there was no such program, so regulation wasnt a cause here, rather here, the big bussiness lent like that anyway thus lack of regulation against it was the problem both here and in the US, the problem wasnt with regulation, but with the type of regulation, had the government regulated AGAINST that type of lending it would have been different in all likelyhood, I doubt anyone is daft enough to say the government should regulate for that sort of lending.

Business, and individuals with business interests, funding government is the #1 problem with both the US and UK at the moment. It should be outlawed, parties can get small cumulative donations from the voting public. Free market != business lobbying controls government policy.

FSA rules already provide for the government compensating savers up to £50k when a bank goes bankrupt. That should cover individuals; and businesses/governments are much more free to choose safer/riskier investments so shouldn't get such compensation. In other words, had a bank gone down due to its own mistakes then the most vulnerable savers wouldn't have lost their money. Yet it doesn't reward banks for their mistakes like bailouts do.

The UK still did bailouts, that was the worse of the two things I said. I believe recession is a good thing, it would have meant banks would have taken fewer risks. As it is, because they did not suffer from the poor investment choices, they are beginning to make those mistakes again - did you see that UK banks are now offering >100% mortgages, and mortgages that are over 5x salary, again?

Regulating against that kind of lending wasn't necessary; a recession should have taught banks not to do that. If it had been in place then it would have reduced global liqudity (cheap money) that allowed businesses to finance expansion and increase the economy.