By using this site, you agree to our Privacy Policy and our Terms of Use. Close
richardhutnik on 13 July 2010
Edit Thread
mrstickball said:
richardhutnik said:

What part of government intervention has told people to do credit default obligations or drive the current leveraging in the derivative market to around 10 times the value of the world economy?  These markets are not regulated, and there was no indication of any government bailout.  So, anyone want to argue how the government is a source of moral hazzard or hindering the free market from making needed corrections?

Consider other things also like:

* Charles Ponzi nearly taking down the banking system in the northeastern United States.

* What part of government regulations causes credit rating services to get stupid and falsely value risk during the most recent meltdown?

* What part of government involvement caused Long-Term Capital Management to nearly take down the financial markets in the United States: http://en.wikipedia.org/wiki/Long-Term_Capital_Management

I was informed in a prior thread that at NO TIME has government involvement help save the financial markets from collapse.  Well, look at LTCM here.  The Federal Reserve brokered a deal to have other firms pool together and prevent the financial markest from collapsing.

To say government involvement is responsible for every ill is to be VERY short sighted and to live under the belief that if Ayn Rand were followed to the letter, we would end up have flowers and rainbows every day.

 

 

Correct me if I'm wrong, but didn't the credit default come as a result of packaging toxic mortgage assets to look better than they were? Weren't most of these toxic assets a result of government intervention in the mortgage market via the Community Reinvestment Act of 1999?

And the government held a gun to the heads of Wall Street and told them to leverage to hilt against them and engage in credit default swaps, and also to rate them worse than they actually are?  Who controlled the rating services?  I don't see the government rating the assets, and marking them down at all.  Show where they did.  Also, did the government order Wall Street to repackage the toxic assets?  All this, to me, looks like the markets doing it.  People driven by greed getting into the business, and markets valuing risk wrong, because of the repackaging.  Also, tell me where the government is involved in around $600 trillion in derivates.  DId the government set this up?  That is how much in derivatives has been floating out there.  This is the byproduct of government intervention how?

One can say the government did have an impact here, but to say if there was no government involvement things would of been just fine, is pushing it.  Do you remember the dotcom bubble?  Markets have tendencies to produce bubbles, with or without the government involved.

And you can push deregulation and the government not stepping in to stop certain mergers.  What do you think happens with companies when they get really larger?  Well, they get "too large to fail".