[Proculation]

Scape Scape:

Explain how a pyramid scheme self regulates then.

By not getting into it ?
They have been proved to be a scam, you don't get into a scam.

[Scape]

Like the scam that was created with deregulation so that no one knew what they were holding.

[Pseudonym]

Oops, I thought he was referring to the derivatives pyramid metaphor I had heard recently. I should have just peeked at the link before replying. My bad.

[Axeman]

Pseudonym Pseudonym:

Major banks do not lend out trillions of dollars at high risk unless another power intervenes. Capitalism is self-regulating. Government is not.

Capitalism IS NOT self-regulating. Even Milton Friedman, the guru of the free-market system, recognized the importance of law enforcement to prevent fraud and enforce contractual obligation. You should read (or re-read) "Capitalism and Freedom". "Capitalism is self-regulating" is the great fallacy held by capitalist who don't really understand capitalism.

[BartSimpson]

Scape Scape:

It was the bad loans that were held by the banks even before this that cause the system to unravel. When loans were sold on blind trust then the whole market went to shit as no one had any idea what anyone had and everyone assumed it was worthless. That's why AIG is being bailed out twice. The CRA wasn't put into effect twice. Your logic is convoluted and feeble.

The reason no one knew what the loans were was a direct result of deregulation.

Let me clarify, the 1999 modifications to the CRA are what's in question here. When people are contemporaneously referring to the CRA right now they mean the CRA as it was composed and enforced after the 1999 modifications.

Prior to 1999 no income qualifiers were private paper loans and after 1999 the mainstream banks started making these loans with Federal backing (IndyMAC, FannieMae, FreddieMAC) and then some assmunch had the clever idea of packaging these high-risk loans into 'collateralized securities' and shilling them as high-yield investments. Theoretically, they are. In practice, they're just bundles of sh*t paper that should be sold at a discount, not a premium.

Still, the CRA as a whole is at fault because the government is getting too involved in the mortgage market by telling banks to loan into areas where values are not stable and to people whose credit is not up to par. The 1999 modifications only made a bad law even worse and at this point the wholesale repeal of the law is what is in order unless we want to keep on bailing out the banks for writing the bad paper the government currently requires them to write.

[Pseudonym]

Axeman Axeman:

Pseudonym Pseudonym:

Major banks do not lend out trillions of dollars at high risk unless another power intervenes. Capitalism is self-regulating. Government is not.

Capitalism IS NOT self-regulating. Even Milton Friedman, the guru of the free-market system, recognized the importance of law enforcement to prevent fraud and enforce contractual obligation. You should read (or re-read) "Capitalism and Freedom". "Capitalism is self-regulating" is the great fallacy held by capitalist who don't really understand capitalism.

My bad. I meant "capitalism regulates itself such that people don't lend one another large amounts of money that they may not get back." I thought it was a bit long to say though. Strong law enforcement, particularly with regards to private property rights is absolutely necessary.

[Proculation]

Axeman Axeman:

Pseudonym Pseudonym:

Major banks do not lend out trillions of dollars at high risk unless another power intervenes. Capitalism is self-regulating. Government is not.

Capitalism IS NOT self-regulating. Even Milton Friedman, the guru of the free-market system, recognized the importance of law enforcement to prevent fraud and enforce contractual obligation. You should read (or re-read) "Capitalism and Freedom". "Capitalism is self-regulating" is the great fallacy held by capitalist who don't really understand capitalism.

I agree with that. The only job of the government should be to regulate economy by ENFORCING free market and private rights. Frauds are not about free market, IMO. It's stealing.

[sandorski]

sigh, it seems to be needed to state again: Freddie and Fannie did not cause this problem! De-Regulated Private Banks made all these Loans, not because Government Regulation forced them to, but because Government Regulation stopped Preventing them from doing so.

[Pseudonym]

sandorski sandorski:

sigh, it seems to be needed to state again: Freddie and Fannie did not cause this problem! De-Regulated Private Banks made all these Loans, not because Government Regulation forced them to, but because Government Regulation stopped Preventing them from doing so.

sigh, it seems to need to be asked again: back up your assertion which goes against conventional knowledge and common sense.

[OPP]

Pseudonym Pseudonym:

romanP romanP:

BartSimpson BartSimpson:

I have more than a few people asking me to run for Congress in 2010 and, trust me, if I get into Congress I will make Rove, Coulter, O'Reilly and Rush look like liberals.

So, you're going to ape Hitler?

That's about the only way you could possibly do worse than that bunch.

Portraying Hitler as a right-wing fellow demonstrates a complete misunderstanding of the spectrum involved in modern day politics. So would portraying him as a left-wing fellow for that matter.

Let me put this simply.. Nationalism, intolerance, racism = Right-wing triats. Solidarity, equality, tolerance = Left-wing traits.

[BartSimpson]

sandorski sandorski:

sigh, it seems to be needed to state again: Freddie and Fannie did not cause this problem! De-Regulated Private Banks made all these Loans, not because Government Regulation forced them to, but because Government Regulation stopped Preventing them from doing so.

Read and learn:

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

$1:

The Act requires the appropriate federal financial supervisory agencies to encourage regulated financial institutions to meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation.

As written the law still exposed the banks to risk, but not so much that the Fed could not cover the rate of default. As modified, the exposure of the banks went from a few billion to an estimated five to eight trillion.

[BartSimpson]

OPP OPP:

Let me put this simply.

I expect nothing more than that from you, still, you periodically amaze me with what you can accomplish with a third grade education.

[Scape]

The securitization is what cause the mortgage meltdown CRA was a sideshow. When you bundle everything triple A it had the effect of luring people into houses they could never afford. When these sales are set up and done in a matter of weeks for sales that are intended to be paid over a term of decades oversight got stripped away. When these bundles got sold off they got bundled with junk and in the end that made everything worthless.

Deregulation allowed that bundling to happen.

[OPP]

Pseudonym Pseudonym:

sandorski sandorski:

sigh, it seems to be needed to state again: Freddie and Fannie did not cause this problem! De-Regulated Private Banks made all these Loans, not because Government Regulation forced them to, but because Government Regulation stopped Preventing them from doing so.

sigh, it seems to need to be asked again: back up your assertion which goes against conventional knowledge and common sense.

Which assertion? He's right. We saw the same thing happen here in Sweden in the early 90's. Now, the U.S is looking at how we solved the chrisis back then talking to our experts.

[BartSimpson]

Scape Scape:

The securitization is what cause the mortgage meltdown CRA was a sideshow. When you bundle everything triple AAA it had the effect of luring people into house they could never afford. When these sales are set up and done in a matter of weeks for sales that are intended to be paid over a term of decades oversight got stripped away. When these bundles got sold off they got bundled with junk and in the end that made everything worthless.

I don't dispute that. As I said, pricks on Wall Street took advantage of a well-meaning law that had some fatal flaws in it.