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> On the other hand, if it had been heavily regulated from the get-go, there would be tremendous pressure to bail it out now, so maybe it's for the best that it
by PragmaticPulp 4y ago
> On the other hand, if it had been heavily regulated from the get-go, there would be tremendous pressure to bail it out now, so maybe it's for the best that it wasn't regulated by the government.
This isn’t true at all. The FTX collapse is more akin to something like Madoff’s Ponzi scheme, which was significantly larger and did not get a bailout.
The financial bailouts you’re comparing this to were mostly loans that were paid back with interest, which init equivalent to the government handing money over to compensate for someone’s fraud.
The idea behind the regulation would be to prevent these situations from becoming so large in the first place. FTX deliberately avoided locations with regulation so they could perpetuate their fraud. So, no, regulations in the US would not have impacted how FTX operated in the Bahamas nor would they have any interest in bailing out a foreign company.
Finally, regulation doesn’t cause bailouts. There’s no rule that says regulated industries get bailouts while unregulated industries don’t. You’re conflating two completely different topics and trying to pass them off as one in the same.
- danans 4y ago> The idea behind the regulation would be to prevent these situations from becoming so large in the first place. I agree that's the idea, but how do you identify a ponzi scheme via regulation before it is revealed as a ponzi scheme? > Finally, regulation doesn’t cause bailouts. There’s no rule that says regulated industries get bailouts while unregulated industries don’t. I didn't say cause. I said pressure. Yes, the auto industry received a big bailout in 2008 and the cruise industry during the pandemic. There were other pressures that made those happen, right or wrong.