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Of course it isn't the common man I'm blaming - he has enough trouble paying the damn electricity bill! This is not the fault of the common man. This is the p

Of course it isn't the common man I'm blaming - he has enough trouble paying the damn electricity bill! This is not the fault of the common man. This is the problem of intelligent people doing stupid things for selfish reasons. We (meaning those who understand these systems) must fight and convince the common man that regulation IS good IF the situation calls for it. People think regulation is bad and capitalism is good. We should convince them that both are great GIVEN the correct situation. I love capitalism - I also love having my electricity stay on and stable (remember Enron energy trading in Northern California people? - dark times (pun intended!). I merely state that regulation has a PR problem and that the people who have the ability to change that, should.

jonnathanson 14y ago
I agree. Somewhere in the last 30 years, to your point, the American people were sold the idea that regulation is the diametric opposite of "freedom," that trust-busting is "socialist," and other such nonsense. We need a modern-day Teddy Roosevelt, who can articulate in capitalist terms the importance of regulation and antitrust activity as vitally important to the health of the competitive, free market. Fact is, the market should have punished the malfeasors in the 2007 financial crash, as it should be punishing the malfeasors in the Libor scandal. Shareholders should be abandoning these banks, and the banks' access to capital should be severely restricted by sheer virtue of nobody's willingness to lend to them (or to lend to them at typical rates). But that couldn't happen in 2007, because, Lehman Bros aside, everyone got propped up, dusted off, and given a fresh coat of paint via taxpayer dollars. Because the banks were "too big to fail," and not bailing them out would have been catastrophic. Because nobody had ever stopped them from growing so big, and so systemically integrated, in the first place. The failsafes that should have prevented banks from being so directly tied to the macroeconomies of nations were not in place, and are still not in place. There is literally nothing in place right now that will prevent anything about the 2007 crisis from occurring again, and that is deeply troubling.
- anamax 14y ago
  > Fact is, the market should have punished the malfeasors in the 2007 financial crash, as it should be punishing the malfeasors in the Libor scandal. Yes, it should have, but the regulators didn't want that to happen. However, you're missing a very important part of the story. Regulators were part of the problem leading up to these disasters. In the LIBOR case, UK regulators knew about the rigging and tacitly encouraged it because they thought that the rigging stabilized the market. (US regulators knew about and accepted said rigging.) That's understandable - many of you want them to stabilize the market and the rigging probably did have that effect. However, if you're looking for an honest market.... Things are even worse wrt the 2007 problems. Regulators were in that up to their eyeballs on both the mortgage and securities sides. (In fact, securitization was encouraged by regulators.) Fannie and Freddie were especially bad because they reported bogus stats that threw off everyone's risk analysis. Until we start punishing regulators and the politicians who push these policies....
  - jbooth 14y ago
    Punishing regulators? Sure. What about punishing the people who snuck it by the regulators? I absolutely cannot stand the libertarian line on this. For decades, it was all "don't regulate the banking sector, you're hurting freedom, they should have the ability to combine investment and consumer banking, don't regulate them", and then when they fuck up the economy? "Oh, you should have let them fail. That would have been free market." Great, that's a lot of help. We should've let your ideology destroy the modern economy. You know how much it burned non-libertarians to have to bail those banks out, after listening to all this crap from you guys for decades about how deregulation was the way to go? But we still supported it, because we're adults, and didn't want to flush the economy down the toilet. So here we are in 2012. Still hearing that the banks shouldn't be regulated. They're the "free market". Sure.
    - dllthomas 14y ago
      Per my understanding, most libertarians are in favor of prohibition of fraud...
      - 14y ago
- anamax 14y ago
  > Because the banks were "too big to fail," and not bailing them out would have been catastrophic. Because nobody had ever stopped them from growing so big, and so systemically integrated, in the first place. If these banks are too big to fail (and thus shouldn't exist), what does that imply about large state govts (such as CA) and the US federal govt? Note that regulation is, by definition, systemic risk.
yequalsx 14y ago
If it is a problem of intelligent people doing stupid and selfish things then it seems to me that blame on them ought to be antagonistic and personal. Necessarily so. I pretty much agree with everything you wrote except that your original comment seemed to suggest a view that the finance industry are unwilling conspirators. In my opinion they deserve vilification.
cgmorton 14y ago
"This is the problem of intelligent people doing stupid things for selfish reasons." I'm gonna disagree. What these people are doing is very much the smart thing to do. They make huge, I mean HUGE amounts of money by doing just these sort of things, and yet what was the risk for them? Even those people who are directly implicated by this scandal will probably just have to pay some fines, or maybe even be forced to resign! Dear god how will they survive? Oh that's right, they'll survive off their massive net worth that they stole. I personally support a minimum sentence of life in prison. Not because I hate them or anything, no, it's a matter, as everyone says, of incentives. In any other crime the magnitude affects the sentencing, and these guys colluded and stole money in the billions, maybe trillions of dollars. If they don't all end up in prison, what does that say to any future banker criminals? It says: steal as much as you want, because even if you get caught there's really nothing we can do about it.
- runawaybottle 14y ago
  I'm going to pull the following statement out of my ass, but I'm willing to bet it's probably true: "There are already laws punishing theft and fraud in America." The law doesn't apply to everyone in the same way. Making a new severe law to punish Wallstreet crime sounds exactly like the kind of thing that will have no lasting effect. These bankers pay our politicians, inject themselves into regulatory bodies, lobby for lower oversight/more exemptions, they know how to get around this stuff. This problem needs to be tackled on an infrastructural level. We need some basic state-owned utility banks in America, that'd be a start, something like they've got over in Germany: http://en.wikipedia.org/wiki/KfW http://en.wikipedia.org/wiki/KfW

jonnathanson 14y ago

I agree. Somewhere in the last 30 years, to your point, the American people were sold the idea that regulation is the diametric opposite of "freedom," that trust-busting is "socialist," and other such nonsense. We need a modern-day Teddy Roosevelt, who can articulate in capitalist terms the importance of regulation and antitrust activity as vitally important to the health of the competitive, free market. Fact is, the market should have punished the malfeasors in the 2007 financial crash, as it should be punishing the malfeasors in the Libor scandal. Shareholders should be abandoning these banks, and the banks' access to capital should be severely restricted by sheer virtue of nobody's willingness to lend to them (or to lend to them at typical rates). But that couldn't happen in 2007, because, Lehman Bros aside, everyone got propped up, dusted off, and given a fresh coat of paint via taxpayer dollars. Because the banks were "too big to fail," and not bailing them out would have been catastrophic. Because nobody had ever stopped them from growing so big, and so systemically integrated, in the first place. The failsafes that should have prevented banks from being so directly tied to the macroeconomies of nations were not in place, and are still not in place. There is literally nothing in place right now that will prevent anything about the 2007 crisis from occurring again, and that is deeply troubling.

anamax 14y ago
> Fact is, the market should have punished the malfeasors in the 2007 financial crash, as it should be punishing the malfeasors in the Libor scandal. Yes, it should have, but the regulators didn't want that to happen. However, you're missing a very important part of the story. Regulators were part of the problem leading up to these disasters. In the LIBOR case, UK regulators knew about the rigging and tacitly encouraged it because they thought that the rigging stabilized the market. (US regulators knew about and accepted said rigging.) That's understandable - many of you want them to stabilize the market and the rigging probably did have that effect. However, if you're looking for an honest market.... Things are even worse wrt the 2007 problems. Regulators were in that up to their eyeballs on both the mortgage and securities sides. (In fact, securitization was encouraged by regulators.) Fannie and Freddie were especially bad because they reported bogus stats that threw off everyone's risk analysis. Until we start punishing regulators and the politicians who push these policies....
- jbooth 14y ago
  Punishing regulators? Sure. What about punishing the people who snuck it by the regulators? I absolutely cannot stand the libertarian line on this. For decades, it was all "don't regulate the banking sector, you're hurting freedom, they should have the ability to combine investment and consumer banking, don't regulate them", and then when they fuck up the economy? "Oh, you should have let them fail. That would have been free market." Great, that's a lot of help. We should've let your ideology destroy the modern economy. You know how much it burned non-libertarians to have to bail those banks out, after listening to all this crap from you guys for decades about how deregulation was the way to go? But we still supported it, because we're adults, and didn't want to flush the economy down the toilet. So here we are in 2012. Still hearing that the banks shouldn't be regulated. They're the "free market". Sure.
  - dllthomas 14y ago
    Per my understanding, most libertarians are in favor of prohibition of fraud...
    - 14y ago
anamax 14y ago
> Because the banks were "too big to fail," and not bailing them out would have been catastrophic. Because nobody had ever stopped them from growing so big, and so systemically integrated, in the first place. If these banks are too big to fail (and thus shouldn't exist), what does that imply about large state govts (such as CA) and the US federal govt? Note that regulation is, by definition, systemic risk.

yequalsx 14y ago

If it is a problem of intelligent people doing stupid and selfish things then it seems to me that blame on them ought to be antagonistic and personal. Necessarily so. I pretty much agree with everything you wrote except that your original comment seemed to suggest a view that the finance industry are unwilling conspirators. In my opinion they deserve vilification.

cgmorton 14y ago

"This is the problem of intelligent people doing stupid things for selfish reasons." I'm gonna disagree. What these people are doing is very much the smart thing to do. They make huge, I mean HUGE amounts of money by doing just these sort of things, and yet what was the risk for them? Even those people who are directly implicated by this scandal will probably just have to pay some fines, or maybe even be forced to resign! Dear god how will they survive? Oh that's right, they'll survive off their massive net worth that they stole. I personally support a minimum sentence of life in prison. Not because I hate them or anything, no, it's a matter, as everyone says, of incentives. In any other crime the magnitude affects the sentencing, and these guys colluded and stole money in the billions, maybe trillions of dollars. If they don't all end up in prison, what does that say to any future banker criminals? It says: steal as much as you want, because even if you get caught there's really nothing we can do about it.

runawaybottle 14y ago
I'm going to pull the following statement out of my ass, but I'm willing to bet it's probably true: "There are already laws punishing theft and fraud in America." The law doesn't apply to everyone in the same way. Making a new severe law to punish Wallstreet crime sounds exactly like the kind of thing that will have no lasting effect. These bankers pay our politicians, inject themselves into regulatory bodies, lobby for lower oversight/more exemptions, they know how to get around this stuff. This problem needs to be tackled on an infrastructural level. We need some basic state-owned utility banks in America, that'd be a start, something like they've got over in Germany: http://en.wikipedia.org/wiki/KfW http://en.wikipedia.org/wiki/KfW