5 ms·

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 tru

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...
    - specialist 14y ago
      Opposing fraud and for the "free market" (aka laissez faire) are mutually exclusive. Just wishful thinking. On open market requires regulation. For instance, we need contract law, transparency, fair and impartial court system, for the market to work efficiently and effectively.
      - dllthomas 14y ago
        Are you saying that, for practical reasons, fraud cannot be effectively punished without more regulation than most libertarians would support? This is a coherent claim that may or may not be valid, but I would be interested to hear support of it rather than simple assertion. On the other hand, if you are asserting that most libertarians oppose a court system in which people can (at least in principle) be tried and convicted when they commit fraud, then I think you are incorrect in your assessment of the position of most libertarians. Even anarcho-capitalists (per the wikipedia article) seem to view fraud as something that can be responded to with force - they just don't want it to be a "government" that does so.
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.

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...
  - specialist 14y ago
    Opposing fraud and for the "free market" (aka laissez faire) are mutually exclusive. Just wishful thinking. On open market requires regulation. For instance, we need contract law, transparency, fair and impartial court system, for the market to work efficiently and effectively.
    - dllthomas 14y ago
      Are you saying that, for practical reasons, fraud cannot be effectively punished without more regulation than most libertarians would support? This is a coherent claim that may or may not be valid, but I would be interested to hear support of it rather than simple assertion. On the other hand, if you are asserting that most libertarians oppose a court system in which people can (at least in principle) be tried and convicted when they commit fraud, then I think you are incorrect in your assessment of the position of most libertarians. Even anarcho-capitalists (per the wikipedia article) seem to view fraud as something that can be responded to with force - they just don't want it to be a "government" that does so.

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.