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This reads like a big rant against libertarians. Also, the myth that the 2008 crash was caused by a lack of regulations is tiring. What lead to the 2008 crash w

This reads like a big rant against libertarians. Also, the myth that the 2008 crash was caused by a lack of regulations is tiring. What lead to the 2008 crash was that the government kept printing money and lending it for close to nothing to banks and many financial institutions that knew they'd just be bailed out in case things would go wrong as they'd be too big to fail. This is one of the reasons why these financials institutions behaved irresponsibly (an other reason was that they were forced by law to give loans to people who couldn't afford to pay them back), not because of the lack of regulation (or at least not only) but because they didn't have any responsibilities as they knew if push came to shove, they'd just be bailed out.

craigyk 13y ago
wow. easy money certainly didn't help, but wow. banks that are too big too fail are a natural outcome of the free-market. It takes government regulation to prevent their formation, or that failing, to at least limit their risk-taking behavior once they become vital to the world economy. you twice cite the moral hazard that allowed them to over-leverage, but completely ignore that regulations were removed or relaxed that prevented this, and then state lack of regulation as a minor part of the problem.
- dnautics 13y ago
  > banks that are too big too fail are a natural outcome of the free-market In a freer market (e.g. the free banking era of the 19th century sweden) there were definitely no "banks that were too big to fail". When a bank collapsed, its assets would be auctioned to smaller competing banks, who would pay fair market share. Now, we have the biggest, most politically connected banks that get a government-subsidized rate (typically federal reserve) to take over a failing bank in the name of stability. That dynamic is what causes aggregation and too big to fail banks.

craigyk 13y ago

wow. easy money certainly didn't help, but wow. banks that are too big too fail are a natural outcome of the free-market. It takes government regulation to prevent their formation, or that failing, to at least limit their risk-taking behavior once they become vital to the world economy. you twice cite the moral hazard that allowed them to over-leverage, but completely ignore that regulations were removed or relaxed that prevented this, and then state lack of regulation as a minor part of the problem.

dnautics 13y ago
> banks that are too big too fail are a natural outcome of the free-market In a freer market (e.g. the free banking era of the 19th century sweden) there were definitely no "banks that were too big to fail". When a bank collapsed, its assets would be auctioned to smaller competing banks, who would pay fair market share. Now, we have the biggest, most politically connected banks that get a government-subsidized rate (typically federal reserve) to take over a failing bank in the name of stability. That dynamic is what causes aggregation and too big to fail banks.