Quote:
Originally Posted by Tex
Exactly. Or to parse a little, "any more" as opposed to "anymore". Responses, however, were:
Nothing I said implies (not "infers") that I believe any of those things. I just don't think putting MORE gov't bureaucrats in the back pockets of companies will "fix" this. The market fixes it.
And I think Sarbanes-Oxley is an albatross. Typical overreaction by politicians wanting to show they are doing something in an election year.
Lastly, citing the Great Depression is the Godwin's law of economic discussions.
|
Horsecrap, you already stated in a subsequent post that you don't want any more government regulation. I didn't read that until after I made my post, so I'll replace my statement regarding "infer" and replace it with "you directly stated." I also like your references to gramatical errors on my part, that always strengthens your position. In addition, maybe you could provide us with dictionary references that will help your argument about the difference between imply and infer.
Citing to the Great Depression is perfectly relevant to the discussion because a lot of the things happening right now are strikingly similar to what happened during the onset of the Depression. Some of the symptoms of the current financial crisis are similar to what led to the Great Depression. As a sidenote, Ben Bernanke's Doctoral Thesis argued that greater intervention by the Fed during the initial panic that led to Great Depression would have prevented some of the long lasting effects. Ironically enough, Bernanke is now dealing with some very similar occurrences. So yeah, I think references to the Great Depression are not merely the equivalent of using an economic Nazi card.
Sarbanes-Oxley is one thing, and I'm curious as to whether you know anything about Sarbanes-Oxley or are you just repeating the party line? I will agree that having an agency oversee and check off on things during their implementation is usually repressive, expensive and really not needed. But I'm referring to laws and regulations- certain things are prohibited, and you if you violate them, then you're breaking the law. For instance if there were a law that stated no negative amortization or interest only loan were to ever be given to someone with net worth of less than $10 million, I think a huge part of the current problem would have been avoided. If a lending institution provided such loans, they would be breaking the law and would be subject to criminal prosecution.
If you track the increase in prices in California you'll find that they strongly correlate to the increased use of Options ARMs and interest only loans. People look more at the monthly payment on a house as opposed to the overall price. Additionally, the low initial teaser payments allowed house flippers to buy multiple properties to the point that up to 40% of the demand in many markets (e.g. Phoenix, Vegas, the inland empire) was due to house flippers. Eliminate the illusory demand and you get rid of a significant factor that led to the housing bubble.
I would venture to say that without these suicide loans, we don't have the current crisis. Housing prices don't escalate to the point where they were bound to significantly fall and the values on the underlying collateral on the MBS don't diminish. All of sudden Lehman Brothers and AIG don't have huge liquidity problems and the Fed doesn't have to bail out Fannie Mae. And it all could have been averted if the use of Option ARMs and interest only loans were sharply curtailed.