you blame aynd rand, alan greenspan, and laissez faire capitalism at large as the culprits of the current crash. freddie mac, fannie mae, barney frank and christopher dodd are what ? innocent by standers ? the community reinvestment act has nothing to do with all this... fannie mae and the clinton administrations are what ? more innocent bystanders...
If there had not been 4x the value of derivative bets compared to underlying assets, I would likely be on your side. Of course, all those bets, were part of the basic premise of Laissez Faire Capitalism: A market allowed to innovate without regulation.
Look at it this way. If you really think subprime is responsible, add up all the subprime loans, take the current market value of the associated real estate, compute the haircut, and ask yourself why that is not approximately the cost of bailing out the entire system? The number will be somewhere around $500B (a quick WAG, as total subprime was around $1.5T?? and the real estate haircut is currently less than 33%).
Your problem is a failure to understand input perturbation to a system, vs. an unstable system. Laissez Faire Capitalism is an unstable system. Even though we had some regulation, it was insufficient to stabilize the system. This is what Greenspan has come to realise, and has admitted before Congress.
Don't worry, it will all be made relatively clear in the next few years. People with religious views on the matter will of course remain profoundly ignorant. The rest will learn, modify the system, and move on. |
