Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : GOPwinger Lies/Distortions/Omissions/Perversions of Truth -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (146968)	11/12/2008 10:42:06 PM
From: geode00	Read Replies (1) \| Respond to of 173976

Obviously we are not talking about regulation that mandates you must wear a pink flowered hat to work everyday. We are talking about regulation that says you do not make fradulent subprime loans to people who have sufficient income and credit to qualify for regular loans. We are talking about regulating the ratings agencies instead of making them a for profit entity at the beck and call of the customers whose products they are rating. We are talking about limiting leverage which is happening now in high speed disaster form. We are talking about understanding the reality of the world we live in and trying to provide transparency to lubricate business for example. Regulation can SAVE COSTS. Why should you have to test every bag of dog food that comes into your store in order to make sure it has no melamine in it? That is a huge burden for the retailer and makes that business grind to a halt. Having regulations that make it illegal to put tainted dog food into the distribution system gives the retailer reasonable confidence he is selling a clean product. Business proceeds. Why do you see regulation as simply adding to costs? Are you on the side of the Chinese companies who seem to be putting melamine into lots of things including chicken eggs and chocolates? What about the costs of too little regulation causing sickness in 50,000 Chinese infants? What about the enormous costs of pulling dog food and cat food from the distribution system? Regulation should, when done properly, guarantee greater probability that a product or service will be safe and will do what it is advertised to do. Without the regulation of cars and drivers on the road, would you want to commute to work tomorrow? Of course there can be too much regulation and stupid regulation. Human beings are imperfect and do stupid things every day of the week. No, with actual regulation for the parties that rate instruments instead of leaving it up to the garbage of the 'free market' ideology, much of this disaster (perhaps ALL of it) would not have happened. When you can go from one ratings agency to another because you didn't like the first agency's analysis (taking your $600K in fees with you) then something stinks. "Both parties where all about expanding home ownership, and both parties, going back decades, created policies that helped feed the bubble." Except that's not really true. The government has been for home ownership for a very long time. Home ownership makes people more involved in their communities and provides what is usually an asset that keeps pace with inflation. This particular bubble happened in this decade. If promoting home ownership was the problem then we would have had a humongous bubble over the course of decades. You have to look at WHAT IS DIFFERENT during this bubble. As I've said repeatedly, you used to be able to borrow a maximum of 300% of income for your mortgage. People routinely were required to put down 20% as well. This time around I have heard of people borrowing 750% of income which is NOT SUSTAINABLE while putting down zero or, sometimes, even getting money back. That is poor lending on the part of loan officers, mortgage brokers, real estate agents. Why don't you blame them? Why don't you think about why it is different for them this time around than it was, say a decade or two ago? "Would the bubble have happened if it wasn't for all the perverse incentives and pressure from government" The, as you call them, perverse incentives from the government for buying a home have been in place for a very long time. The tax incentive to have a mortgage has been around for a long time. There used to be a deduction for non mortgage interest payments. Even though that went away, people are borrowing ever more at ever higher rates. How do you explain that?