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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: bentway who wrote (255698)	6/20/2010 11:46:21 AM
From: RetiredNow	Read Replies (1) \| Respond to of 306849

I believe in open and transparent free markets. So I believe that derivatives trading should be allowed, but it should be done on exchanges with audit trails and with capital requirements posted. That would make it impossible to get to the leverage that we currently have in the system, because of the capital requirements to create a derivative. Derivatives were part of the problem to be sure, along with the unfettered, laissez faire markets that we had in the last 10 years. So absolutely, I believe in regulating these markets. But the Keynesian solution to the problems created by unregulated free markets is just as bad as the problem itself. The idea that we can borrow and spend our way out of a recession forever is just childishly stupid. The excesses MUST be wrung out of the system, if we are to have a meaningful, sustainable recovery. In addition, our government should never, ever engage in socializing private losses, because it creates the mother of all moral hazards. We now have a situation where Wall Street banks, our car companies, and our largest insurance companies can take any amount of risk they want, because they have a high probability of being bailed out with tax payer dollars. They are not being held accountable for taking too much risk. So our government has literally disrupted the free market from performing arguably its most critical function, which is to hold foolish risk takers accountable. Bailouts are one breed of socialism. It is socialism for the wealthy, but it is socialism nonetheless. I want the government to play its proper role: regulation to minimize abuses and to ensure a level playing field. I do NOT want the government to overstep its mandate and start guaranteeing private losses from too much risk taking, as it has done in the past 1.5 years.