Yes thats a pretty good synopsis -- and adds some good examples. A problem, IMO, is that people think in dichotmous black or white terms. This or that. All good or all bad.
The crises is not a total regulatory failure -- but neglect in carrying out laws on the books (Greenspan) -- and failure to require disclosure and transparency for derivatives and hedge funds was a colossal legislative failure. The traditional securities markets are already heavily regulated. There is not a need for massive new regulations there. The rhetoric of the right and left is at times prone to this black or white thinking: all regulation is bad on the right, all regulation is good on the left. Or markets are all good, markets are all bad. Markets are quite powerful and efficient in setting prices and allocating resources in "productive" ways. But they are not sufficient by themselves in many cases. They do not always produce, by themselves, everything that is needed for smooth functioning. Such as information and transparency. They don't handle externalities such as pollution well. They aren't as efficient in cases of natural monopolies such as electric and gas companies -- primarily their distribution systems (its inefficient to have competing distribution systems, so they are granted monopoly status and then heavily regulated.) However, given the strong merits of regulation is some areas -- over-regulation is counter productive. We live in mixed-states -- not laissez-faire economies. We have for over 100 years. The key is correctly fitting sound regulation to specific deficiencies in the market. And reassessing and readopting over time. Not 100% regulations (aka fascism and authoritarian states) nor canning all regulation. IMO, the genesis of this crises was the Fed. Though structured to be somewwhat buffered from political decisions, and full of bright and shiny doctorates (a good thing in most regards) -- they have made large errors with devastating effects. The solution is not further politicalization of the Fed, a freer reign, or abolishment of the Fed. How to counter their excesses and errors will be a major regulatory issue in the coming years. And size does matter. Too big to fail is to big to exist. Part of the legitimate emerging legislative mandate will be to limit firms size to "small enough to fail". There are economies of scale -- and competitive advantages to size -- particularly in global markets with state-sponsored players. But those efficiencies are overshadowed by the costs, direct and indirect, of providing absolute gov't backing to private firms that make engage in foolish pattern of errors and corporate culture. Limits on size yield more layers -- more diversity. Diversity is generally a good thing. One of the sad outcomes of this crisis is that the financial markets are far more concentrated than before. Five investment banks gone. B of A -- its scary to think how big they are -- given how incompetent they have become at the customer level. The assets of Countrywide, AIG Merrill Lynch, Bear Stearns, Lehmans -- and soon Wachovia-- all absorbed by bigger players. More consolidation to come as more firms fail. (This "solution" will not stop all insolvency). --- In FairfieldLife@yahoogroups.com, "Patrick Gillam" <[EMAIL PROTECTED]> wrote: > > The New York Times seems to make a > straightforward case in a recent > editorial aimed squarely at the > right's talking points. > > http://tinyurl.com/49ndpv > > Don't Blame the New Deal > > Published: September 27, 2008 > > "This year's serial bailouts are proof of a colossal regulatory > failure. But it is not "the system" that failed, as President Bush, > Treasury Secretary Henry Paulson and others who are complicit in the > calamity would like Americans to believe. People failed." > > http://www.nytimes.com/2008/09/28/opinion/28sun1.html?hp > > > > --- In FairfieldLife@yahoogroups.com, new.morning wrote: > > > > --- In FairfieldLife@yahoogroups.com, "authfriend" <jstein@> wrote: > > > > > > --- In FairfieldLife@yahoogroups.com, "Patrick Gillam" <jpgillam@> > > > wrote: > > > > > > > > Has anyone read a good discussion of > > > > the debate that's shaping up between > > > > the right and left regarding the causes > > > > of our current credit crisis? The left > > > > is saying the problem is a failure of > > > > the free market. > > > > Not a particularly insightful or focused argument, > > IMO. The repeal of > > the Glass-Stegal act in 1999 allowing commercial and investment banks > > to merge was not a particularly good move -- but the reasoning > > "reasonable" -- that US C and I banks could not compete with the > > global banks that allowed such consolidation. > > > > Some on the left claim that the financial markets > > are not-regulated -- > > that is a laissez-faire love fest. A pipe-dream > > rant -- blows against > > the empire mentality. Hardly true. >
