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The US Economy, and bailouts. | by Illiad | 2007-08-08 14:25:04 |
| It is a condemnation of the free market |
by Peace_man |
2007-08-08 15:02:23 |
principle. As opposed to the open market.
Financial institutions have pretty much been forced into an untenable situation by unregulated competition. In order to compete for customers they have been forced to offer terms that weren't good for the customers or for the institutions (because they aren't good for the customers, they make the chances of defaulting too high) themselves.
It means that the industry should have been regulated. Exactly what that means, and how far it should have gone to protect borrowers and financial institutions, is something we could debate forever. But the meltdown that may be happening does not benefit anybody.
Some market adjustment is good. It weeds out the poor performers and encourages everybody to improve. But something like this, where positive feedback risks an entire sector of the economy collapsing, can't be good. This situation should not have been allowed to come into existence.
Of course, 20/20 hindsight is easy. But this particular outcome should have been predictable. And maybe it was - but because the benefits were immediate and visible, any words of warning were ignored. The benefits were that everybody had money to spend from borrowing to the hilt of their equity. The economy was booming and made the current government look good. Everybody was working, and making more money. And didn't worry about the fact that it was a bubble that made everything look so good, instead of true growth. |
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[ Reply ] |
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FYI the industry is regulated | by DesertRat66 | 2007-08-08 15:07:26 |
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If the industry is regulated, | by Peace_man | 2007-08-08 15:11:47 |
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It's *very* well regulated. | by subbywan | 2007-08-08 15:14:11 |
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That's not what I call regulated. | by Peace_man | 2007-08-08 15:25:53 |
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Doesn't matter what you call it | by subbywan | 2007-08-08 15:28:51 |
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'institutionalized'? | by Peace_man | 2007-08-08 15:41:12 |
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Yes, as SOP. | by subbywan | 2007-08-08 15:45:02 |
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That's not what I would call good, responsible | by Peace_man | 2007-08-08 16:00:14 |
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No one has called it that good or responsible | by subbywan | 2007-08-08 16:04:52 |
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OH. Here I thought you were replying to my | by Peace_man | 2007-08-08 16:09:05 |
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eh. Not without me knowing :P | by subbywan | 2007-08-08 16:12:02 |
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Unlikely to be reversed | by altordwm | 2007-08-08 17:18:39 |
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It all depends upon | by leistico | 2007-08-08 15:29:20 |
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Google - Keating 5 | by DesertRat66 | 2007-08-08 17:11:51 |
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There might be collusion | by DesertRat66 | 2007-08-08 17:19:43 |
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The banks still have to keep the ratio | by ShadoCat | 2007-08-08 17:39:36 |
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Regulation is hard to do. | by ShadoCat | 2007-08-08 16:22:27 |
