<<Your argument is kind of like arguing that when 1000 posts are still there, closing 20 amounts to an uncontrolled border.>>
The end of Glass-Steagall removed a lot of regulation from the industry and left comparatively little regulation in place. Enough regulation was removed that the industry got the economy into the trouble it's in now. Whether the amounts of regulation cut and regulation left alone corresponds to the 1000 fence posts remaining and 20 cut or vice versa is immaterial. Significant regulation was cut, and the results speak for themselves.
<<What I said was that I believe problems with hedge funds were part of Bear Sterns' problems. >>
What you said was exactly this:
"Meanwhile, the least regulated firms -- hedge funds and private-equity companies -- have had the fewest problems, or have folded up their mistakes with the least amount of trauma."
<<And your explanation of a hedge fund is a good example of your lack of understanding. Some hedge funds are risk averse and cautiously managed. Some hedge funds are aggressively managed with the intent to generate a high rate of return. For to you talk as if all hedge funds are the same, and as if all are low risk, tells me you don't know what you're talking about.>>
Obviously some hedge funds are riskier than others and the general rule that you can apply to the average hedge fund would not apply to those at the extreme limits of the class. It's possible that the infectious atmosphere of greed carried some hedge fund managers away, but their losses SHOULD be lower because they do bet both sides of the future. Also, they can certainly "fold up their mistakes with the least amount of trauma," as you put it, because they ARE for only the wealthiest of investors, who generally can well afford the loss.
<<That [undercapitalization is the real explanation for the disaster, not under-regulation] is a steaming pile of you-know-what. Regulations cannot be made that eliminate bad judgment and prevent reckless risk taking. The notion that they can is wholly unrealistic.>>
Bullshit. Regulations can deny the opportunity to make certain types of risky investment, or limit it to a certain percentage of fixed assets or a percentage of total invested capital. There is literally no limit to what regulations can do.]
<<And you can deny the influence of the government's actions on the economy that lead to this crisis all you like, but that is equally unrealistic. While it's easy to criticize businesses and banks for not acting according to what the economy might be, everyone acts according to what the economy is. >>
That is meaningless gobbledeygook. Pretty much like saying everyone puts on clothes to go outside.
<<Some people make good choices. Some people make bad choices. Some people/businesses take risks. Sometimes those risks pay off. Sometimes they don't. That is what makes them risky. That cannot be removed with regulation. >>
That's a complete crock a shit. No one is proposing regulation to remove all risk. The regulation can be very effective in limiting the SCOPE of the risk.
<<And if it could, that would completely ruin the economy. >>
There is no evidence of that whatsoever.
<<A certain amount of risk taking is necessary for progress. Which means sometimes bad things happen. Trying to prevent all bad things from happening is unrealistic and foolish, to say the least.>>
Once again, you try to win through misrepresentation. The issue is not whether to "prevent all bad things from happening." The idea behind regulation is to minimize and confine the risk.
