The Berlin Wall of Laissez-Faire has Fallen

[Universe Prince]

But it IS inherently a bad practice.

No, it's just risky.

Insurance should ALWAYS insure. Credit swaps do not do this. They are bogus insurance, less useful than a bogus $10 Rolex.

Says you.

If every mortgage is actually insured by insurance that will pay up in the event of default all the time, this would PREVENT failure.

Ideally speaking, yes. But we don't live in an ideal world.

Sounds like you are in favor of bogus insurance being sold as the real thing. Why? Do you sell these things, or what?

No. I'm in favor of letting people take risks and letting them live with the consequences.

[Xavier_Onassis]

If every mortgage is actually insured by insurance that will pay up in the event of default all the time, this would PREVENT failure.


Ideally speaking, yes. But we don't live in an ideal world.

===============================================
Oh, please.

Life insurance pays up at least 99% of the time. The credit swaps failed miserably. Actual insurance is not some ideal, it is clearly possible.
Ban that which has failed us, allow only that which has proven that it has not.

It is not the fact that the banks failed themselves that counts, it is that their failure has ruined people who had no way of knowing what would happen and no way of preventing the collapse if they did.

[Universe Prince]

If every mortgage is actually insured by insurance that will pay up in the event of default all the time, this would PREVENT failure.

[...]

Actual insurance is not some ideal, it is clearly possible.

Infallible insurance that pays up all the time and therefore prevents failure is clearly an ideal and not possible.

[Amianthus]

Actual insurance is not some ideal, it is clearly possible.
Ban that which has failed us, allow only that which has proven that it has not.

So, it's your claim that no insurance company has ever failed because it could not meet it's insurance obligations?

Would you like a few examples to counter your claims?

[Xavier_Onassis]

So, it's your claim that no insurance company has ever failed because it could not meet it's insurance obligations?

Would you like a few examples to counter your claims?

===================
It is my claim that actual insurance from a well-regulated insurance company (and they all should be well-regulated) should be used instead of the bogus credit swaps, which were almost universally worthless.

An insurance policy that pays off 99% of the time might not be perfect, but it is certainly better than bogus credit swaps that failed almost universally.

The latter should be outlawed, and real insurance should be required.

Jeez!

[Amianthus]

An insurance policy that pays off 99% of the time might not be perfect, but it is certainly better than bogus credit swaps that failed almost universally.

Actually, credit default swaps paid off consistently for years. Probably as great as 99%.

[Xavier_Onassis]

Actually, credit default swaps paid off consistently for years. Probably as great as 99%.

I have no idea where anyone could confirm this. I suspect it isn't true. But no matter. NOW we know that they do not work all the time, and when they fail, they fail spectacularly. They were unregulated, and have been shown to be ineffectual. It is time to ban them or reform them so they won't fail

[Amianthus]

I have no idea where anyone could confirm this. I suspect it isn't true. But no matter. NOW we know that they do not work all the time, and when they fail, they fail spectacularly. They were unregulated, and have been shown to be ineffectual. It is time to ban them or reform them so they won't fail

Regardless of your "suspect it isn't true" comment, it is a true statement. You can look up the records, they were a traded security, so their records are with the SEC.

Similarly, we know that insurance does not work all the time (or there would not be failed insurance companies), so do you want them banned as well?

[Plane]

   Well , I suppose that any mortguage has a level of risk , that the promise won't be kept, or that the circumstances that allow the payments to be possible will not continue or that after thefailure of the payer the insureance will also fail.

    However it is done , can mortguages be rated accurately for the level of risk ?

  Investors have a right to take risks, but putting a misleading four stars on the risk seems unfair.

[Xavier_Onassis]

Regardless of your "suspect it isn't true" comment, it is a true statement. You can look up the records, they were a traded security, so their records are with the SEC.

Similarly, we know that insurance does not work all the time (or there would not be failed insurance companies), so do you want them banned as well?

I have no idea what these damn fool things would be listed as, so no, I can't look up the records.

And no, I do not propose banning insurance. I propose banning credit swaps, as I have said four (4) cuatro, quatre quattro times now, and replacing it with well-supervised insurance. Please stop asking the same stupid questions again and again.

[_JS]

And whether you are willing to admit it or not, this is a failure of deregulation to an extent. Is that the only variable? Of course not. But it most certainly played a role and you'd be hard-pressed to find many investors who disagreed.

I like these articles that blame the free-market, but never get into any specifics as to what actually happened. For a start, what was ever deregulated? The only deregulation I can think of was a relaxation of some of the provisions of the Glass-Steagall act in 1999. Other than that, regulation has come thick and fast. You can have Glass-Steagall back if we can get rid of Sarbanes-Oxley. As someone who's had to implement some it's provisions, I can assure you it's taking a hell of chunk out of the economy in it's own right.

Interesting...I've actually done SOX audits. What did you have to implement if you don't mind my asking?

[_JS]

The problem Prince is that you're assuming that had the market mechanisms been allowed to work (which is completely hypothetical) then the private sector would not have had bad actors or at the least it would have had less of an impact from bad actors. In other words, the "boom and bust" is caused from government interference. But this is merely a supposition.

I don't really have too much of a problem with it. I sincerely dislike the neo-liberal construct of government and business lying in bed with each other. The difference is that you want to place that power into the private sector whereas I want to bring back the piece that the neo-liberals selectively excluded and give the power to the Trade Unions.

[Xavier_Onassis]

Boom and bust goes way back to the times of the Tulip mania in Holland and the South Sea Bubble in France and England. It is as much an integral part of capitalism as he waves on the sea is a part of the natural state of things on Planet Earth..

Capitalism is not something to be worshipped in the way that some Communists seen to worship Communism. IT is a natural phenomenon, like waves or the wind or gravity. Just as waves can be quelled with a drop of oil on the waters, the violent fluctuations of the market can also be controlled. Greenspan did a pretty good job for the long period he presided over the Fed, but specific regulations, like requiring actual insurance on bundled mortgages rather than bogus credit swaps, and orders to the FM's to NOT approve loans to people who had no demonstrated manner of repaying them were needed. Just as bad money always drives out good, bad mortgages drove out good ones, and the result is the current mess.

Maybe they had too many regulations, maybe not enough. But it is undisputable that they did not have the RIGHT regulations.

[Christians4LessGvt]

"The Berlin Wall of Laissez-Faire has Fallen"

actually just the opposite

when you get half-wit liberals (Barney Frank, Chris Dodd, Obama, ect..)
that basically tell by law lending insitutions "hey you must carry out our
social experiments & loan billions to our favored half-wits that cant afford
the loans but we order you to against all logic loan to these victimhood groups
anyway and dont really worry about the consequences because we'll cover it if it goes bad".....
thats just the opposite of "Laissez-Faire"...thats just more failed "LAZY ASS LIBERALISM AFFAIR"!

[Plane]

"... I sincerely dislike the neo-liberal construct of government and business lying in bed with each other...."

Didn't I see this in certain descriptins of facism?

No wonder you don't like it , if certain businesses belong to the government , how can the government avoid helping these businesses with laws that favor the businness above the customer or compeditor?