The Berlin Wall of Laissez-Faire has Fallen

[Universe Prince]

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'm not assuming that at all. I do think government interference contributes to booms and busts in ways that get overlooked far too often. Ignoring the influence of government practices and actions on the boom bust cycle seems entirely foolish to me. It would be like trying to understand how plants grow without considering sunlight. Like or dislike government interference, it is there and it does contribute. I'm not saying it is the only cause, but some people seem to think government interference in the market has nothing ever to do with the cycle, and that simply is not true. Particularly in this crisis.

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.

Yes, I want that power in the private sector. I'm not entirely opposed to unions, nor am I saying no laws should apply to businesses. I am saying I don't like the partnership of government and corporations to control the market. I am not saying the market is a panacea, or that there will not be bad actors in it who cause problems. I am saying relying on government to fix it is not going to solve the problem because government cannot fix it. Many people looking at this crisis are trying to think of how government can somehow prevent this from happening in the future. It can't. Depending on it to do so will only result in more power in the hands of the politicians and the wealthy and some future crisis. We cannot avert every crisis, but we can stop doing the things we know for certain will cause one. And we certainly don't need government bailout plans that give taxpayer dollars to the corporations.

[Plane]

  Perhaps a boom and bust cycle is normal to a market , I can see how the positive feedback might cause an overshoot of any goal.

    What does government do but aggrivate the cyclical by holding the frequency low?

    When the Rangers began putting out forest fires we learned thet the fires happening less frequently tended to be worse because there was more accumulation of fuel in the forest than would naturally occur.


     Imaginethat carefull regulation reduces risk so much that no one gets burned in investmet for a long time , wouldn't the reluctance to take risk be reduced ? After a while rediculous risks are taken by investors who have gone years without being burned , thus the burn all the brighter whenthey finally do.

[Xavier_Onassis]

Forest fires have zero to do with financial cycles.

What Greenspan was doing, rather successfully, was maybe like pruning back the underbrush.

He was on the right track, but he simply failed to regulate a couple of things that should have been regulated better, or at least get Congress to make the proper moves with regard to requiring insurance that guaranteed the value of bundled mortgages, and restricting Fannie Mae and Freddie Mac from granting mortgages especially ARM's with teaser rates, to people who had no hope of paying them off.

Minor dips in the market will always occur, but major panics are what we need to avoid. It could have been done, but it wasn't. Politicians on both sides are to blame.

[Plane]

Forest fires have zero to do with financial cycles.

What Greenspan was doing, rather successfully, was maybe like pruning back the underbrush.

He was on the right track, but he simply failed to regulate a couple of things that should have been regulated better, or at least get Congress to make the proper moves with regard to requiring insurance that guaranteed the value of bundled mortgages, and restricting Fannie Mae and Freddie Mac from granting mortgages especially ARM's with teaser rates, to people who had no hope of paying them off.

Minor dips in the market will always occur, but major panics are what we need to avoid. It could have been done, but it wasn't. Politicians on both sides are to blame.

If regulations prevent the minor dips , might this not pile the effect and make the eventuall major dip more drastic?

[Xavier_Onassis]

If regulations prevent the minor dips , might this not pile the effect and make the eventuall major dip more drastic?

No.

Why should they?

[Universe Prince]

When the Rangers began putting out forest fires we learned thet the fires happening less frequently tended to be worse because there was more accumulation of fuel in the forest than would naturally occur.

Forest fires have zero to do with financial cycles.

If regulations prevent the minor dips , might this not pile the effect and make the eventuall major dip more drastic?

No.

Why should they?

Ahem.

When the Rangers began putting out forest fires we learned thet the fires happening less frequently tended to be worse because there was more accumulation of fuel in the forest than would naturally occur.