"JPMorgan to buy Bear Stearns for $2 a share. Federal Reserve bank to provide financing for the deal." (These Feds will finance anything if you're big enough.)
Unregulated hedge funds promised sky-high returns. That forced them into the more risky loans.
Not being regulated, they could "leverage" for almost anything. A previous citation said a 75% loan, 25% investment was common. The margin on which one can buy stocks is controlled by law and can't reach such dangerous levels.
This reminds one of '29, only substitute "leverage" for "margin". A pretty good argument for regulation. The patchwork way the Feds are plugging holes in the dike is scary. People will have a few bucks, but they will be worthless. It's a great way to have everyman finance the bailout of the wealthy.
Arf
Current Events » in reply to Too much deregulation? Maybe.
The lack of regulation is part of the cause of the current crisis.
The whole thread (20 posts)
- Too much deregulation? Maybe.
- The lack of regulation is part of the cause of the current crisis.
- Actually, that pretty much sums up my point of view.
- The US is socialist for the favored corporations.