Poor market assumptions are part of a free market system. The idea is not infallibility, but isolation of mistakes, and allowing evolution to weed out those who make too many.
The response to bank failures nowadays is to make sure nobody suffers any pain. Not surprisingly, the same failures often happen again. If stupid risks are covered by someone else, why not make them? The upside is still attractive, and somebody else eats the downside. This is often referred to as "private profits, socialized losses." The regulators become part of the problem, nannies instead of cops.
I think the proper response to the last financial failure - let the chips fall where they may for the most part - would have hurt a lot more in the short run, but had a lot fewer long-range side effects. At this point, the guys who were "too big to fail" are, in many ways, at it again.
Current Events » in reply to Guess again
Re: You are correct
The whole thread (34 posts)
- Ockham's razor
- Better stock up
- No, it is not.
- Podrock
- You have certainly have got me interested in seeing the movie...
- Guess again
- Razor burn n/t
- We're not in debt because of private companies.
- Movie recomendation
- don't cut yourself