> what I really said was, "I think there are limits to what regulators > can do".
That's NOT actually what you said, but let's pretend it was because it's (finally!) a good point.
Yes, there are absolutely limits to what regulators can do. See, we agree! :)
But this all-or-nothing game isn't productive. Just because the cops can't catch all the crooks for all the crimes they commit, doesn't mean we just shouldn't have cops.
And yes, there are certainly limits to what /should/ be regulated -- marriage for example, as a legal construct between two adult citizens, should not be regulated.
But marriage has yet to cause a national or global crisis -- finance does it every couple decades, or more often if they can get away with it. :)
Have we entered bizarro world? You're the one that hates regulation -- you need to pick a side. :)
You said: "Gov employees can't regulate with regards to voluntary transactions." "If you advocate for gov[ernment] reg[ulation] of vol[untary] transfer[transactions], then you create the economics for pol[iticians] to be bought." "some of the bankers are just small time local folks that are getting crushed by the policies [regulation] you are advocating for." "If you don't want corrupt business practices to be rewarded, don't give the gov[ernment] the power to regulate voluntary transactions."
> the only alternative to regulation is throwing people in jail > after people get killed.
I don't see why you can't do both. There are many laws related to criminal negligence, etc, that could easily put a lot of the financial crisis facilitators in jail -- if only anyone had the stones to enforce them.
> Free markets, markets free from force and fraud > ... > Again, are you seeing a growth in the number of banks, or are > the larger banks getting bigger and bigger?
Let's dispel this bit of misunderstanding first.
Completely-free markets do nothing but generate monopolies. A monopoly is the logical and inevitable conclusion of unrestricted competition: at some point, someone wins, and then they do everything in their power to keep everyone else from being able to compete.
There is no invisible hand. Adam Smith mentioned it only once in the book, while he repeatedly noted situations where "natural liberty" does not work. Let banks charge much more than 5% interest, and they will lend to "prodigals and projectors," precipitating bubbles and crashes. Let "people of the same trade" meet, and their conversation turns to "some contrivance to raise prices." Let market competition continue to drive the division of labor, and it produces workers as "stupid and ignorant as it is possible for a human creature to become." (http://bit.ly/Ln1jis)
You need SOME regulation. There is certainly such a thing as too much regulation, and useless regulation, but you need SOME.
Oh, and that number of banks you're so fond of alluding to, it went down the most during a period of significant DEregulation. Few significant regulations have been put (back) into place yet. Little of Dodd Frank has taken effect, or even been defined yet. Food for thought. :)
> eventually purge bad investments
This is indeed true, but sometimes, for some markets, it takes too long and the price of the correction is too high.
If a company sold food that killed people, yes eventually people would stop buying their food and they would go bankrupt, but how many people would have to die before that happened? We, as sensible human beings, don't like that scenario, so we regulate food companies to try to prevent that from happening.
The price for letting the market purge a bad toaster-making company is a few bad toasters -- no big deal, there's really no need to prevent bad toasters.
The price for letting the market purge bad mega-banks is significant global economic turmoil -- so it probably would be better to prevent bad mega-banks in the first place...or ideally, to prevent mega-banks from existing at all.
> Each boom starts with a 'new technology': railroad... automobile > (1911); television (1947); computer (1983)......(2019)? > > Each bust starts with interest rates held too low for too long and > bubbles developing in the fabric of the economy and banker > corruption and bank panics.
It's funny how the rest of us have to work so hard to develop these booms (actually creating value), but the bankers get rich off of it and destroy pretty much the same way every time (extracting value).
> my observation is that there are simply more homes than people > that need a home.
More like there are more homes than people that can afford a home, even at these low prices.
More specifically, many people can't get mortgage, even with these low rates. Don't forget that there have been many millions of foreclosures over the last few years, there are many millions of foreclosures still in process, and there are many millions more to come.
All that said, simple supply and demand is indeed one major reason why prices have stayed so low. Even in the midst of the housing bust, the developers were still building tons of new homes in most regions. (And of course, it very depends on the region, even the neighborhood.)
Not to get too off-topic (though you already have, so why not)...this is where some people get very, very confused.
The Barney Franks, Chris Dodds, and Phil Gramms that we all love to hate, made a little bit of easy money due to their policies.
The Loyd Blankfeins, Jamie Dimons, Ken Lewises, Dick Fulds, John Thains, and Angelo Mozilos that some people still obliviously defend, made a TON of easy money due to those policies.
Follow the money, and you'll very quickly find that you probably have your chicken and egg backwards. :)
> The requirement was to make loans to people that could not > otherwise qualify or not get the funds
Yes, and less than a third of sub-prime loans were made by banks that were subject to that requirement.
So don't totally blame the regulators/government (don't NOT blame them either), and and hold the banks responsible for their fair share in this mess. :)
> Those are the "move up" buyers who maybe are thinking of > "moving down" these days.
And yet they can't even "move down" because they're underwater. (Unless they foreclose, which is only easy to do in a handful of states.)
This is one of those metrics that is very meaningful as a drag on the economy and certainly on the housing market, and yet most people have become totally numb to it.
Everyone was freaking out when ~15% of borrowers were underwater, but by the time it got to over 30%, no one cared anymore. :)
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
Regarding the difficulty of asset allocation, there are many very simple models one can follow that is almost trivial to manage with just a handful of various ETFs, for example the Swensen model: http://seekingalpha.co...
The Housing Recovery: An Update [View article]
> what I really said was, "I think there are limits to what regulators
> can do".
That's NOT actually what you said, but let's pretend it was because it's (finally!) a good point.
Yes, there are absolutely limits to what regulators can do. See, we agree! :)
But this all-or-nothing game isn't productive. Just because the cops can't catch all the crooks for all the crimes they commit, doesn't mean we just shouldn't have cops.
And yes, there are certainly limits to what /should/ be regulated -- marriage for example, as a legal construct between two adult citizens, should not be regulated.
But marriage has yet to cause a national or global crisis -- finance does it every couple decades, or more often if they can get away with it. :)
The Housing Recovery: An Update [View article]
Strawman (http://bit.ly/zrR413), no one said that. Please try to stay on topic and make coherent arguments.
The Housing Recovery: An Update [View article]
Have we entered bizarro world? You're the one that hates regulation -- you need to pick a side. :)
You said:
"Gov employees can't regulate with regards to voluntary transactions."
"If you advocate for gov[ernment] reg[ulation] of vol[untary] transfer[transactions], then you create the economics for pol[iticians] to be bought."
"some of the bankers are just small time local folks that are getting crushed by the policies [regulation] you are advocating for."
"If you don't want corrupt business practices to be rewarded, don't give the gov[ernment] the power to regulate voluntary transactions."
> the only alternative to regulation is throwing people in jail
> after people get killed.
I don't see why you can't do both. There are many laws related to criminal negligence, etc, that could easily put a lot of the financial crisis facilitators in jail -- if only anyone had the stones to enforce them.
The Housing Recovery: An Update [View article]
Please stop putting up straw man arguments (http://bit.ly/zrR413) and start engaging intelligent, fact-based debate. Please. :)
The Housing Recovery: An Update [View article]
> ...
> Again, are you seeing a growth in the number of banks, or are
> the larger banks getting bigger and bigger?
Let's dispel this bit of misunderstanding first.
Completely-free markets do nothing but generate monopolies. A monopoly is the logical and inevitable conclusion of unrestricted competition: at some point, someone wins, and then they do everything in their power to keep everyone else from being able to compete.
There is no invisible hand. Adam Smith mentioned it only once in the book, while he repeatedly noted situations where "natural liberty" does not work. Let banks charge much more than 5% interest, and they will lend to "prodigals and projectors," precipitating bubbles and crashes. Let "people of the same trade" meet, and their conversation turns to "some contrivance to raise prices." Let market competition continue to drive the division of labor, and it produces workers as "stupid and ignorant as it is possible for a human creature to become." (http://bit.ly/Ln1jis)
You need SOME regulation. There is certainly such a thing as too much regulation, and useless regulation, but you need SOME.
Oh, and that number of banks you're so fond of alluding to, it went down the most during a period of significant DEregulation. Few significant regulations have been put (back) into place yet. Little of Dodd Frank has taken effect, or even been defined yet. Food for thought. :)
> eventually purge bad investments
This is indeed true, but sometimes, for some markets, it takes too long and the price of the correction is too high.
If a company sold food that killed people, yes eventually people would stop buying their food and they would go bankrupt, but how many people would have to die before that happened? We, as sensible human beings, don't like that scenario, so we regulate food companies to try to prevent that from happening.
The price for letting the market purge a bad toaster-making company is a few bad toasters -- no big deal, there's really no need to prevent bad toasters.
The price for letting the market purge bad mega-banks is significant global economic turmoil -- so it probably would be better to prevent bad mega-banks in the first place...or ideally, to prevent mega-banks from existing at all.
The Housing Recovery: An Update [View article]
> (1911); television (1947); computer (1983)......(2019)?
>
> Each bust starts with interest rates held too low for too long and
> bubbles developing in the fabric of the economy and banker
> corruption and bank panics.
It's funny how the rest of us have to work so hard to develop these booms (actually creating value), but the bankers get rich off of it and destroy pretty much the same way every time (extracting value).
It's a waste of human potential, really.
The Housing Recovery: An Update [View article]
> economics for pol to be bought.
What are you even talking about? Please use real words.
The Housing Recovery: An Update [View article]
> getting crushed by the policies you are advocating for.
Uh...maybe, but I don't seem to recall advocating any particular policies lately, so could you be more specific?
I think you are pretending that I'm arguing something that I'm actually not. :)
The Housing Recovery: An Update [View article]
> came to power.
You're absolutely right. You can't blame the Jews (the government) for not standing up to Hitler (the banks). :)
The Housing Recovery: An Update [View article]
> that need a home.
More like there are more homes than people that can afford a home, even at these low prices.
More specifically, many people can't get mortgage, even with these low rates. Don't forget that there have been many millions of foreclosures over the last few years, there are many millions of foreclosures still in process, and there are many millions more to come.
All that said, simple supply and demand is indeed one major reason why prices have stayed so low. Even in the midst of the housing bust, the developers were still building tons of new homes in most regions. (And of course, it very depends on the region, even the neighborhood.)
The Housing Recovery: An Update [View article]
I know! I can't fathom why you're defending the banks! :)
The Housing Recovery: An Update [View article]
Not to get too off-topic (though you already have, so why not)...this is where some people get very, very confused.
The Barney Franks, Chris Dodds, and Phil Gramms that we all love to hate, made a little bit of easy money due to their policies.
The Loyd Blankfeins, Jamie Dimons, Ken Lewises, Dick Fulds, John Thains, and Angelo Mozilos that some people still obliviously defend, made a TON of easy money due to those policies.
Follow the money, and you'll very quickly find that you probably have your chicken and egg backwards. :)
The Housing Recovery: An Update [View article]
> otherwise qualify or not get the funds
Yes, and less than a third of sub-prime loans were made by banks that were subject to that requirement.
So don't totally blame the regulators/government (don't NOT blame them either), and and hold the banks responsible for their fair share in this mess. :)
The Housing Recovery: An Update [View article]
> "moving down" these days.
And yet they can't even "move down" because they're underwater. (Unless they foreclose, which is only easy to do in a handful of states.)
This is one of those metrics that is very meaningful as a drag on the economy and certainly on the housing market, and yet most people have become totally numb to it.
Everyone was freaking out when ~15% of borrowers were underwater, but by the time it got to over 30%, no one cared anymore. :)
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
http://seekingalpha.co...