Comments on: looking back - the Deregulation I… http://1boringoldman.com/index.php/2008/11/24/looking-back-the-deregulation-i/ All Mickey, All the Time Thu, 09 Sep 2010 18:31:59 +0000 http://wordpress.org/?v=2.5.1 By: 1 Boring Old Man » change we can believe in… http://1boringoldman.com/index.php/2008/11/24/looking-back-the-deregulation-i/#comment-162713 1 Boring Old Man » change we can believe in… Fri, 22 Jan 2010 00:52:37 +0000 http://1boringoldman.com/?p=2641#comment-162713 [...] looking back - the Deregulation I… [...] [...] looking back - the Deregulation I… [...]

]]> By: Ralph Roughton http://1boringoldman.com/index.php/2008/11/24/looking-back-the-deregulation-i/#comment-92689 Ralph Roughton Wed, 26 Nov 2008 15:53:22 +0000 http://1boringoldman.com/?p=2641#comment-92689 Mickey, thank you for this series on the depression and deregulation. You have applied the clarity and common sense thinking I have always valued in your psychoanalytic explanations. These essays should be bound and published as a primer for those of us who want to understand what's happening without having to wade through all the technical jargon. I glean two simple lessons about the economy and "free markets" from this: 1. Any system that lets people get rich by investing in loss is ultimately going to fail. It should be self-evident: if you can get rich by investing in others' loss without taking any risk yourself, then it's going to encourage loss rather than success. 2. The ultimate result of deregulation and de-firewall-ization is the creation of financial institutions that become "too big to fail." Then the taxpayers have to bail them out in order to save the economy. Without these enabling measures, the market would punish those that take too much risk, small institutions would fail, and other would learn the lesson Instead, the loss-swap measures and the conglomeration of financial institutions kept the market from working to self-correct. I'm not advocating total free markets, because I think that ignores humanistic concerns that a humane society needs to insure. But we had a hybrid monster that pretended to be freeing up the markets while also protecting them both from regulation and from self-correcting forces. I don't need a PhD in economics to know that's a formula for ultimate disaster. Mickey, thank you for this series on the depression and deregulation. You have applied the clarity and common sense thinking I have always valued in your psychoanalytic explanations. These essays should be bound and published as a primer for those of us who want to understand what’s happening without having to wade through all the technical jargon.

I glean two simple lessons about the economy and “free markets” from this:

1. Any system that lets people get rich by investing in loss is ultimately going to fail. It should be self-evident: if you can get rich by investing in others’ loss without taking any risk yourself, then it’s going to encourage loss rather than success.

2. The ultimate result of deregulation and de-firewall-ization is the creation of financial institutions that become “too big to fail.” Then the taxpayers have to bail them out in order to save the economy. Without these enabling measures, the market would punish those that take too much risk, small institutions would fail, and other would learn the lesson

Instead, the loss-swap measures and the conglomeration of financial institutions kept the market from working to self-correct. I’m not advocating total free markets, because I think that ignores humanistic concerns that a humane society needs to insure. But we had a hybrid monster that pretended to be freeing up the markets while also protecting them both from regulation and from self-correcting forces.

I don’t need a PhD in economics to know that’s a formula for ultimate disaster.

]]>