De-Regulation Leads to Banking Crises

Discussion in 'Economy' started by Toro, Jan 1, 2009.

  1. Toro
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    Toro Diamond Member

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    Great historical perspective of financial crises for anyone who is interested.

    http://www.publicpolicy.umd.edu/news/This_Time_Is_Different_04_16_2008 REISSUE.pdf
     
  2. Paulie
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    Paulie Platinum Member

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    Fractional Reserve lending leads to crises. It's a stupid policy that can not possibly lead to prosperity. If consumers understood the policy and cared enough to inform themselves of their prospective banks' balance sheet health, maybe it could work. But we don't, because we are either too ignorant, or too apathetic to care.

    We want regulations instead, so that we don't have to be bothered with actually investigating who we do business with.
     
  3. NOBama
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    NOBama Senior Member

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    I’m not about to read a 124 page document written in legalese. However, I’m convinced that the Democratic party was the primary cause of our current banking crises which lead to our current depression, which will lead to an eventual depression. Deregulation had nothing to do with it. For cryin’ out loud, the powers that be can’t enforce regulations currently on the books so what’s the point of creating more given that the same people who have already failed us are – and will remain – in power.
     
  4. Toro
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    Toro Diamond Member

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    First, its not "legalese." The paper is written in easy-to-read English, 8.5x11, double-spaced 12" font. The body is about 50 pages and takes 30 minutes to read.

    Second, I have no doubt that if you are a conservative partisan, you will believe that the Democrats caused the financial crisis, no matter what facts are as presented.

    Its not hard to understand why financial de-regulation causes financial crises. Financial de-regulation often causes a boom in credit. A boom in credit causes asset prices to inflate. Asset price inflation causes banks to increase debt. Then, eventually when the bubble pops, asset prices deflate but debt does not, causing financial institutions to contract credit and often collapse.

    Of course, not all financial de-regulation is bad. Generally the market should set the price for credit. However, not all financial de-regulation is good either, as history has shown, including the most recent crisis.
     
  5. NOBama
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    NOBama Senior Member

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    I didn't say the Democrats "caused" the financial crisis, I said "I’m convinced that the Democratic party was the primary cause of our current banking crisis...". There are probably very few, if any, members of congress who do not share in the responsibility for our current banking/financial crisis. Nevertheless, collectively, they choose to ignore the warnings of the Administration.

    If that 124 page PDF document is a Liberal presentation of the (so called) facts, your right, I would most likely disagree with it.
     
  6. Toro
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    Toro Diamond Member

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    No, it was not the primary cause. I don't know anyone other than partisan people who think so.

    The primary cause is outside of the political arena. Partisan people look to politics first when the answer is often outside politics.

    Well, that's very open-minded of you to make a judgment without actually opening it.
     
  7. Truthmatters
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    Truthmatters BANNED

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    The rebuplicans had help from some Democrats in making the mess but the people who controled the regulations at the time the crisis was taking form were the Republicans. They pushed for deregulation and did nothing to avert it when they had the chance. Bush appointed people who ignored its escalation and called all regulation bad. Look waht happened to Spitzer when he tried to do something about it when his state and others tried to step in.

    This was a mess urged into being by idiots who thought all regulation was bad.
     
  8. mash107
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    mash107 Active Member

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    Exactly. It's been rather clear that our current banking and financial system, most recently since 1971, hasn't been working. Partisan hacks fail to realize that both parties support the same monetary system that can dilute our currency for whatever government construes is important.

    Shame partisan politics gets in the way.
     
  9. NOBama
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    NOBama Senior Member

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    About as open minded as you slinging the word Partisan around and I must have just GUESSED that it's a 124 page PDF document. :eusa_eh:
     
  10. Paulie
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    Paulie Platinum Member

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    Toro, how do you feel about fractional reserve lending, and do you think we could be a prosperous nation without it? If not, why?
     

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