Roubini claims that LACK OF REGULATION caused current financial crises

[editec]

Roubini claims that LACK OF REGULATION caused current financial crises

FT.com / View from the Markets

Who is this guy?

The guy who a year ago predicted this meltdown....AKA DR. DOOM

He called what we had "the SHADOW BANKING SYSTEM".

Predicts that 1000's of hedge funds will fold in 2009.

Expects to see emerging markets start collapsing.

Sees POTENTIAL for a slow recovery post 2009 if the central banks don't blow it.

 

[Toro]

Roubini is partly right.

However, the primary cause of this mess is the Fed.

 

[Kevin_Kennedy]

And Peter Schiff says that it was government regulation that caused it, and he also predicted this crisis a few years ago.

 

[Epsilon Delta]

http://www.usmessageboard.com/economy/63852-dr-doom-nouriel-roubini.html

 

[Modbert]

Roubini is partly right.

However, the primary cause of this mess is the Fed.

The Federal Reserve was allowed no regulation in what they been doing for years and now have no regulation for this bailout.

So lack of regulation everywhere was the main cause, but you are right that the Fed is a part of it at least.

They currently refuse to tell the American people who are the recipients of $2 trillion dollars.

 

[mash107]

The Federal Reserve was allowed no regulation in what they been doing for years and now have no regulation for this bailout.

So lack of regulation everywhere was the main cause, but you are right that the Fed is a part of it at least.

They currently refuse to tell the American people who are the recipients of $2 trillion dollars.

Yes, one of the best regulations is what we had until 1971. It's called the gold standard. It prevents the federal government from creating bubble economies, and inflation is never a factor.

 

[Modbert]

Yes, one of the best regulations is what we had until 1971. It's called the gold standard. It prevents the federal government from creating bubble economies, and inflation is never a factor.

Techincally yes.

The gold standard has it's faults like any system would but it is leaps better then our current system.

Our currency is only backed up by the confidence of the people in the economy and market at this point. No real currency backed up by anything could print $700 billion like it's monopoly money. Which is actually how much our money will be worth in 5 years if the markets continue to be unregulated because that $700 billion will be simply wasted with it's current unregulated process and they will only be back asking for more.

 

[Neubarth]

Techincally yes.

The gold standard has it's faults like any system would but it is leaps better then our current system.

Our currency is only backed up by the confidence of the people in the economy and market at this point. No real currency backed up by anything could print $700 billion like it's monopoly money. Which is actually how much our money will be worth in 5 years if the markets continue to be unregulated because that $700 billion will be simply wasted with it's current unregulated process and they will only be back asking for more.

Do you honestly think that the countries that export to us would let the dollar inflate to the point that it has lost half of its buying power or more.

They can not allow that because it would cause the collapse of their economy.

Your projecdtion would be impossible to realize short of a total global economic collapse and a return to isolationism by the whole world.

 

[sparky]

not shadow, more an eyes wide shut global fiat system, with various players vieing for valuation. leaving the gold standard didn't mean we have a complete fairy tale system, there's always going to be a benchmark, it's simply a matter of WHO sets this that is relevant to the American economy

imagine for a moment if one of the other players , one who may not exactly like us like Hugo Chavez, parlays a monetary consortium of enough trading partners to set their own valuation of US currency

the US dollar could drop like a brick....

 

[Modbert]

Do you honestly think that the countries that export to us would let the dollar inflate to the point that it has lost half of its buying power or more.

They can not allow that because it would cause the collapse of their economy.

Your projecdtion would be impossible to realize short of a total global economic collapse and a return to isolationism by the whole world.

Sparky makes the point I was going to make actually. Besides, the U.S. is no longer even the economic superpower that it once was.

I don't know if you realize this but the U.S. dollar has lost a good amount of value and continues to.

My projection isn't impossible as any student or follower of history could tell you that nothing is impossible.

Besides, do you not see the fact we are at the edges of a total global economic collapse? It would not take too much more at this point to bring the world over the brink of economy collapse in which the world will return to a period of isolationism for at least 20-50 years if not longer for every country. All depends on how long it takes for that country's economy to recover.

You also tend to forget the giant elephant in the room that few want to talk about; overpopulation.

If you don't think wars with even people like your neighbor for things like water isn't in the near future at the rate we're going then continue to be a dream like world where reality does not matter.

 

[Toro]

The Federal Reserve was allowed no regulation in what they been doing for years and now have no regulation for this bailout.

So lack of regulation everywhere was the main cause, but you are right that the Fed is a part of it at least.

They currently refuse to tell the American people who are the recipients of $2 trillion dollars.

The lack of regulation was part of it, particularly the belief that financial companies would not take excessive risk.

However, none of this could have happened without excessively low interest rates. All bubbles have excessive liquidity at the heart of the imbalance, regardless of the level of regulation. The lack of regulation merely poured gas on a fire. The tech bubble was a classic bubble, for example, with excess liquidity and new technologies causing insane stock valuations. Regulations had almost nothing to do with the tech bubble.

 

[sparky]

Sparky makes the point I was going to make actually. Besides, the U.S. is no longer even the economic superpower that it once was.

I don't know if you realize this but the U.S. dollar has lost a good amount of value and continues to.

My projection isn't impossible as any student or follower of history could tell you that nothing is impossible.

Besides, do you not see the fact we are at the edges of a total global economic collapse? It would not take too much more at this point to bring the world over the brink of economy collapse in which the world will return to a period of isolationism for at least 20-50 years if not longer for every country. All depends on how long it takes for that country's economy to recover.

well as Editec wrote out, we've a long history of ups & downs we call bailouts here now Rob.

now i guess objectively we could say regulation is condusive to competition, too much nothing moves, too little we run capitalism off it's tracks

subjectively there isn't enough ascii here....

my question, however, is in the Fed's mitigation of the latest debacle here, they seem to play the only card they can in lowering rates and polluting the species.... so much so they'd have to be giving $$$$ away next

placing this next to the deficit tells me that the Fed is creating the biggest badest bubble of all

American bankrupcy

but hey, i'll give writers like Gore Vidal the credit for that, he thought it up years ago....

 

[midcan5]

The lack of regulation is a large part of the story, consider the S&L debacle or Enron and Anderson, these things demonstrate the inherent weakness in allowing greed to be the sole economic motivator. If people think they can make something for nothing they will, even if the backing is a bunch of empty paper bags that the next fool in line thinks has worth down the road to another fool.

Savings and loan crisis - Wikipedia, the free encyclopedia

 

[midcan5]

However, none of this could have happened without excessively low interest rates. All bubbles have excessive liquidity at the heart of the imbalance, regardless of the level of regulation. The lack of regulation merely poured gas on a fire. The tech bubble was a classic bubble, for example, with excess liquidity and new technologies causing insane stock valuations. Regulations had almost nothing to do with the tech bubble.

Good point but a difference is the people holding the air money and who lost at the end of the tech bubble. I wonder how much 401 investment was lost in the tech bubble or was that imaginary growth and then reality.

 

[Paulie]

The lack of regulation was part of it, particularly the belief that financial companies would not take excessive risk.

However, none of this could have happened without excessively low interest rates. All bubbles have excessive liquidity at the heart of the imbalance, regardless of the level of regulation. The lack of regulation merely poured gas on a fire. The tech bubble was a classic bubble, for example, with excess liquidity and new technologies causing insane stock valuations. Regulations had almost nothing to do with the tech bubble.

And to expand, for the others here, that bubble's pop was "fixed" by reducing the target rate to eventually 1% in 2002, which sparked yet ANOTHER excess in liquidity.

That excess, coupled with the historically low rate of 1%, is what jump started the housing boom. All that money had to find a place to go to work, and home buying was pushed on to us through various media outlets, advertisements, etc.

People generally don't do a whole lot of thinking on their own, so naturally they were enticed into buying homes en masse, because that eventually became the cool thing to do.

When you couple low rates, excess liquidity, the keeping up with the jones' mentality, and limited economic knowledge among the masses, you have yourself everything you need to create a bubble of historic proportions.

You can regulate consumers and banks to death, and all you're going to have is a society of weak, irresponsible, undereducated consumers still playing the same game with credit, because all that really matters to most consumers is how much the interest is going to be, and whether or not it's worth it to borrow.

When the federal rate is at 1%, when will it ever be cheaper to borrow? Probably NEVER.

 

[Zoomie1980]

Good point but a difference is the people holding the air money and who lost at the end of the tech bubble. I wonder how much 401 investment was lost in the tech bubble or was that imaginary growth and then reality.

The 401k and the Mutual Fund......a very recent phenomena that has introduced the common man to the equities market. People have lost their live's fortunes in the stock markets of the world for CENTURIES, but up until recent decades, it was only that infinitesimally small percentage of actual stock investors that risked it and the most didn't care. All of the sudden the common man now loses money in the stock market and now it's some kind of "bad" thing.

Tough, that's life when you take RISKS. You can actually LOSE money as an investor.....imagine that.....

 

[Paulie]

The 401k and the Mutual Fund......a very recent phenomena that has introduced the common man to the equities market. People have lost their live's fortunes in the stock markets of the world for CENTURIES, but up until recent decades, it was only that infinitesimally small percentage of actual stock investors that risked it and the most didn't care. All of the sudden the common man now loses money in the stock market and now it's some kind of "bad" thing.

Tough, that's life when you take RISKS. You can actually LOSE money as an investor.....imagine that.....

No no no, we should regulate the markets to death, so consumers don't have to be troubled with actually LEARNING, and burdened with those pesky losses.

That's the REAL American way.