Quote:
Originally Posted by roachboy
even greenspan, who oppose the freddie and fanny bailouts on the same lines as you, loquitor, is now saying that this is too big for schumpterian rationalizations.
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Greenspan participated in creating the clusterfuck that caused overheated home prices and led to the current meltdown. Obviously he's feeling twinges of regret.
Pretty much everything that we think is wrong will end up being reflected in pricing, which is what is supposed to happen. And lots of people are going to be analyzing the correctness of their computer models.
I have a client who lost a hump of money trading derivatives a few years ago. His issue was that the small probability ended up coming true - which of course tends to happen if enough time passes; you just don't know on which trade the small probability will happen. We can argue about whether it was the model or the judgment or both, of course.
My question for you, RB, is this: if govt created the current regulatory environment and that led to the current imbroglio, what makes you so confident that the next regulatory scheme isn't going to carry the seeds of its own destruction too? See, I'm old enough to remember the S&L fiasco and the role the govt had in creating it, as well as the horrendous job it did cleaning it up. You might not like certain aspects of capitalism but you can't possibly establish that the govt will do better. In fact, Buchanan and (to some extent) Coase pretty much established that in most cases it can't.