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4runner
ParticipantLet’s try a different tack:
- Can you show me a single society that has evolved out of the stone age without gov’t regulation of one sort or another?
I’m not saying that every gov’t reg is necessary. I’m not saying that the FDA is always right, or that mattress manufacturers need regulating.
What I am saying is that at some level, a certain amount of gov’t regulation is economically efficient. In fact- the rule of law is essential to allowing humans to coexist as a society. Look at the book of Leviticus– it is nothing more than 30-40 pages of regulations specifying things like what happens if my cow dies while plowing your field.
As for challenging my belief system– show me any working example of a society without gov’t regulations, and then we can start talking.
Libertarianism is a lot like communism– great in theory but it just doesn’t work in the real world.
ParticipantLet’s try a different tack:
- Can you show me a single society that has evolved out of the stone age without gov’t regulation of one sort or another?
I’m not saying that every gov’t reg is necessary. I’m not saying that the FDA is always right, or that mattress manufacturers need regulating.
What I am saying is that at some level, a certain amount of gov’t regulation is economically efficient. In fact- the rule of law is essential to allowing humans to coexist as a society. Look at the book of Leviticus– it is nothing more than 30-40 pages of regulations specifying things like what happens if my cow dies while plowing your field.
As for challenging my belief system– show me any working example of a society without gov’t regulations, and then we can start talking.
Libertarianism is a lot like communism– great in theory but it just doesn’t work in the real world.
Participant- Even with that we get homes that come out with crossed wiring and other hazards. The regulations don’t save us a bit. What motivates the producer here is the knoweldge we’ll buy from a different manufacturer as well as civil liability.
Wow– a libertarian who is actually in favor of replacing gov’t regs with tort lawsuits. I never thought I’d see the day when a libertarian contended that tort lawsuits were “efficient.”
Back to SF– the buyers/lenders/insurers can make all the demands they want, except some people are going to build sh_t for houses no matter how dangerous absent laws telling them that they can’t. The danger is not limited to those fools– fire spreads. No man is an island.
Put another way– you can do due diligence on your car until the cows come home– buy a Volvo, get airbags, test the rubber on your tires, etc. But if the slob next to you is driving a piece of crap, without headlights, and without safe tires, you are still in danger.
Participant- Even with that we get homes that come out with crossed wiring and other hazards. The regulations don’t save us a bit. What motivates the producer here is the knoweldge we’ll buy from a different manufacturer as well as civil liability.
Wow– a libertarian who is actually in favor of replacing gov’t regs with tort lawsuits. I never thought I’d see the day when a libertarian contended that tort lawsuits were “efficient.”
Back to SF– the buyers/lenders/insurers can make all the demands they want, except some people are going to build sh_t for houses no matter how dangerous absent laws telling them that they can’t. The danger is not limited to those fools– fire spreads. No man is an island.
Put another way– you can do due diligence on your car until the cows come home– buy a Volvo, get airbags, test the rubber on your tires, etc. But if the slob next to you is driving a piece of crap, without headlights, and without safe tires, you are still in danger.
Participant- The private market can and always will regulate better then the govt. Do you think there was always regulations for building bridges, houses, etc. No the market dictated the quality.
I don’t understand what you mean. How has the market ever dictated quality in building construction? Before San Francisco burned to the ground, were the houses built so that the whole city wouldn’t be immolated if a fire started? Even if one or two were safe, it didn’t matter when the whole city was burning to the ground. It took gov’t regulation to insist that buildings be built to code so the catastrophe would not be repeated time and gain.
Do you really think that consumers are smart enough to tell a safe bridge from an unsafe bridge, a safe road from an unsafe road, or a safe rail track from an unsafe rail track? They should just do “due diligence” before driving over the Coronado bridge– check out the pilons, see if the paint is fresh– and then decide whether or not to take drive out on the bridge.
I hope that you checked the wiring in your house before you bought it. Is everything grounded properly? Does the electrical insulation meet the necesary temperature tolerances? How about those breakers– consumers should figure out on their own when a line is overloaded!!! That silly, ineffective gov’t regulation– always insisting that the electrical wiring be be up to code.
Do you really think that private action is more effective than gov’t regulation in every case?
Participant- The private market can and always will regulate better then the govt. Do you think there was always regulations for building bridges, houses, etc. No the market dictated the quality.
I don’t understand what you mean. How has the market ever dictated quality in building construction? Before San Francisco burned to the ground, were the houses built so that the whole city wouldn’t be immolated if a fire started? Even if one or two were safe, it didn’t matter when the whole city was burning to the ground. It took gov’t regulation to insist that buildings be built to code so the catastrophe would not be repeated time and gain.
Do you really think that consumers are smart enough to tell a safe bridge from an unsafe bridge, a safe road from an unsafe road, or a safe rail track from an unsafe rail track? They should just do “due diligence” before driving over the Coronado bridge– check out the pilons, see if the paint is fresh– and then decide whether or not to take drive out on the bridge.
I hope that you checked the wiring in your house before you bought it. Is everything grounded properly? Does the electrical insulation meet the necesary temperature tolerances? How about those breakers– consumers should figure out on their own when a line is overloaded!!! That silly, ineffective gov’t regulation– always insisting that the electrical wiring be be up to code.
Do you really think that private action is more effective than gov’t regulation in every case?
Participant- Due dilligence was only a partial recommendation, however. The primary protection is proper asset allocation. All of these problems would be avoided if common people stopped trying to make tremendous gains on specific companies. Why create billions in new goverment, hamper these industries, drive jobs overseas, etc. when you could warn investors to stop being so stupid and placing half their retirement in Enron?
Proper asset allocation doesn’t solve the problem. In fact, it is a significant problem in public markets and worsens fraud.
Think about the alternatives: instead of having a thief steal large amounts from a limited number of people, all of whom are very interested in getting a piece of his hide, increased diversification (i.e., proper asset allocation) just means that the thief steals smaller amounts from a larger number of people. None of this large group really has any incentive to go after the thief, because the individual cost to them is so minimal.
Put another way, if you want to steal a million dollars, it is a heck of a lot easier to steal a dime from one billion people than to steal $500,000 from two.
Participant- Due dilligence was only a partial recommendation, however. The primary protection is proper asset allocation. All of these problems would be avoided if common people stopped trying to make tremendous gains on specific companies. Why create billions in new goverment, hamper these industries, drive jobs overseas, etc. when you could warn investors to stop being so stupid and placing half their retirement in Enron?
Proper asset allocation doesn’t solve the problem. In fact, it is a significant problem in public markets and worsens fraud.
Think about the alternatives: instead of having a thief steal large amounts from a limited number of people, all of whom are very interested in getting a piece of his hide, increased diversification (i.e., proper asset allocation) just means that the thief steals smaller amounts from a larger number of people. None of this large group really has any incentive to go after the thief, because the individual cost to them is so minimal.
Put another way, if you want to steal a million dollars, it is a heck of a lot easier to steal a dime from one billion people than to steal $500,000 from two.
Participant- Instead of spending billions to regulate and losing billions in return because of our inability to compete with other economies, why not realize that some people will make stupid mistakes and speculate by putting all their eggs in one basket? Perhaps we can help them if they are hurt from an unforseen event or act, but why sacrifice literally thousands of jobs and billions of dollars to prevent this? As to punishing those that commit fraud, we have plenty of state and federal laws to deter most people. Some will get around the laws, but that is life.
At some point, it is actually more efficient for the gov’t to step in and forbid certain behavior. For example, the government does not allow people to buy addictive recreational drugs because too many people will make stupid mistakes and society at large will have to pay for those mistakes.
As another example, the government does not allow people to build unsafe bridges/highways/roads. By your logic, if the people who used those bridges/highways/roads did proper “due diligence,” there would be no need for government intervention!!! People would simply figure out which bridges/highways/roads were the safest, and only use those!!!
Much of Sarbox is an attempt to increase the number of things that the CEO and Board have to say about a company. It makes due diligence easier. If those statements are false and/or misleading, the CEO and Board can be punished using the existing state and federal laws that you hold so dear.
Before Sarbox, the CEO and Board could simply refrain from saying those things and not commit fraud by virtue of their silence… Investors were stuck reading through the voluminous footnotes, and we all know how successful most investors were in discovering the Enron and its ilk.
Participant- Instead of spending billions to regulate and losing billions in return because of our inability to compete with other economies, why not realize that some people will make stupid mistakes and speculate by putting all their eggs in one basket? Perhaps we can help them if they are hurt from an unforseen event or act, but why sacrifice literally thousands of jobs and billions of dollars to prevent this? As to punishing those that commit fraud, we have plenty of state and federal laws to deter most people. Some will get around the laws, but that is life.
At some point, it is actually more efficient for the gov’t to step in and forbid certain behavior. For example, the government does not allow people to buy addictive recreational drugs because too many people will make stupid mistakes and society at large will have to pay for those mistakes.
As another example, the government does not allow people to build unsafe bridges/highways/roads. By your logic, if the people who used those bridges/highways/roads did proper “due diligence,” there would be no need for government intervention!!! People would simply figure out which bridges/highways/roads were the safest, and only use those!!!
Much of Sarbox is an attempt to increase the number of things that the CEO and Board have to say about a company. It makes due diligence easier. If those statements are false and/or misleading, the CEO and Board can be punished using the existing state and federal laws that you hold so dear.
Before Sarbox, the CEO and Board could simply refrain from saying those things and not commit fraud by virtue of their silence… Investors were stuck reading through the voluminous footnotes, and we all know how successful most investors were in discovering the Enron and its ilk.
April 23, 2007 at 9:38 AM in reply to: Subprime to have little impact on desirable areas of San Diego?? #50847Participantre: smarter owners in more desirable areas
At some point, NOT walking away from your mortgage is stupid. Suppose you buy a condo in Del Mar or La Jolla for 500k$ w/ 5% down and an interest-only loan. With California foreclosure laws, you can look at this like a put option with a 475k$ strike. If the price of the units in the building drops to say, 400k$, you have two options:
1) Keep paying on your I/O mortgage on the full 475k$ amount of your loan.
2) Let the lender foreclose your unit and sell it for 400k$. You realize 75k$ in debt-forgiveness income (25k$ in taxes) and have your credit rating ruined. Once the smoke has cleared (or using a related party, or if you have enough bank to pay cash), you buy the unit nextdoor for 400k$.
If the damage to your credit rating is worth less than 50k$, option 2) is the better choice.
April 22, 2007 at 12:41 PM in reply to: Subprime to have little impact on desirable areas of San Diego?? #50788ParticipantI don’t think that it is “desirability” that makes a neighborhood a leading indicator. Instead, I think that it is the amount of mortgage activity in that neighborhood over the last 6-7 years. For the most part, this should reflect how “new” the housing is.
Look at it this way:
El Cajon: over the last 7 year, say 10% of the houses change hands/are used as ATM’s. At a 1% default rate, one home in 1000 enters the “must sell” inventory.
Chula Vista: over the last 7 years, say 80% of the houses change hands/are used as ATM’s. Even at the same default rate, eight homes in 1000 enter the “must sell” inventory.
Prices are going to be pushed down sooner in the newer neighborhoods like Chula Vista than the “less desirable” neighborhoods like El Cajon.
The neighborhoods that you think of as more desirable (La Jolla, Del Mar, etc) are just more developed and have a larger percentage of owners who don’t need to sell. However, I would expect the same to be other older neighborhoods, like Clairemont.
ParticipantAnother question:
Does anyone know an easy platform for investing in non-dollar (e.g., Euro, Yen) denominated bonds?
Participantrseiser,
E-trade is apparently about to open up a global trading platform for US investors.
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