[patientrenter]

[quote=patb]it does mean a regulator does need to make sure
that if a country or it’s private parties borrows in
foreign currency, there is a limit to it, or that
it’s driven by business deal not as currency speculation.

[/quote]

We know what the regulators should do, patb, but how do you set up a system that ensures they do it?

For example, we are borrowing large amounts from China with no repayment plan, and we’ve been doing it for some time. That money was pushed back into the US economy, and showed up as ever more inflated asset prices bought on borrowed money.

What are our newly energized regulators doing to stop this unsustainable craziness? Pushing for more and cheaper loans, and resisting drops in inflated asset prices. And vastly expanding their powers to do even more of it. So regulators doing MORE isn’t always the solution. What we need is a system that gets regulators to do the RIGHT things.

[patientrenter]

[quote=patb]it does mean a regulator does need to make sure
that if a country or it’s private parties borrows in
foreign currency, there is a limit to it, or that
it’s driven by business deal not as currency speculation.

[/quote]

We know what the regulators should do, patb, but how do you set up a system that ensures they do it?

For example, we are borrowing large amounts from China with no repayment plan, and we’ve been doing it for some time. That money was pushed back into the US economy, and showed up as ever more inflated asset prices bought on borrowed money.

What are our newly energized regulators doing to stop this unsustainable craziness? Pushing for more and cheaper loans, and resisting drops in inflated asset prices. And vastly expanding their powers to do even more of it. So regulators doing MORE isn’t always the solution. What we need is a system that gets regulators to do the RIGHT things.

[patientrenter]

[quote=patb]it does mean a regulator does need to make sure
that if a country or it’s private parties borrows in
foreign currency, there is a limit to it, or that
it’s driven by business deal not as currency speculation.

[/quote]

We know what the regulators should do, patb, but how do you set up a system that ensures they do it?

For example, we are borrowing large amounts from China with no repayment plan, and we’ve been doing it for some time. That money was pushed back into the US economy, and showed up as ever more inflated asset prices bought on borrowed money.

What are our newly energized regulators doing to stop this unsustainable craziness? Pushing for more and cheaper loans, and resisting drops in inflated asset prices. And vastly expanding their powers to do even more of it. So regulators doing MORE isn’t always the solution. What we need is a system that gets regulators to do the RIGHT things.

[patientrenter]

[quote=patb]it does mean a regulator does need to make sure
that if a country or it’s private parties borrows in
foreign currency, there is a limit to it, or that
it’s driven by business deal not as currency speculation.

[/quote]

We know what the regulators should do, patb, but how do you set up a system that ensures they do it?

For example, we are borrowing large amounts from China with no repayment plan, and we’ve been doing it for some time. That money was pushed back into the US economy, and showed up as ever more inflated asset prices bought on borrowed money.

What are our newly energized regulators doing to stop this unsustainable craziness? Pushing for more and cheaper loans, and resisting drops in inflated asset prices. And vastly expanding their powers to do even more of it. So regulators doing MORE isn’t always the solution. What we need is a system that gets regulators to do the RIGHT things.

[patientrenter]

SD R, I considered NZ a few years back. (I honestly can’t remember when, but it might have been around 2000). I looked, and even picked out where I wanted to live, and looked at a few homes for sale. Felt pretty good, and put it aside for a year as I focused on work. Looked again a year later, and discovered prices had shot up. Kept going. I honestly don’t know which bubble was bigger – NZ/AUS or SoCal.

I think we just have to let some more air go out of this global bubble. It will take a while in many places, because of the governments, but eventually more air will come out. I would look for an inflation hedge, though.

[patientrenter]

SD R, I considered NZ a few years back. (I honestly can’t remember when, but it might have been around 2000). I looked, and even picked out where I wanted to live, and looked at a few homes for sale. Felt pretty good, and put it aside for a year as I focused on work. Looked again a year later, and discovered prices had shot up. Kept going. I honestly don’t know which bubble was bigger – NZ/AUS or SoCal.

I think we just have to let some more air go out of this global bubble. It will take a while in many places, because of the governments, but eventually more air will come out. I would look for an inflation hedge, though.

[patientrenter]

SD R, I considered NZ a few years back. (I honestly can’t remember when, but it might have been around 2000). I looked, and even picked out where I wanted to live, and looked at a few homes for sale. Felt pretty good, and put it aside for a year as I focused on work. Looked again a year later, and discovered prices had shot up. Kept going. I honestly don’t know which bubble was bigger – NZ/AUS or SoCal.

I think we just have to let some more air go out of this global bubble. It will take a while in many places, because of the governments, but eventually more air will come out. I would look for an inflation hedge, though.

[patientrenter]

SD R, I considered NZ a few years back. (I honestly can’t remember when, but it might have been around 2000). I looked, and even picked out where I wanted to live, and looked at a few homes for sale. Felt pretty good, and put it aside for a year as I focused on work. Looked again a year later, and discovered prices had shot up. Kept going. I honestly don’t know which bubble was bigger – NZ/AUS or SoCal.

I think we just have to let some more air go out of this global bubble. It will take a while in many places, because of the governments, but eventually more air will come out. I would look for an inflation hedge, though.

[patientrenter]

SD R, I considered NZ a few years back. (I honestly can’t remember when, but it might have been around 2000). I looked, and even picked out where I wanted to live, and looked at a few homes for sale. Felt pretty good, and put it aside for a year as I focused on work. Looked again a year later, and discovered prices had shot up. Kept going. I honestly don’t know which bubble was bigger – NZ/AUS or SoCal.

I think we just have to let some more air go out of this global bubble. It will take a while in many places, because of the governments, but eventually more air will come out. I would look for an inflation hedge, though.

[patientrenter]

davelj, I read that excellent article. The lesson that many draw from this extreme example of a financial melt-down is that more regulation is better.

When I look at what has happened both here and in Iceland, I see the fundamental problem as a headlong rush into excessive borrowing and asset price inflation. Yes, regulators, if they really wanted to, had the power to check this. Private investors, if they had acted with prudence, could have prevented it. The central issue in my mind is not the quantity of regulation. The only question is, who do you trust more to take away the punch-bowl when the party starts to get interesting?

I grew up in a country where politicians and their friends had custody of the punch-bowl. It wasn’t pretty.

By contrast, our current system here was originally designed to rely on private investors to pull back when the party got a little too crazy with their money. Unfortunately, over the last 30 years or so, we have moved to a professional money manager system. Now agents of the people who provide the money make the investment decisions. These agents get compensated very well when asset prices go up, and simply get a new job somewhere else when prices go down. They therefore push for higher asset prices, regardless of risk. Their interests are not aligned with the people providing the money.

Unfortunately, rising asset prices and lots of cheap loans make almost every voter happy, so the populace love it (without realizing it is unsustainable). With professional money managers making millions giving them money on the one hand, and voters anxious to get free lunches from appreciating home and stock prices on the other, politicians cave in and push for ever more cheap borrowing and inflated asset prices.

So are we now seeing our politicians finally making the really necessary and hard choices – undoing all this cheap borrowing and inflated asset prices? Haha! Check what the Congress and the White House, nearly to a person, are pushing for now – cheaper money and higher asset prices. With our entire political class united to push in the wrong direction, we are not yet even at the beginning of the real recovery.

[patientrenter]

davelj, I read that excellent article. The lesson that many draw from this extreme example of a financial melt-down is that more regulation is better.

When I look at what has happened both here and in Iceland, I see the fundamental problem as a headlong rush into excessive borrowing and asset price inflation. Yes, regulators, if they really wanted to, had the power to check this. Private investors, if they had acted with prudence, could have prevented it. The central issue in my mind is not the quantity of regulation. The only question is, who do you trust more to take away the punch-bowl when the party starts to get interesting?

I grew up in a country where politicians and their friends had custody of the punch-bowl. It wasn’t pretty.

By contrast, our current system here was originally designed to rely on private investors to pull back when the party got a little too crazy with their money. Unfortunately, over the last 30 years or so, we have moved to a professional money manager system. Now agents of the people who provide the money make the investment decisions. These agents get compensated very well when asset prices go up, and simply get a new job somewhere else when prices go down. They therefore push for higher asset prices, regardless of risk. Their interests are not aligned with the people providing the money.

Unfortunately, rising asset prices and lots of cheap loans make almost every voter happy, so the populace love it (without realizing it is unsustainable). With professional money managers making millions giving them money on the one hand, and voters anxious to get free lunches from appreciating home and stock prices on the other, politicians cave in and push for ever more cheap borrowing and inflated asset prices.

So are we now seeing our politicians finally making the really necessary and hard choices – undoing all this cheap borrowing and inflated asset prices? Haha! Check what the Congress and the White House, nearly to a person, are pushing for now – cheaper money and higher asset prices. With our entire political class united to push in the wrong direction, we are not yet even at the beginning of the real recovery.

[patientrenter]

davelj, I read that excellent article. The lesson that many draw from this extreme example of a financial melt-down is that more regulation is better.

When I look at what has happened both here and in Iceland, I see the fundamental problem as a headlong rush into excessive borrowing and asset price inflation. Yes, regulators, if they really wanted to, had the power to check this. Private investors, if they had acted with prudence, could have prevented it. The central issue in my mind is not the quantity of regulation. The only question is, who do you trust more to take away the punch-bowl when the party starts to get interesting?

I grew up in a country where politicians and their friends had custody of the punch-bowl. It wasn’t pretty.

By contrast, our current system here was originally designed to rely on private investors to pull back when the party got a little too crazy with their money. Unfortunately, over the last 30 years or so, we have moved to a professional money manager system. Now agents of the people who provide the money make the investment decisions. These agents get compensated very well when asset prices go up, and simply get a new job somewhere else when prices go down. They therefore push for higher asset prices, regardless of risk. Their interests are not aligned with the people providing the money.

Unfortunately, rising asset prices and lots of cheap loans make almost every voter happy, so the populace love it (without realizing it is unsustainable). With professional money managers making millions giving them money on the one hand, and voters anxious to get free lunches from appreciating home and stock prices on the other, politicians cave in and push for ever more cheap borrowing and inflated asset prices.

So are we now seeing our politicians finally making the really necessary and hard choices – undoing all this cheap borrowing and inflated asset prices? Haha! Check what the Congress and the White House, nearly to a person, are pushing for now – cheaper money and higher asset prices. With our entire political class united to push in the wrong direction, we are not yet even at the beginning of the real recovery.

[patientrenter]

davelj, I read that excellent article. The lesson that many draw from this extreme example of a financial melt-down is that more regulation is better.

When I look at what has happened both here and in Iceland, I see the fundamental problem as a headlong rush into excessive borrowing and asset price inflation. Yes, regulators, if they really wanted to, had the power to check this. Private investors, if they had acted with prudence, could have prevented it. The central issue in my mind is not the quantity of regulation. The only question is, who do you trust more to take away the punch-bowl when the party starts to get interesting?

I grew up in a country where politicians and their friends had custody of the punch-bowl. It wasn’t pretty.

By contrast, our current system here was originally designed to rely on private investors to pull back when the party got a little too crazy with their money. Unfortunately, over the last 30 years or so, we have moved to a professional money manager system. Now agents of the people who provide the money make the investment decisions. These agents get compensated very well when asset prices go up, and simply get a new job somewhere else when prices go down. They therefore push for higher asset prices, regardless of risk. Their interests are not aligned with the people providing the money.

Unfortunately, rising asset prices and lots of cheap loans make almost every voter happy, so the populace love it (without realizing it is unsustainable). With professional money managers making millions giving them money on the one hand, and voters anxious to get free lunches from appreciating home and stock prices on the other, politicians cave in and push for ever more cheap borrowing and inflated asset prices.

So are we now seeing our politicians finally making the really necessary and hard choices – undoing all this cheap borrowing and inflated asset prices? Haha! Check what the Congress and the White House, nearly to a person, are pushing for now – cheaper money and higher asset prices. With our entire political class united to push in the wrong direction, we are not yet even at the beginning of the real recovery.

[patientrenter]

davelj, I read that excellent article. The lesson that many draw from this extreme example of a financial melt-down is that more regulation is better.

When I look at what has happened both here and in Iceland, I see the fundamental problem as a headlong rush into excessive borrowing and asset price inflation. Yes, regulators, if they really wanted to, had the power to check this. Private investors, if they had acted with prudence, could have prevented it. The central issue in my mind is not the quantity of regulation. The only question is, who do you trust more to take away the punch-bowl when the party starts to get interesting?

I grew up in a country where politicians and their friends had custody of the punch-bowl. It wasn’t pretty.

By contrast, our current system here was originally designed to rely on private investors to pull back when the party got a little too crazy with their money. Unfortunately, over the last 30 years or so, we have moved to a professional money manager system. Now agents of the people who provide the money make the investment decisions. These agents get compensated very well when asset prices go up, and simply get a new job somewhere else when prices go down. They therefore push for higher asset prices, regardless of risk. Their interests are not aligned with the people providing the money.

Unfortunately, rising asset prices and lots of cheap loans make almost every voter happy, so the populace love it (without realizing it is unsustainable). With professional money managers making millions giving them money on the one hand, and voters anxious to get free lunches from appreciating home and stock prices on the other, politicians cave in and push for ever more cheap borrowing and inflated asset prices.

So are we now seeing our politicians finally making the really necessary and hard choices – undoing all this cheap borrowing and inflated asset prices? Haha! Check what the Congress and the White House, nearly to a person, are pushing for now – cheaper money and higher asset prices. With our entire political class united to push in the wrong direction, we are not yet even at the beginning of the real recovery.

[patientrenter]

[quote=CONCHO] …..I guess the only thing I’ve learned is that whenever some guy in a suit is on TV telling me that he’s going to solve my problems, I know I’m about to get screwed….[/quote]

I can agree to that easily:)

From what I have seen, bad regulation will really screw things up eventually. You can get bad regulation in lots of ways. One of the many ways is plain absence – too little regulation of what needs regulating. Another way is to have just the right amount of regulation, but the regulations direct people to do the wrong things. A third way is too much regulation – nothing productive gets done ‘inside’ the regulated system, and the regulations restrict productive enterprises outside the system. Corruption inside the government becomes rampant.

Right now, politicians are making lots of calls to the new regulators to direct money to their backers and their voters. The new bailout was a product of those calls. It benefits both institutions and individuals. The only uniting trait amongst the beneficiaries is irresponsibility. I am not hopeful that we are going to a better system.

[Author]

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