The Glade 4.0

Not sure about the economical regulation, but you have the most annoying medicinal regulations in the world. While Canada, Australia and EU are all trying to deregulate the annoyingly wordy medicinal regulations, you guys are trying to put more in. *shakes fist*

And you assume that third parties who rate security exchanges of companies won't come into existence? Of course, you'll argue that they will become corrupt, but anything is corruptible, the SEC is not infallible. At least they have their business on the line if they do become corrupt unlike the SEC.

The only reason you wouldn't want this is if you think the Government's SEC can operate more efficiently than a private third party exchange investigations institution of some sort.

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

We already have private companies that rate creditworthiness. I believe the phrase "criminal fraud" was mentioned earlier in regards to them. I'm not sure why you think such agencies would be trustworthy.

A government agency is absolutely going to be more efficient. First, no conflict of interest. They don't have to make a profit and they don't make investments, so there's no incentive to run a large scale pump and dump by overrating companies. Second, they have force of law behind them. They can demand any company turn over its records, and more importantly, they can compel sworn testimony from employees. While a private ratings firm could downrate someone for refusing to turn over records, they can't guarantee honest answers. Anyone they investigated could lie their asses off with few consequences if found out, since this private firm would have no power to jail them.

Wow, just wow.

Such agencies must be trustworthy. Their livelihood depends on it. You are paying them to be trustworthy.

No conflict of interest?!?! Get OUT of here. Moody's and S&P has no interest in propping up the credit rating of the US Bond Market? Really? None whatsoever? I mean, our monopoly money backed securities are still AAA, right? There is absolutely a huge incentive to operate a poor ratings schedule with the government backing. In fact, that's exactly how it works right now with Moody's and S&P. They are just as much as "private" entity as Goldman Sach's or Fannie and Freddie.

Ok, so we can establish that a private ratings company must do everything in its power to make quality ratings schedules for various credit-worthy entities. That means these ratings will have quality that creditor issuers and credit-seekers won't want to lose. How is that not more powerful that being able to "compel" sworn testimony. Have you ever watched the Federal Reserve Board or the Secretary of Treasury testify under oath? Wow, so much power to compel truth. What about the SNAFU with BoA basically being told to acquire Merril Lynch despite Kenneth what's-his-face testimony to the contrary?

You completely underestimate the "consequences of lying their asses off" because you forget how there is a mutual necessity of both the ratings issuer and those borrowing on credit to ensure an accurate ratings schedule.

Basically, everything you just posted makes no sense at all.

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

If by, "makes no sense" you mean, "does not follow logically," that's false.

His statements all follow logically from his assumptions and premises. The problem is that the assumptions and premises themselves are either incorrect or flawed, for reasons you discussed.


Xeq: The government never does anything "more efficiently" than private enterprise.

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

I think I'm missing a key point here. Moody's and S&P are public corporations. Warren Buffett/Berkshire Hathaway is the biggest stockholder. They do not answer to nor are they run by the government. This was my entire point. They are private rating agencies, yet their conduct in the last few years has bordered on outright fraud. They've been handing out undeserved AAA ratings left and right for their own financial benefit, not to mention blackmailing corporations that don't want to go along with their crap by giving low ratings to those that don't cooperate to destroy them. You say private raters will regulate themselves, but when our current private raters are so mad with power that they actually see refusal to submit to their whims as evidence of unsound business practices, well, that doesn't bode well for your theoretical completely unregulated companies.



I'm really not sure how you jumped to compelling testimony of government officials. I wasn't talking about government officials at all, the SEC CAN force the employees of a company suspected of fraud to testify under oath. No private ratings agency can possibly do this.

Yes, both the ratings issuer and those borrowing on credit want an accurate ratings schedule. But it's virtually impossible for them to get one. Assume for a second that, well, any example company is engaged in shitty business practices or outright fraud, practices that will bankrupt them if they come to light. If the private agency gets suspicious and starts an investigation, what incentive do the executives of this company have not to lie harder than politicians in a sex scandal? If their duplicity is exposed, they are bankrupt anyway. The ratings company can't threaten them with anything worse. The corrupt corporation's best option is to go full coverup and hope the malfeasance is missed.

I mean, what can this ratings company possibly do? Even if the executives of said corrupt company each signed individual contracts that they're breaching, the company still can't do anything. You could sue for breach of contract but the revelation will bankrupt them anyway so that's trying to get blood from a stone.

Having worked for the government for many years, it is my duty to refute what DFK! has said. The private enterprises that contract with the government in California tend to be bigger inefficient money sinks than the equivalent in State Workers. It truly blows my mind that they can waste money like that, then claim that they are more efficient. Most of the contractors that I have worked with are greedy whores with a bigger since of entitlement than Octomom. Several of the contracted pieces of work had to be thrown away because the 'political payoff' PRIVATE INDUSTRY contractors lied their asses off as to their ability to do the job they were contracted to do.

On the non government front, after having watched a bunch of local contractors work on homes around here I make sure anyone I hire is licensed, bonded, and insured and check some of the references they give. People in private industry, especially in sales, lie worse than politicians.

A lot of the Government workers are hard working honest people, its just the greedy creeps that get the press.

That negates his assertion because he used the word 'never'. Its mostly true, but not universally true.

One of the things to remember, private industry is about profit. Most government agencies are about services to the citizens. These are two different worlds. If the services were supplied for the citizens by private industries, the cuts and restrictions would be hellishly more severe than they are now - to maximize profit.

I'm not saying that government does the best job possible, just that the two sectors are very different in mission and reason for existence. When people forget that we get fools like our Governator who thinks he can come in, change the rules and run the State like a private business. Then he finds out Governor and CEO are two very different jobs.

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The U. S. Constitution doesn't guarantee happiness, only the pursuit of it. You have to catch up with it yourself. B. Franklin

"A mind needs books like a sword needs a whetstone." -- Tyrion Lannister, A Game of Thrones

Fair enough.



I edited this part though to make it be what I feel is more correct.

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

We will always differ in opinion on that last point then.

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The U. S. Constitution doesn't guarantee happiness, only the pursuit of it. You have to catch up with it yourself. B. Franklin

"A mind needs books like a sword needs a whetstone." -- Tyrion Lannister, A Game of Thrones

Without the government propping up these enterprises, they would then fail, or change their business model to remove the "siphon money from the government to prop up our failings" clause.



See above.



The actions you take are what keep private enterprise efficient, without them, you have: See Above.




While I don't believe your statements negate his statement (I rather believe that they work toward proving his statement), it was inelegant of him to use the word "never".

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"Dress cops up as soldiers, give them military equipment, train them in military tactics, tell them they’re fighting a ‘war,’ and the consequences are predictable." —Radley Balko

That is the point you are missing. The Federal Reserve "does not answer to nor is run by the government." Freddie and Fannie, "did not answer to nor was run by the government." The Federal Reserve requires entities be rated by two of the either Standard & Poors, Moody's or Fitch's. Thus they operate implicitly as government sanctioned semi-regulatory body, sort of a counterpart to the SEC except when dealing with finacial vehicles, rather than more broad encompassing domain of "securities trading".

Basically, if we argue that the ratings issuers are in bed with certain private firms (since the private firms pay to participate in the ratings schedules and thus there is a mutual conflict of interest) then this is a comprimise of their core business. Remember, you are paying them not only for their technical aspects of their product, but their integrity as well.

If you want to force people to have due diligence when this integrity is lost, you are basically saying you want a law that forces people not to be stupid. But stupidly is regulated by the market, itself.



Well you said "employees" I thought you meant the hypothetical employees of a hypothetically fully integrated credit-worthiness assement entity. However, the point still stands, because my point that compelling "truth" from large investment or brokerage entities isn't effective, just as it isn't effective when Bernanke testifies in front of Congress. Remember, Bernanke is also technically a chairman of a private organization. It isn't effective because the testimonies aren't there to actually uncover the truth. The testimonies generally happen to the benefit of Congress so they can say they tried to mitigate the problem.



What you are saying is that people shouldn't take the due diligence to actually invest wisely. If the company gets investigated by the ratings issuer acts suspicious when the investigation begins, that sends the investors the same signals as if their ratings got slashed.

If you had money in a mutual hedge fund trading ETF's on a foreign market, say the Chinese Hang Seng, and the company that was brokering your investment suddenly stopped allowing the users to view their accounts online, what would you do? Would you keep your money there? You wouldn't withdraw your investment? Ok, so Lucky Strike Security Investigations (fictional) starts an investigation and the testimony coming from the president overseeing the brokerage division handling this fund says "No, we are not aware of a problem with our online fund management website. Our investors don't need to worry, our investments are sound." and doesn't offer a techinical IT explanation in his public statement, you would leave your money there? And then, on the message board, people start to post they are withdrawing their funds and buying securities or just cash, you would still leave your money?

You would deserve to lose your money, the company would deserve to go bankrupt, and their CEO's deserve to lose the trust and have a huge black spot on their resume.



Yes, that's one thing they could do. They could also hire a batallion of archers to fire burning arrows at their building.

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

In our day and age, this is absolutely false. They do not have to *be* trustworthy. They only need to be precieved that way. What consequences have the credit rating agencies faced for rating bogus financial products at a AAA? None. Why? Because they have consolodated enough power to be basically immune to market forces in their industry. They don't have to be honest. They can play fast and loose with reality because they essentially have a hammer lock on what constitutes good and bad credit. There aren't any competitors knocking on their door, and even if there were, nothing would stop them from pulling the same shennanigans.

The market does not always make everything hunkey dorey.

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It feels like all the people who want limited government really just want government limited to Republicans.
---The Daily Show

Then if people still trust and use Moody's and S&P to measure the credit risk associated with bonds issued by corporations, or debt obligation type investment vehicles, they deserve to lose money. So the market is working. The equity crash last year predicated on many factors, one being the poor perception of credit risk, is proof of this.

Basically, what that means is the outcome of stupid decisions are bad consequences. Do you think it should work in some other fashion?

Your argument is essentially that no one who makes offers product has to make that product with any sort of quality because they can choose how and when to make it and people just purchase it as a fact of reality.

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

No, the market is not working. People use those agencies because they have to. This is actually a fantastic example of how the market fails. It's not a stupid decision for a bank to use credit agencies for lending purposes. However, their choice is very limited. Why? Because the Market consoldated all that power into very few hands. Hands that now basically work together instead of competing with one another.

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It feels like all the people who want limited government really just want government limited to Republicans.
---The Daily Show

And yet you want further consolidation by imposing government sanctioned regulations agencies, such as the SEC. Wow, your argument makes no sense.

You do realize that failure, bankruptcy and liquidation is part of how the market works? It's Darwinism. Basically, you are just mad because stupid people aren't allowed automatically make money when they screw up. The market functioning doesn't mean every single venture is successful in the greatest capacity possible, which is the only way you can reconcile your argument above. It means that malfeasant competitors get eliminated, resources get liquidated and reallocated naturally, and the best competitors get to stay until they are too eliminated by better firms. This allows continual development of better and better choices for consumers.

Your opposition seems completely analogous to the giving all kids trophies proposition.

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

Sigh. Don't make an argument I haven't made, and then call it my argument. The SEC came about because swindling brokers were bilking folks out of millions and adversely affecting the economy with their shennanigans. Regulation does not happen in a vaccuum. It happens as a response to abuse by those in the "market" or in industry.

Look, at the end of the day, people drive the economy. Good and greedy, honest and wicked. Market forces are not enough to prevent the bad people from harming everyone in the name of their own greed (case in point, Bernie Madoff).

Bankruptcy is not how your "free" market would work, Raph. It's actually a government safety net. It's regulation.

Your second sentence in the second paragraph is a straw man at best, and a gross misrepresentation of how I feel about the subject. This has nothing to do with stupid people, smart people, or me trying to force something I don't support - equality of outcome. The market doesn't always function. That's the point I am trying to make. Sometimes, the market does great harm to people entirely uninvolved with a given issue. That's when you need government to come in and deal with the snarl.

Regulations are rules of the road. If we had no rules governing the way we drive and operate on streets and highways, it would be deadly chaos.

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It feels like all the people who want limited government really just want government limited to Republicans.
---The Daily Show

Bankruptcy != court sanctioned debt restructuring. Is a generic term. You act like when a firm offers investment opportunities, people are obligated to put their money there. And not only that, they must be protected. I have news for you: people put money into various personal savings plans and such willingly.

All regulation does is remove the incentive for personal due dilligence. The market does always function. When you incentivize stupid behaviour with government programs, lots of bad things happen. Artificially low interest rates, cash rebates or tax credits for making certain purchases, etc. That's like saying gravity "doesn't always work" because it doesn't allow us to transcend vertical distances to our liking at will. And that building planes or other such machines actually "turns off gravity".



Demonstrate how in the world this is at all possible.

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

Raph, our current economic downturn is a clear and resonating example of how when some people screw around, everyone is adversely affected. It's a clarion call for strong, smart regulation of industry.

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It feels like all the people who want limited government really just want government limited to Republicans.
---The Daily Show

Except it's not. Everyone voluntarily entrusts their deposits to banks. Everyone voluntarily chooses to put their money in investment vehicles, all of which carry real risks. Since having a depository institution or owning investments in the form of equities, bonds or cash is not a right, then you cannot possibly claim that "uninvolved people" were harmed.

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

Yes, Raph, it is. The consequences of the economic downturn affected everyone. Even if they had absolutely *nothing* in the market or in a bank.

It's a lot like when a private company pollutes the ground water for a town entirely unconnected to the company itself. The people that get cancer are directly affected by something entirely unrelated to them and their individual choices. Regulating pollution is a perfectly reasonable response.

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It feels like all the people who want limited government really just want government limited to Republicans.
---The Daily Show

So people are forced to deposit their money into banks? They are forced to invest in various retirement savings funds like 401Ks?

The only thing people are forced to do (and they aren't, because you can still barter or use other currencies) is take US dollars as legal tender. The only institution that has control over you from that perspective is the The Federal Reserve.

The fact is, everyone voluntarily submits to using banking depository institutions. Find one person who doesn't use a bank, at all. Then demonstrate that the equity crisis affected him/her.

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

The Amish.



Reduced demand for handmade quilts negatively affected their income...

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

That and delicious Amish bread. Is anything in the world better?

Maybe I'm wrong, but I think the current disagreement in this thread has to do with "equity crisis" being differentiated from "economic woes"? Economics is complex, but most everything is tied together in a six degrees of Kevin Bacon kind of way. Maybe someone more familiar with the issue can follow all the steps in between me and the equity crisis specifically, but I am getting the feeling here that a lot of people would be inclined to say that it's either a result of, or a shared symptom with, the equity crisis that have caused a general economic hardship, and that does affect most everyone.

As of yesterday I'm down to under $1k in the bank and I can assure you that the layoffs at public libraries across the state with the 23% overall budget cut have affected me. University libraries are doing alright and still hiring, but they almost all want 1-2 years of experience first, and there just so happens to be laid off librarians with experience on the market now.

Must go back to school to get more government money to carry me through a few more years of my life. Ah, sweet loan forbearance. Must look into degree options... and if the economy never gets back on track I can just keep going back to school and amassing more and more debt. It will be just like our government! Heart attack kills me at age 50 after my 879234th degree and it'll be like I never had that debt at all, using government money to pay government debt! If the government can go so many years with an upward trend in debt, I can too!

Noggel:

The Equity Crisis was the result of government policies in the first place. The solution to problems created by the government is never more government.

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The Amish also do tours and the like. I've noticed a lot fewer of them coming through the last few months.

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Grenade 3 Sports Drink. It's fire in the hole.. Your hole!