How to Prevent a Repeat of 2008 (Reining in Wall Street)

Kipinger ^ | September 14, 2009 | Steven Goldberg

[parsifal]

As Winston Churchill might have put it, capitalism is surely the worst economic system,except for all the others that have been tried. It's capitalism's risk takers -- often using borrowed money -- who produce many of the innovations that spur economic growth.

But now, a year to the day since the collapse of Lehman Brothers, it's clearer than ever that capitalism without effective regulation is a disaster waiting to happen.

[parsifal]

I'm beginning to think Wall Street needs to be nuked back to the Stone Age. Ban hedge funds, ban most derivatives, ban computerized trading, impose a transaction tax, and require minimum holding periods for stocks and bonds to discourage speculation and day trading. And, work with other countries to prevent this from simply moving to another locale.

parsy, who says Wall Street ought to make money the old fashioned way.

[eyeamok]

the simple answer is to make them start living under the same law as everyone else, When they Commit a Fraud put them in JAIL and Seize their Assets, just like they do to us little people.

[parsifal]

True. But a lot of what the did was not fraud and not illegal. It was just pure stupidity and greed. For example, Lehman Bros was leveraged up like 30 or 40 to 1. That means, at 30, they had $3 dollars of capital and $90 or $120 in debt. Let their assets shrink by a mere 3% or so, and they are upside down. They leveraged that high because there was no law preventing it and if assets didn’t shrink, they could make more money.

parsy, who says the stock market “isn’t a toy”

[sauropod]

home

[DaisyCutter]

Lehman et al would not have been allowed to lever up like they did had Paulson not gone to the SEC and asked for the limits on leverage to be raised while he was still at Goldman.

[USFRIENDINVICTORIA]

" capitalism without effective regulation is a disaster waiting to happen. ."

Try rewording that statement, by using synonyms:

"Free enterprise, without coercive government restraints, is a disaster waiting to happen. ."

Clearly oxymoronic.

[parsifal]

Was there ever a law or regulation which set forth leverage limits? And, do you have a link? This would be a fascinating because I think most of the houses are over-leveraged.

parsy, who is trying to learn more about all this stuff

[parsifal]

I am all for coercing Wall Street with guns, planes, tanks, and the threat of forced labor as Wal Mart clerks.

parsy, who says you can’t look at this mess and think otherwise

[mulligan]

Most want to blame Wall Street, Bank Street or some other Street and overlook the Street that is the cause of all problems - GOVERNMENT STREET. Started when Congress established the Fed in 1913 and has continued progressively. And with each new step, government acquires more power and control. Process is now almost 100 years old. Government is out of control in every aspect. Financially, legally, intrusively, ethically. It is a monster trying to devour all in it's way. Unless and until it admits this destructive process (highly unlikely) or citizens wake-up, step up and take corrective actions to dismantle this monster the growth will continue and the destruction of our Nation come to pass.

[bankwalker]

parsy, who is trying to learn more about all this stuff

You might want to consider doing your learning first before posting on here and making a fool of yourself.

[parsifal]

Well, first, I figure I will learn a lot faster this way because if I am wrong, some knowledgeable freeper will certainly set me straight.

parsy, who don’t mind the debate

[parsifal]

Maybe the problem is that gov’t isn’t doing certain jobs very well. But let’s be real. We ain’t going to live in a world without gov’t.

parsy, who asks what you think about the article

[WOBBLY BOB]

ping

[bankwalker]

parsy, who don’t mind the debate

Sorry Parsy, I don't have time for a debate that could take years. If you sincerely want to learn, start here.

It is only a beginning, but ya gotta start somewhere.

The best to you from a fellow outstanding freeper.

[parsifal]

Thank you. I bookmarked the link. I have read part of this before, but it is nice to have at one location.

parsy, who says thanks