The basic notion is that (average size of today's posts) times (total number of posts) is about as meaningful as (average market share price today) times (number of shares outstanding). The former number is clearly meaningless; the latter number is no less so.
Gubmint tried to re-price the lending risk through central planning.
The avoidance of moral hazard should IMHO be one of the most important considerations when formulating policy. A policy which is would achieve mediocre results but is free of moral hazard is apt to be better than one which could create great results, but has some seemingly-slight moral hazards. If moral hazards exist, markets will adapt to exploit them.
BTW, I've sometimes thought it might be good if the FDIC policy were to, instead of insuring accounts for 100% of face value, instead insure them for face value minus, say, three years' reverse-compounded interest (so if an account was earning 3%, its value would be reduced by about 8.8%). That would encourage people to give some consideration to how solid their bank was, and give a competitive advantage to a bank that was more solid but offered slightly inferior returns. Unfortunately, insuring at anything less than 100% face value might result in more runs on banks, so I don't really know the best solution.
Whoever wrote these kids songs or fairy tales when we were young was a genius....
This whole thing reminds me of the Old Lady Who Swallowed a Fly. Or it should read....There was a great Republic who swallowed some Socialism and than tried to throw some greenbacks to catch the socialism. Substitute Marxism for a fly and Barney Frank for the spider.
There was an old lady who swallowed a fly. (ACORN and leftist special interest group who think that home ownership is a constitutional right)
I dunno why she swallowed that fly,
Perhaps she’ll die.
There was an old lady who swallowed a spider,( (Fannie Mae and Freddie Mac and lax lending standards)
That wriggled and jiggled and wiggled inside her.
She swallowed the spider to catch the fly.
But I dunno why she swallowed that fly -
Perhaps she’ll die.
There was an old lady who swallowed a bird; (Wall Street firms who will buy the loans that FNMA and FHLMC won’t buy because the Gubmint forced lenders to make the loans)
How absurd, to swallow a bird!
She swallowed the bird to catch the spider
That wriggled and jiggled and wiggled inside her.
She swallowed the spider to catch the fly.
But I dunno why she swallowed that fly -
Perhaps she’ll die
There was an old lady who swallowed a cat. (Bailout bill)
Imagine that, she swallowed a cat.
She swallowed the cat to catch the bird ...
She swallowed the bird to catch the spider
That wriggled and jiggled and wiggled inside her.
She swallowed the spider to catch the fly.
But I dunno why she swallowed that fly
Perhaps she’ll die