Reply #1: Even in a deregualted market, failure to follow the fundamentals = disaster

[OmahaBlueDog]

Why did the dot.com bubble burst? Because, for 3 years, investors large and small ignored basic indicators such as market capitalization and p/e ratio and bought wildly overpriced shares of unproven companies.

I'm in my early 40's; when my parents went to buy a home, there were 15 and 30 year mortgages available. To get one, a buyer had to come up with a 20% downpayment. Flash forward -- houses got more expensive, and people saved less and less. Products increasingly allowed buyers to enter the housing market with less and less equity, and service less and less debt. The end result is that buyers were allowed to buy homes with no money down and only servicing interest on the loans they made -- and this on the assumption that home prices would always rise.

I am a firm believer in market capitalism. I believe in the innovation it brings and the demands it meets. However, we need to recognize (as we did 100 years ago) that as much danger lurks in big business as big capital. Government needs to robustly protect all against the expediency of the marketplace. This is a fine line, since a business needs to operate efficiently, but ultimately needs to serve society's greater good.

Oil is the most glaring current example of this. Despite the warnings about global warming, and despite the moral compromises nations make in obtaining oil from unsavory regimes around the world, we continue to use oil-based petroleum and hear demands to drill for more. Why? Because it's expedient. Oil is there; oil is cheap to get out of the ground; making products from oil is an established practice that favors entrenched businesses. Yet continued use of oil is not in America's interest. Even if you don't believe one word about global warming, you can't deny that oil has forced us to send huge sums of cash to nations that share none of our values.

Without government regulation, we will continue to use oil. Only government can create and enforce milage standars. Only government can herd the markets toward producing alternative fuel vehicles, and only government can stand up and tell oil companies that they cannot drill anywhere they want.