the fruits of de-regulation:....our current economy

[spanone]

i suspect we should be thankful that our social security 'lock-box' isn't locked up in the stock market.

paul krugmans take here: http://lettrist.blogspot.com/2007/12/where-deregulation-took-mortage.html

[Fresh_Start]

1. the issue is more than deregulation

its our incredible willingness to live beyond our means - as individuals and as a society
its our need for instant gratification, placing possessions high on our priorities

[SoCalDem]

2. De-regulation made it all possible..

There was a time when "ordinary" people did not spend more than they had.. they COULDN'T.. Before the mid 70's only department stores & oil companies issued credit to the average person of modest means.. You had to meet a high income threshold to get an American Express card..and you had to pay it all off every month.. The department stores were pretty choosy too, about who got credit and who did not.. Our Standard Oil credit card had a limit of a couple of hundred dollars too ..

People used to SAVE for stuff they wanted..

De regulation led to loose-credit for everyone..and the spendathon started.. Once ON the spendathon machine, there is no easy way OFF..

[spanone]

3. it also led to mortgage companies getting 'creative' with loans

while the fed looked the other

[Fresh_Start]

6. Actually there are regulations in place

but many of them are not enforced in the way they need to be enforced

There are safety and soundness requirements on all regulated financial institutions.
Those have not been deregulated away.
But no one is minding the store.
Its neglect by a government that wants government to fail and is pro-corporate profits above all other goals

[spanone]

10. 'no one is minding the store' that is the issue.

[Fresh_Start]

13. yes, like all the other regulations our government choses not to enforce

starting with immigration laws and environmental laws and labor laws, they aren't enforcing financial soundness.

There is a pattern.
It is intrinsic to the GOP small government/free market philosophy
And it repeatedly leads to the same damn problems, over and over again

The insidiousness of corporate driven government policies is very broadly based

[Fresh_Start]

4. Isn't there any personal responsibility involved?

Even in a consumer credit environment, the consumer doesn't have to spend.

I live within my means. I have lots of credit that I don't use.
I've cut down spending due to fears about the economy.
I have savings.
I bought my first home at 25 before I was married.
You don't have to use credit; no one can make you except yourself.

I'm happy there is consumer credit available.
We are all strangling in stuff.
That stuff causes pollution to manufacture and causes pollution to dispose of.

[SoCalDem]

5. true..BUT

accessability of credit attracts people who cannot handle credit the way you did/do. When people have to save for stuff, they stay out of debt..Debt has been made "good for the economy". There was a time when debt was a bad thing.. Debt takes away freedom..

[Kingofalldems]

7. Instead of higher wages

people now get easy credit. And the joke is on them.

[Fresh_Start]

8. and tax rebates financed by debt we pay interest on

and our children will pay interest on and our grandchildren will pay interest on

[spanone]

9. of course there is.

but the commercials on television were relentless....ditech dot com...blah blah blah....people sadly tend to trust banks and lenders because they are supposed to be federally regulated....buyer beware is always the caveat, but we also have regulations to keep people within the laws.

[Fresh_Start]

11. I totally agree with you that media pushed spending

but you don't need to watch the media.

[spanone]

16. of course you don't....but EVERYONE does..

[Fresh_Start]

18. its a choice

I stopped when I went away to college and never restarted
My husband watches history channel and nature channels so he made a similar choice to minimize watching
My 12 year old watches one show a day and he only started doing that in the last 6 months

[SoCalDem]

12. that.. and...

people are terminally optimistic about their futures..

On paper, everything "works out", but in real life, things "happen"..cars break down. marriages fail, furnaces quit working, roofs leak, kids get sick, jackets get left on the bus, colleges demand tuition..

We have all been brainwashed into thinking we need "stuff" and we need it NOW.. (we can pay later)..BUT if you don't have the money for it NOW, what makes you think you will have it LATER??

I have a friend who shopped all over town, for WEEKS to find the best deal on a TV, and then she put it on a credit card.. I KNOW she did not pay it off right away, so the interest she paid on that tv, ended up costing her MORE than what she "saved"... (and it was their 4th TV)

[spanone]

15. also i read that many of these 'loans' were fraudulent. misrepresented the facts

the lawsuits out of this mortgage 'crisis' will be going on for years

[SoCalDem]

17. and any "fines" that result from prosecutions will just go to the government

not to the people who got scammed..

[LSK]

20. personal responsibility will fail, that is why you need regulation

[fasttense]

14. Who needs a law when a law can be broken

by any government official too lazy to do their job.

[spanone]

19. from march 2007

The dangers of deregulation

~snip~ Why is the market so nervous? Mainly thanks to the latest bitter fruit of financial deregulation : the collapsing $1.3 trillion "subprime" mortgage business, which
now accounts for one mortgage in three. Here is a textbook case of why financial institutions need to be regulated, to protect both consumers and the solvency of the larger economy.

In the past decade, as regulators discarded rules, shady mortgage banking companies, financed by the bluest-chip outfits on Wall Street, calculated that they could make a lot of money offering bait-and-switch mortgages to poor credit risks. Default and foreclosure rates would be greater, but higher profits would more than compensate for the risks. So the subprime mortgage industry, enabled by the big banks, invented amazing gimmicks. These included not just variable-rate mortgages, but mortgages that were initially interest only, mortgages with introductory teaser rates, mortgages with no down payment. No income verification required! No credit check! Subprime operators targeted people with horrific credit histories and families desperate for housing who could not afford the debt they were taking on. Last year, 60 percent of subprime loans required no meaningful documentation.

http://www.boston.com/news/globe/editorial_opinion/oped/articles/2007/03/17/the_dangers_of_deregulation/