Is 1989 that far gone?

The irony though is that in this case it was the regulators, through their outsourced risk measurers, the credit rating agencies, that induced the herd to run over the subprime precipice.

If you jusr read I say the opposite. Absent the “official” risk content specifications provided by the credit rating agencies the market would have worked a lot better, the pricing would have been more correct, and the subprime mess would never have happened.

Worldly wisdom teaches that it is better for the reputation to fail conventionally than to succeed unconventionally. John Maynard Keynes

We need regulation, because the herd of managers of other people's money will, regardless of the information available to them, always crowd into the worst of the boom's excesses — leaving the taxpayer to bail out the system.

Prices are information.

In this particular financial example, you assume that absent the ratings agencies, no pricing would occur. This is false.

Hence, your inherently stupid non-economic statement,

Without the credit rating agencies no one would have been able to resell anything.
Posted by: Per Kurowski

Dumb statement.

[Plus, they got the ratings wrong, didn't they?]

Hmmmm, I always thought the borrower was taking the risk. The risk that the value of the asset would be greater than the debt. (When using debt, equity becomes a call option).

Dumb comment:
Self-explanatory

This is an effective slam at Dione for standing for nothing, but the statement seems otherwise self-contradictory because the "left" could not be the "left" if it advocated capitalism; could it?

Markets work just fine. Its the the agents who comprise the market that go haywire from time to time.

Nobody says that markets forgive stupidity.

Anyways, EJ Dione is boring. He is a political writer, what else do you want him to say? The only reason he attacks capitalism or the market is because conservatives have sided with the market.

If the left was on the side of capitalism and regaled it with praise on a continual basis then Dione would argue for capitalism.

Markets work just fine. Its the the agents who comprise the market that go haywire from time to time.

Nobody says that markets forgive stupidity.

Anyways, EJ Dione is boring. He is a political writer, what else do you want him to say? The only reason he attacks capitalism or the market is because conservatives have sided with the market.

If the left was on the side of capitalism and regaled it with praise on a continual basis then Dione would argue for capitalism.

Without the credit rating agencies no one would have been able to resell anything.
Posted by: Per Kurowski

I’ll explain later. If I have time.

This is flatly lying, and completely inaccurate.

Oh, this is so way down the list of causes for the subprime crisis. Without the credit rating agencies no one would have been able to resell anything.

Up there, as proud and sole the numero uno culprit, we find the financial regulators who ignoring the markets ordered or stimulated about everyone, one way or the other, to heed the advice of the credit rating agencies… and which unanimously shone their prime ratings on some securities collateralized with much worse than subprime subprime mortgages… and the market followed them… as lambs.

If we have a problem it is that the current crop of conservatives is a very weak one and they all got side-blinded into the stupidity of believing that just because the credit rating agencies were private…they represented the markets. Our conservatives and many others were fooled by the regulators who instead of having appointing their own financial commissars, which would have raised hell, outsourced that function to the credit rating agencies.

Have you heard about any regulator having been held accountable and fired because of having contracted the credit rating agencies? No? I didn’t think so!

Without the credit rating agencies no one would have been able to resell anything.

[After Gekko took size position, trying to unload, i.e. seller]

As a professional trader, I would advise against taking bids, and instead hitting them when you are a seller, as this will protect you from any future Oliver Stone Hollywood script terminology confusion, especially being on the wrong side of the trade (hit bids = seller, lift offers = buyer).

Helpful weekend trading tip….

Wrong. Regulation is dead:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aAYLeK3YAie4&refer=home

IndyMac Seized by U.S. Regulators; Schumer Blamed for Failure

By Ari Levy and David Mildenberg

July 12 (Bloomberg) — IndyMac Bancorp Inc. became the second- biggest federally insured financial company to be seized by U.S. regulators after a run by depositors left the California mortgage lender short on cash.

The Federal Deposit Insurance Corp. will run a successor institution, IndyMac Federal Bank FSB, starting next week, the Office of Thrift Supervision said in an e-mail yesterday. The regulator blamed U.S. Senator Charles Schumer for creating a “liquidity crisis'' after a letter on June 26, in which he expressed concern that the bank may fail.

The Pasadena, California-based lender specialized in so-called Alt-A mortgages, which didn't require borrowers to provide documentation on their incomes. The demise adds to the crisis caused by the subprime collapse and may mean regulators will have to raise more money to support the federal deposit insurance program that repays customers when a bank fails.

http://www.fdic.gov/news/news/press/2008/pr08056.html

More to follow.