Bruce Bostwick <[EMAIL PROTECTED]>
> Are you seriously
> suggesting that we should deregulate the entire financial system to
> that extent?
There shouldn't be any arbitrary regulations imposed by the government,
which obviously has little clue of what regulations make for an efficient
system. I am not suggesting that there should be no insurance, and the
insurer(s) certainly should be making rules that make it possible for them
to estimate the risks of providing the insurance. If the government is an
insurer, then it is not unreasonable for the goverment to regulate.
Unfortunately,
the government has made the mistake of trying to insure far too much, and
charging far too little, and not doing a good job of estimating the risks that
it is insuring. The government should get out of the insurance business as
much as possible.
> Or would you agree that mandating at least enough
> reserves in the system to where we don't get this domino effect when
> the inevitable escalation of risk reaches the point where the system
> can't withstand it anymore might actually be a good idea,
> "interference" though it may be?
Don't agree. I think a rational insurer would charge dramatically higher
premiums for larger risks. The large, risky financial institutions you mention
should have been charged extremely high premiums. But they were not,
since the government is a poor insurer. If the premiums had been
commensurate with the risks, I suspect the system would have been
less dominated by a few large players and more diverse with many smaller
players. I guess that would be a lot more stabile. But instead we have the
situation of a small number of too-large-to-fail institutions that the
government
bails out, and will likely continue to bail out when the next "crisis" comes
along.
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