The Failure of Deregulation

Filed in National by on September 17, 2008

Jesse Eisinger (who writes for Portfolio Magazine) provides a cogent discussion of how deregulation is at the root of our current meltdown. This video is about 5 minutes long and he makes a good case for the failure of the current attitude towards deregulation:

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"You don't make progress by standing on the sidelines, whimpering and complaining. You make progress by implementing ideas." -Shirley Chisholm

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  1. Arthur Downs says:

    Deregulation worked well in telecommunications, where there have been great technlogical improvements. Raw energy cost was never a factor.

    Energy deregulation was anothe matter and there was a lot of political sleight of hand being played. In Maryland, the generating capacity of BG&E was split from the distribution and billing operations. Thus the ratepayers who had effectively subsidized the nuclear plant at Calvert Cliffs ended up as losers.

    Former Governor Glendening put off the inevitable with artificial rate caps that would not kick in until he was out of office. This was smart politics but bad policy.

    Some feel comfortable with a vast and rigid array of regulations. These people tend to be the losers we call socialists.

  2. cassandra_m says:

    Which means you didn’t even watch the video before just jumping in with this not-even-on-topic crap.

    This is a discussion of trying to manage systemic risk.

    Not that you’d be able to discuss that.

  3. anon says:

    These people tend to be the losers we call socialists.

    Well, us capitalists better hope the socialist losers don’t stop lending us their dirty commie money, or we are screwed.

    The Chinese were into Lehman and Fannie/Freddie pretty deep, and they are pissed.

  4. DavidV says:

    Want to prolong a crisis and create a real disaster… invite the government to help.

  5. mike w. says:

    “Want to prolong a crisis and create a real disaster… invite the government to help.”

    Yeah, and teach people that it’s the government’s job to help.

    Cass – This post is about the failure of Deregulation, so Art’s comment is certainly applicable to the discussion.

  6. liz says:

    The President of AIG says, “we never asked for this, we needed a little help, now they have NATIONALIZED they system. Too bad, they won’t nationalize the oil companies, nationalize health care. We the taxpayers are going to bail out a whole lot more of these companies this is just the beginning. GM, Ford and other car companies are waiting in line for their turn.

    McSame wants a “Blue ribbon panel” to deal with our economy, doesn’t that sound like Minner?

  7. liz says:

    ooohhh I love it..,Al went into the studio with Rick and took Rick on with his lies about Gore inventing the internet. Good for Al….hahah…
    Al says Rick can’t read….how true, how true. Rick is a master at twisting words and using his opinion to change fact.

  8. Duffy says:

    Serious question: has anyone anywhere seen a post supporting the AIG bailout? Left or Right I have not seen one post anywhere from anyone that thinks this was a good idea.

  9. mike w. says:

    “Too bad, they won’t nationalize the oil companies, nationalize health care. ”

    You’re kidding right Liz? How’s nationalized oil and health care working out in Socialist countries? (Hint: – not too well.) If you want nationalized industries there are plenty of countries you can move to that are already socialist.

  10. Von Cracker says:

    I’ve heard a few experts say the bailout was the way to go since AIG is so involved with everything financial, be it auto, home insurance, market funds, etc. They have their hands in everything, plus the international footprint of the company is much, much larger than the banks that recently failed, which would have caused massive problems with the international markets.

    Many of these experts stated that the Fed should’ve let the other firms (Bear Sterns) go bankrupt and the only one worth intervention was AIG. Unfortunately, most weren’t aware of AIG grave prognosis until this past weekend, while Lehman and Sterns had months to change its ways, find proper capital, but refused to do so.

    Put another way, if AIG went tits-up, the shockwave would’ve been catastrophic and paralyzing, worldwide.

  11. Von Cracker says:

    Here’s a position Mike: If we’re fighting wars for oil, de facto, couldn’t the argument be made that petroleum is a Strategic National Resource, and should be in the hands of the gov’t?

    I’m not saying that’s the way to go, but it’s a valid argument. Personally, I think we should make oil demand in this country obsolete, and subsequently making the OPEC cartel, to us, obsolete as well. The only way to do this would be to focus on alternative sources, such as wind, solar, natural gas, etc….

    Here’s a fact: In this country, the resources involved to create 1 job in the oil industry would create 4 jobs in the alternative energy sector.

    BTW Mike, I’m still waiting for your response to the Ayers issue.

    Is it still a valid point to criticize Obama for working with Ayers even though they were brought together by the Annenberg Group for the sole purpose of collaborating on a poverty project?

    If so, by your logic, wouldn’t that make the Annenberg Institute a group of terrorist sympathizers too?

  12. cassandra m says:

    I haven’t seen anything yet today that explicitly argues for the bailout, Duffy – other than the reporting that seems to push the Treasury’s talking points today. The closest I’ve read is from Barry Ritholz at The Big Picture and he lists items to consider, but would not take this as an endorsement.

    One thing I heard this AM (on the BBC, I think) is that AIG is the biggest business insurer in China. Sound familiar? The Chinese were among the biggest bond holders of Fannie Mae and Freddie Mac. In the case of Fannie and Freddie, the Chinese made a point of asking the Treasury how they’d get their money back. And if you look at that deal, bondholders get their money 100%.

  13. liberalgeek says:

    The best that I’ve seen today is from Tommywonk. Go check it out.

  14. Von Cracker says:

    That’s where I heard the AIG bail-out rationalization – the BBC, Cass.

  15. Truth Teller says:

    Dereg the air Lines so where is Eastern TWA Pan Am and others today.

    And by the way Mikey the countries that have health care all their folks live longer than us.

  16. feces throwing monkey says:

    Nobody could have see this economic meltdown coming…could they?

    Ron Suskind, quoting an unnamed aide to George W. Bush:

    The aide said that guys like me were “in what we call the reality-based community,” which he defined as people who “believe that solutions emerge from your judicious study of discernible reality.” … “That’s not the way the world really works anymore,” he continued. “We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality—judiciously, as you will—we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors…and you, all of you, will be left to just study what we do.”[1]

  17. mike w. says:

    Feces – Oooh an “unnamed source.” Boy, that’s real credible.

    “Here’s a fact: In this country, the resources involved to create 1 job in the oil industry would create 4 jobs in the alternative energy sector.”

    Sorry, but I’ve not seen proof of said “fact” anywhere. If alternative energy were so profitable that those in the industry could make huge profits while employing 4 times as many workers at the oil industry we’d see the market creating a huge boom in that industry. When the tech is good enough we’ll see huge profits and growth, but not until then.

    Von – On Ayers – Yes it’s still valid. Politics isn’t fair. As an example, Obama probably didn’t work directly with Sarah Brady and The Brady Campaign as part of The Joyce Foundation, but he was still at the top of an organization that bankrolled The Brady’s and other anti-gun groups. The guilt by association is still valid regardless of what his actions may have been while serving on their board.

    BTW Von – Is anyone going to answer the question I politely asked here? somehow I highly doubt it.

    http://delawareliberal.net//2008/08/25/markell-plans-common-sense-practical-plan-to-reduce-gun-violence/

  18. Von Cracker says:

    So, I guess Annenberg and everyone, everywhere that had some sort of contact with them are terrorist sympathizers.

    Good to know that “politics is not fair” is a proper excuse for everything.

    “Honey you pissed on the toilet seat again!”
    “Sorry babe, Politics isn’t Fair, so go back to sleep”

    And your question – I couldn’t give a fuck. I don’t care about guns, either way.

  19. mike w. says:

    Von – I don’t really give a fuck whether Obama had any ties with Ayers or not. It’s irrelevant IMO, about on the level with him not wearing a lapel pin. That said, in politics all kinds of silly things end up being issues. Look at Dukakis in the tank….

    Politics isn’t fair. That’s reality.

    BTW nice response. – Rather than address questions / arguments you folks either ridicule me or state the equivalent of “la la la la Whatever, I don’t care.”

  20. Von Cracker says:

    This was your original statement:

    “There was stupid crap for which I defended Obama (like the lapel pin BS) I consider stuff like the Ayers commercial to be fair game however.”

    So your answer to this is that it’s all part of the game?

    Fairness aside, it’s legitimacy that’s the issue, right?

    And being a child of reality, I know that fairness only applies in sports.

    Again – I’m not the one arguing with you about gun control, so don’t look for me to answer your question.

  21. mike w. says:

    Who says fairness applies in sports?

  22. Von Cracker says:

    god, you’re dense.

  23. liberalgeek says:

    You mean, “Skydad, you’re dense.”

    😉

  24. mike w. says:

    “it’s legitimacy that’s the issue, right?”

    Sure, but the media can and does turn things that aren’t really legitimate issues into huge deals that end up deciding races.

  25. liberalgeek says:

    Like when an anonymous hacker steals a Veep’s email box… Good point, Mike.

  26. pandora says:

    Don’t be silly, LG. That was serious, unlike mortgage and insurance industries being nationalized. Please, get your priorities straight.

  27. mike w. says:

    I’d say the mortgage bailouts are a wee bit more serious….

    LG – Kinda like the “how many houses does McCain own” BS, or the lapel pin BS towards Obama, or Palin’s daughter getting pregnant.