Well Reasoned Article about Regulation and Free Markets

#2
#2
the problem is financial instruments are getting more complicated, not less. even people who want to properly price them in their filings are bound to get it wrong. this leaves a lot of room for manipulation. not sure how to solve that though unless you want to ban everything the sec doesn't understand.
 
#3
#3
droski said:
the problem is financial instruments are getting more complicated, not less. even people who want to properly price them in their filings are bound to get it wrong. this leaves a lot of room for manipulation. not sure how to solve that though unless you want to ban everything the sec doesn't understand.
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I don't think he's necessarily advocating hardcore regulation as much as he is saying that cheaters are going to get around a static set of laws and that can't be overcome. Clarity is the greatest asset to a market and he's arguing for it, almost in a common law plea. He's arguing for doing the right thing, but that's just too much for folks.

I'm not at all for further regulation. I am for better disclosure.
 
#4
#4
What government regulation caused the Tulip Mania or the South Sea Bubble?
 
#5
#5
BigPapaVol said:
I don't think he's necessarily advocating hardcore regulation as much as he is saying that cheaters are going to get around a static set of laws and that can't be overcome. Clarity is the greatest asset to a market and he's arguing for it, almost in a common law plea. He's arguing for doing the right thing, but that's just too much for folks.

I'm not at all for further regulation. I am for better disclosure.
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i agree 100%, but if something never trades and only the people who made it really understand it, what benefit do you get from greater disclosure? i.e. who decides what's the fair price or even more important the fair amount of exposure you need to report?
 
#6
#6
Velo Vol said:
What government regulation caused the Tulip Mania or the South Sea Bubble?
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Relevance?

Maybe you should look into a book I like to recommend (Extraordinary Popular Delusions and the Madness of Crowds), which addresses many market bubbles and the psychology of those who make them happen. Very interesting.

In the end, we aren't going to get rid of the bandwagon or the rise and fall of bubbles.
 
#7
#7
droski said:
i agree 100%, but if something never trades and only the people who made it really understand it, what benefit do you get from greater disclosure? i.e. who decides what's the fair price or even more important the fair exposure?
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I agree that disclosure protects the buyer, who shouldn't be buying if he's too stupid to understand the product.

Fair price is a difficult animal for one off products and seldom traded items. I would advise a buyer to understand all he can, but God has a way of parting fools from their money. No amount of regulation will stop that and the line of fools with money is long.
 
#8
#8
I think people should go to classes to learn about what they are buying before they do, especially housing.
 
#10
#10
BigPapaVol said:
good grief! We already go way out of our way to protect the stupid from themselves and you just can't make people learn.
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How do we actually educate people on what buying a house involves?? I'm not just talking about money wise, I'm talking repairs, insurance, taxes, and other things. It's like marriage, I think that you should have MANDATORY counseling before you tie the knot. These are good mandates that states can impose honestly. The states should become more responsible for their residents and tell the feds to go fly a kite.
 
#12
#12
BigPapaVol said:
I agree that disclosure protects the buyer, who shouldn't be buying if he's too stupid to understand the product.

Fair price is a difficult animal for one off products and seldom traded items. I would advise a buyer to understand all he can, but God has a way of parting fools from their money. No amount of regulation will stop that and the line of fools with money is long.
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yup. obama wont stop too big to fail no matter what he does.
 
#13
#13
g8terh8ter_eric said:
How do we actually educate people on what buying a house involves?? I'm not just talking about money wise, I'm talking repairs, insurance, taxes, and other things. It's like marriage, I think that you should have MANDATORY counseling before you tie the knot. These are good mandates that states can impose honestly. The states should become more responsible for their residents and tell the feds to go fly a kite.
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So the state should be responsible to educate people about life and making financial decisions? First, that's loony. Second, given the way the state educates and executes today, why do you believe they would do it even remotely well?
 
#14
#14
g8terh8ter_eric said:
How do we actually educate people on what buying a house involves?? I'm not just talking about money wise, I'm talking repairs, insurance, taxes, and other things. It's like marriage, I think that you should have MANDATORY counseling before you tie the knot. These are good mandates that states can impose honestly. The states should become more responsible for their residents and tell the feds to go fly a kite.
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and those of us who already understand this stuff should be forced to take said mandatory class?
 
#15
#15
CountVolcula said:
People should learn to live within their means.
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I agree, but most of the people don't even know the consequences if they can't afford it. This is one thing I am VERY adamant about in educating adults, because HS doesn't prepare most for this. Even college doesn't do that good of a job really.
 
#16
#16
g8terh8ter_eric said:
I agree, but most of the people don't even know the consequences if they can't afford it. This is one thing I am VERY adamant about in educating adults, because HS doesn't prepare most for this. Even college doesn't do that good of a job really.
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Seriously? Tell people that owning a home has costs and that failure to pay on a mortgage has consequences?

Let me know which college doesn't educate folks in basic math and decision making.
 
#19
#19
BigPapaVol said:
Seriously? Tell people that owning a home has costs and that failure to pay on a mortgage has consequences?

Let me know which college doesn't educate folks in basic math and decision making.
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Based on foreclosure and short sale rates, they suck at it really.
 
#25
#25
g8terh8ter_eric said:
Based on foreclosure and short sale rates, they suck at it really.
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what are the foreclosure rates? how many of those are tied to broad economic issues?

In the end, there isn't enough education on earth (or regulation) to keep people from doing stupid crap. There also isn't any education to help people avoid unintended consequences or bad fortune. It's going to keep coming.
 
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