On the academic front: what exactly would one like to regulate. Crises make for bad laws. You cannot increase the capital requirements to overcome the financial crash.
Glass Steagall, the great lesson learnt from the 1929 depression, is now effectively being repealed when investment banks are part of normal commercial banks.
The lesson drawn from 1929 was wrong !.

Finally, if you regulate you would have to identify the evil. Happy lending is not bad per se, lending to people who will not be able to pay back the loan is something you cannot predict (or regulate). In the end I am afraid, one attempts to regulate greed which well intentioned politicians will pursue zealously and incompetently.

At the risk of sounding like a disillusioned Communist or Marxist bemused that ‘the people’ knocked down the wall and voted with their feet, “But communism hasn’t been tried yet, what is there not to like?”

Liberalism hasn’t been tried, not recently. IF the population thinks it is living in an economically liberal economy (and I grant you the majority don’t give it a moments thought), they should really open their eyes. The EU for a start is a socialist, protectionist and regulatory organisation. There isn’t an aspect of our daily life that isn’t worth inspecting and regulating, be it which bin to put your rubbish in or how much oxygen you personally breath – for that is the flip side of carbon credits.

DBC REED: “Gov’t gives away billions.”

Apart from the fact that in a liberal economy the government wouldn’t have billions to give away, I have personally been railing against the bailouts (poor old John Redwood has been very patient), these companies should have been left to fail, the wreckage picked over by the survivors. That would have been capitalism.

What we have now is more like government directed corporatism, which in my opinion is pretty much Fascism Given the lefty leanings of the European Union that might otherwise be known as National Socialism.

But I give you lefties credit, you have enormous brass neck.

Yes.

DBC REED: “This is the first time I have heard anyone say ,even on the most right-wing revisionist sites, that the Great Depression did not exist”

So, in fact nobody said the GD did not exist.

DBC REED: “I simply suggested that there was a problem with the lack of credit in the Great Depression and that Fannie Mae was created to ameliorate its effects in housing.”

It is difficult to reconcile what I can see you wrote earlier, with what you claim to have written. But I take it that that is what you intended to write.

DBC REED: “I take your point about it being the regulators causing F&F to create great floods of credit for housing,not F&F doing it off their own bats.”

Again, you seem to be telling me I said things I don’t appear to have written.

The point about the regulators is that they didn’t stop F&F creating ‘innovative’ financial products and selling them on the third parties. In short, regulation failed. Is that the third time I have said that?

DBC REED: “I’m afraid, is that it looks like the game is up for free-market liberalism.”

Ah, now I see why you have been deliberately missing the point all this time.

One final point:

DBC REED: “Freddie Mac came along later to provide competition -what happened to that BTW”

I can’t see how you can have competition between two state sponsored organisations, I would rather call such an arrangement a cartel.

http://www.reuters.com/article/gc03/idUSSIN35058520080910

Michael Spence said an oversupply of houses and weak demand from consumers combined with turbulent financial markets and high inflation will drag on the U.S. housing market, which is in its worst slump since the Great Depression in the 1930s.

“It’s going to take awhile to work that out of the system, probably a couple of years,” said Spence, who won the Nobel Prize in 2001. Spence said he expects “100, 200″ banks to collapse in the United States in the next year because a number are not well capitalized, and the U.S. government will let the smaller ones fail without intervening.

“If you take a reasonable guess as to the value of the assets that they have, it’s less than the liabilities, so they are bankrupt,” he said.

Global financial markets have tumbled after defaults on U.S. mortgages surged to record levels. Many of those loans were repackaged and resold, which has sapped liquidity from markets worldwide.

In the latest debacle in the bust, U.S. government on Sunday seized control of the two largest U.S. mortgage finance firms Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz), which have suffered combined losses of nearly $14 billion in the last four quarters.

Spence said the government was right to take over the two companies, whose debt is held by central banks, because it reduced the risk of further credit tightening in markets, but it now needs to put money into the firms quickly so they can buy mortgages again.

However, he said the firms and the government should not engage in “irresponsible” purchases of overpriced houses just so they can prop up the property market.

“What we really need is financing for house purchases that are legitimate, and businesses that want to borrow money,” he said. Continued…

Did I say the great depression did not exist? It seems you are telling us that Fannie Mae was responsible for the end of the great depression?

That would be a pretty significant achievement if true.

Looking at the timeline, Fannie Mae was established in 1938 and the great depression had already been going for nearly a decade by that time.

One year between establishing Fannie Mae and the [generally accepted] end of the great depression would really be quite an acheivement.

I don’t believe it!

Freddie Mac was established in 1970 with a similar brief to Fannie Mae, so either Fannie Mae was not doing its job very well or Freddie Mac was unnecessary? Either way, Freddie Mac had nothing to do with ending the great depression.

DBC REED: “FDR era was a socialist con”

Many of the things he did are considered unconstitutional.

DBC REED: “You then complain that FMx2 did not regulate the markets enough”

No, the regulators who were supposed to be regulating Fannie and Freddie did not regulate them, i.e. regulation did not work!

DBC REED: “But we don’t have these institutions and our banks created as much ,if not more, excess credit using that private-sector ”

No, we didn’t have these institutions, but our institutions did have access to the cash generated by Freddie and Fannie. Which was spread around the global market, why do you think the Chinese were so excercised at the prospect of a collapse of F&F?

DBC REED: “But financial services are monitored by ratings agencies, because the securities are so non-transparent .”

If you are happy to buy something you don’t understand because someone you don’t know tells you, “go on mate, it’s good to go!” Then frankly you probably ought not to be buying that thing.

DBC REED: “that international business would be impossible without them.”

There is nothing ‘non transparent’ about a Company bond or a Municipal bond, or a Certificate of deposit or a Letter of credit. There are lots and lots of perfectly transparent financial instruments and international business has, in the past managed perfectly well without the more opaque and exotic instruments.

State level planning http://www.hcd.ca.gov/hpd/

Federal planning http://www.hud.gov/

Pesky reality getting in the way of knee-jerk anti-Americanism much?

You might also want to look at the ASI blog

http://www.adamsmith.org/blog/economics/fannie-mae-and-freddie-mac-200809102097/

which suggests it was the regulators forcing Fannie and Freddie to loan to riskier customers caused the dodgy loan book

And the idea that UK planning delivers enough housing to meet UK demand? Don’t even get me started.

A good formula, I believe. Additionally, only one body should regulate the mortgage market, not three as at present.
Also there should be greater accountability; I read that the CEOs of both Fannie an Freddie left immediately.
That should happen in our banks and building societies when there is a monumental foul-up, as in these cases, – and in government!

Lehman, whose shares have plunged more than 80 percent this year as investors lost confidence in the financial services firm, also said Wednesday it lost $3.9 billion during the third quarter. The company, like others on Wall Street, suffered from wrong-way bets on mortgage securities and other risky assets.

The company did not name a buyer for a 55 percent stake in its prized investment management business, which includes Neuberger Berman. And it plans to spin off to shareholders $25 billion to $30 billion of its commercial real estate portfolio into a publicly-traded company called Real Estate Investments Global early next year.

The company also plans to slash its annual dividend to 5 cents from 68 cents weighed on stock futures.

http://www.cbsnews.com/stories/2008/09/10/business/main4433776.shtml?source=RSSattr=HOME_4433776

I may be wrong, but I think it is wrong to conclude that markets have failed.

What we have had here is absolutely in *no* way a *FREE* market. The market has been massively distorted – for example by regulations on land use which have held down supply, while demand is constant or rising, which simply acts to raise prices.

A free market would not have behaved in this way. It is *because* the market is not free that all the people ended up getting the short end of the stick.

The failure here is on the part of the State for distorting the market.

Fair enough, your land, your call. Of course if you retain ownership, short of a compulsory purchase, you can ensure no building in your lifetime with or without trees.

I was merely suggesting it is illogical to plant trees with the potential for statutory protection, if you have any development aspirations.

In my experience (around 15 years in housebuilding) I am yet to meet a single person who has declined an offer of several hundred thousand pounds over and above the existing use value of their land because they were opposed to development in principle. Indeed, the complete and almost immediate reversal of position is often amusing to observe when they realise you want to develop THEIR land.

There was an interesting piece on newsnight a while back which proposed removing all traffic lights and signals from roads. The same argument was given. Ie that “perversely” road signs\lights cause more accidents and actually reduce traffic flow and not enhance it.

When you see a green light you generally put your foot down without need to think too much. Of course, if you are involved in an accident, its okay as you had the legal right of way!!!

The other thing about regulators is the huge cost.

and has poo poo d the idea of replacing the whole thing with state backed medical insurance, which would force the providers to optimise, and react more quickly to real patients

shame the conservatives cannot see the bleedin obvious here

the landscape is wide open for a party that defends the patients rather than the dross of the nhs