Re:The End of Libertarianism: The financial collapse proves ...
by davidw on Sunday October 19, 2008 @02:48AM
(#336948)
> Banks do not, en masse, make loans to people who aren't likely to pay the money back without Government encouragement.
But when they securitize the loan, and sell it on, they have every incentive to 'make bad loans', because they get a cut of the sale, and little of the actual risk.
This crisis does not have one and only one cause - it's a mix of nasties that came together. Anyone who is trying to sell you one policy that would have fixed it "it's all the government's fault!", or "if only we had had more regulation!" (without saying what regulation) is very likely wrong.
Tyler Cowen, as he often does, has something sensible to say:
But when they securitize the loan, and sell it on, they have every incentive to 'make bad loans', because they get a cut of the sale, and little of the actual risk.
This crisis does not have one and only one cause - it's a mix of nasties that came together. Anyone who is trying to sell you one policy that would have fixed it "it's all the government's fault!", or "if only we had had more regulation!" (without saying what regulation) is very likely wrong.
Tyler Cowen, as he often does, has something sensible to say:
http://www.nytimes.com/2008/10/19/business/19view.html?partn...