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URL:  http://boards.fool.com/hi-slap-i-guess-the-question-is-whether-we-want-27059668.aspx

Subject:  Re: Anatomy of a Disaster (formatted) Date:  10/4/2008  8:24 PM
Author:  Dwdonhoff Number:  257651 of 525250

Hi Slap,

I guess the question is whether we want to live in a free system of extreme booms and busts, or a system of regulation with smaller booms and busts.

Therein lies the fallacy...

The reality is that regulation SOMETIMES reduces a cyclic extreme, and SOMETIMES excacerbates a cyclic extreme. There's no way of telling for sure,in advance, which it will be (such is always the nature of unintended consequences.)

The systemic troubles we are having right now are CLEARLY significantly a result of the government intervention in artificially depressed interest rates (via the Fed) for an over-extended period of time, along with artificially extended risk-taking (via federally-encouraged Fannie & Freddie voraciousness, and HUD/FHA under-insuredness) for an over-extended period of time.

While so many are crying for MORE regulation, they're blind to the reality that the CURRENT ills are from an OVER-EXUBERENCE of ineffective regulation and government intervention.

As long as we are as blind to the effects caused by our government intervention, we can never hope to begin to become accurate in the proper balancing of beneficial intervention.

We're simply doomed to dramatic swings... whether we mess with nature, or not.

Cheers,
Dave
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