[marricks]

1) I'm discussing the narrative, the poster only cites over-regulation as a problem, which I haven't seen bail-outs called before. The language implies government rules are the problem.

2) Many notable economists actually blame deregulation, such as Alan Greenspan & the SEC [0]. I think the man who oversaw much of the deregulation while it was happening calling it a problem in hindsight is a pretty darn good indication.

Of course your right though in the sense it's many things happening together, and the finger can never be pointed at one person let alone one group of policies. Still many people see the increased volatility caused by that regulation as a pretty big part of the cause.

[0] http://www.nytimes.com/2008/09/27/business/27sec.html

[pdeuchler]

Nobody is arguing for deregulation. We just want government regulation that doesn't overtly protect the wealth of the ruling class.

Stop perpetuating false dichotomies that preclude valid criticism of current policies.

[cft]

It's fine to protect the wealth that is value creating (like actual industry). What is happening is increasing protection of value transference sectors (banking, pure equities plays that are often tax free, Hollywood's intellectual property), combined with increasing pressure on value creation sectors (higher corporate income tax rates) on actual real income, especially for small business that does not have scale to participate in legal tax dodging schemes.

[marricks]

Hmm, I see how I could be seen as doing that.

Thanks for the reply!

[generj]

Per point 2, Greenspan is kind of the worst person to make that call. There's a very good argument that he explicitly allowed that deregulation and coupled it with a series of bailouts, resulting in the "Greenspan Put". This moral hazard was then combined with very cheap credit, all at his insistence. I'd take anything Greenspan has to say about the economy with a few metric tonnes of salt - as would many people who served on the Fed Board with him. The documentary 'Money for Nothing' is a great laymen's view on this.

Similarly, the SEC isn't a super credible economic source for several reasons. One being if you are smart enough to work at Goldmans you don't work at the SEC. It's pretty self-serving for the agency in charge of regulation to argue that de-regulation was harmful. Do you know the specific economists making this argument? I'm very skeptical until I see names, and then my skepticism decreases while reading the actual paper.

I would argue that deregulation was not the central issue - which was a rise in activities which circumvented regulation, like off-balance bank trading. Greenspan shielded these new fields from regulation, and the resulting over-leverage killed banks. In addition, overly cheap credit made these activities and mortgage in general overly attractive.

There is a lot of evidence for this view, mostly in the multitude of institutions and industries which all had problems simultaneously. You can view this as a coincidence or you can view it as industries responding to incentives set by Greenspan.

TLDR Greenspan caused the housing bubble.

[kiruwa]

> I'm discussing the narrative

No, you're discussing your narrative... which doesn't have much to do with the post you replied to.

Greenspan is rather heavily implicated as one cause of the problems. But he's attempting to shift the blame to the political side, rather than the economic side he was responsible for. He may actually be right, but I wouldn't take his word for it just because he was there. He's joined by political hacks pretending to be economists (like Krugman), and a few genuine economists. But it's far from agreed-upon.