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<p>Gee, I guess Wall Street firms touting dot.com “dogs” while they took in hundreds of millions in IPO fees was the “free market” working.</p>
<p>The same goes for Enron manipulating the California energy market as well as the recent run-up in oil (where a big chunk of the run-up had nothing to do w/ the supply/demand equation and had everything to do w/ the rush of speculators into the latest bubble).</p>
<p>Now, the excess credit was bad policy by the Feds and the current administration which was desperate to keep the economy going (just like Reagan, all the “growth” was via “easy money”).</p>
<p>But, at the same time, there were members of Congress pushing for legislation to prohibit these bad lending practices but any such attempts were quickly killed thanks to $$ from lobbyists.</p>
<p>Even w/ the low interest rates pushed by the Feds, we wouldn’t be in nearly as bad of a shape if previous regulations hadn’t been watered down or done away w/ by Phil Gramm and his cohorts.</p>
<p>The regulations that had been in place would have PROHIBITED these financial firms from taking these huge risks w/ “swaps” and thus, leveraging themselves to the point of no return if things turned south which was inevitable.</p>
<p>Besides, how well did the markets “work”. All these financial firms knew that some of the paper was bad or that they didn’t know the true worth of the paper and yet, they continued to buy and securitize these mortgages b/c there was a “feeding frenzy” (that’s the market at work) and there was gobs of easy $$ to be made.</p>
<p>In order for the markets to work smoothly, there needs to be TRANSPARENCY, but you can’t have that when the regulations to make that so have basically been gutted (same thing happened 20 some years ago w/ the S&L scandal and bailout - it’s no coincidence that McCain and his good buddy Phil Gramm have their fingers in all of the excesses and burst bubbles of the markets of the past 20-25 years).</p>
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<p>Harvard prof. and the “father of Reaganomics”, Martin Feldstein, who was instrumental in the push for deregulation of the financial markets grudgingly admitted that this mess was a result of over-deregulation and the resulting lack of oversight.</p>