We do need to be especially careful with the kinds of regulations that we impose on small businesses, that's for sure.

Yes. But lets also assume that after 30-40 years of being told, without much counter arguement, that government is a problem many people simply repeat the rote.
There is a large segment of the populace that clings to beleifs without critical analysis. I'm all for constant improvemnet and I've no doubt that regulations in many parts of the US business enviroment are excessive or counter productive. But I'd be very careful about the umbrella assertion.
So many of what were one considered "excessive regulation" have proven to be the only things that kept Wall Street from imploding the economy. We could look at other sectors and see the same things. (Mine safety, Drilling safety, EPA regulatins that stopped pollution that was killing people, and kepot the Cayohoga river from buring...) )
A truly conservative approach to regulation would ensure that no one player is left "self regulating" their own dangerous behaviours that could cause harm to others . Beasue individuals are lousy at assessing risk, and optimistic when assessing potential reward.
Corporations left to pursue short term profit have made countless decisions that have contributed to the damaged manufacturing sector in the US... And at the same time pursued enormous reward to exectuives whilst shareholders and their employeess stood still or fell back from their economic position in the 80s. Sometimes that too, was a rsult of ridding an industry of "regulation" or tax policy. And all part of a generally radical attitude instead of careful conservative analysis and moderate adaptive change.

freeman2 wrote:I would also point that these are small businesses being polled. They have less ability to deal with government red tape and less political power to influence government regulations than is true with regard to large corporations. I think we are dealing with apple and oranges when we are comparing government regulation of small business as compared to government regulation of Wall Street or the oil companiies, or health care or multi-national companies. We do need to be especially careful with the kinds of regulations that we impose on small businesses, that's for sure

Exactly ... I believe I've been trying to make that point now for a week. One can look at regulation as a government / large business wedge against small business and entrepreneurs. There are a few regulations that differentiate by size of enterprise, but unfortunately, too few.

rickyp wrote:

We do need to be especially careful with the kinds of regulations that we impose on small businesses, that's for sure.

Yes. But lets also assume that after 30-40 years of being told, without much counter arguement, that government is a problem many people simply repeat the rote.There is a large segment of the populace that clings to beleifs without critical analysis. I

Ricky, try to think objectively. You just assume that the people who disagree with you are mindless dupes. I would say this sentence works equally well if you change "a problem" to "the solution".

'm all for constant improvemnet and I've no doubt that regulations in many parts of the US business enviroment are excessive or counter productive. But I'd be very careful about the umbrella assertion.

Yes, exactly.

And all part of a generally radical attitude instead of careful conservative analysis and moderate adaptive change.

Exactly.

I agree with you with your concerns about regulations with regard to small business, Monte. I don't have much of a concern about industries where there are large numbers of small businesses competing with each other. My concern is with the economic and political power of large corporations and how that power has been used to keep workers' wages down.

I suspect that at least some small businesses don't exactly comply with all of the government regulations that they are expected to comply with. I suspect that that might have something to do with the angst that these small business have regarding government regulations. Making information regarding compliance readily accessible to small businesses, exempting certain businesses from compliance where the regulations are unduly burdensome, and making it easier to comply with the regulations would relieve some of that angst.

ray

Ricky, try to think objectively. You just assume that the people who disagree with you are mindless dupes. I would say this sentence works equally well if you change "a problem" to "the solution".

Oh. I am thinking objectively. And yes I do think a segment of the US are mindless dupes. I just said as much.
But I agree that if you put "the solution" in there instead of "the problem" you'd be equally right.
The problem is, Ray, that for the last 30 years the ascendant philosophy is "The Problem". And its 30 years of ascendancy have lead to attitudes that allowed radical deregulation of the financial sector (by both political parties, such was the ascendancy of the attitude) and the notion that private enterprise would always make decisions that would inevitably benefit the nation as a whole lead to corporatism that benefited only the elite.

The centre ground between the two, careful conservatism, that saw a role for government that worked for the benefit for society at large, and the nation as a whole, was often abandoned and the polarization that you illustrate with your word substitution came about.
its taken a financial collapse and thirty years of economic regression for working and middle class people to prove that the attitude that government is "the problem" all the time was a crock. And yet you still have presidential candidates crowing on about "deregulation' and limiting government without the acknowledgement that as soon as government got out of the way of Wall Street they crashed the economy. Without, generally, personally losing much.
Radical choices were made because of the acendancy of this attitude,. Not truly conservative choices.
I'm not saying you need a revolution Ray. Just that the one you just had since 1980 (The reagan revolution) failed.(at everything but redistributing wealth to the wealthy) Its time to go back to a middle ground that worked reasonably well from 45 to 80

Ricky, I know that you are speaking specifically about certain financial regulations and their removal, whereas I am speaking of regulation in general, but try to get your head around the entire regulatory scheme in the US which presumably you don't experience as a US businessman the way I do. Also, I'm not even getting into state regulation which is often just as bad. Here's an interesting article from a few years ago

http://reason.com/archives/2008/12/10/b ... y-kiss-off

It shows the vast increase in regulation since 1980 which you fondly recall.

The Bush team has spent more taxpayer money on issuing and enforcing regulations than any previous administration in U.S. history. Between fiscal year 2001 and fiscal year 2009, outlays on regulatory activities, adjusted for inflation, increased from $26.4 billion to an estimated $42.7 billion, or 62 percent. By contrast, President Clinton increased real spending on regulatory activities by 31 percent, from $20.1 billion in 1993 to $26.4 billion in 2001.

The article is before Obama's presidency which has increased regulation even further. For example, this link

http://www.usnews.com/news/washington-w ... egulations

on Obama care:

Section 3022 of the law, which is about the Medicare shared savings program, take up just six pages in the 907-page Patient Protection and Affordable Care Act. But HHS has turned that into 429 pages of new regulations

By the way, since you are a fan, you should check out Jon Stewart's recent interview of Nancy Pelosi. She avoid his question as to why Volcker's 3 page memo on the Volcker rule turns into hundreds of pages of federal law which would no doubt turn into thousands of pages of regulation. Ms. Pelosi dodges the question.

Ray, for the record , I've just spent the last three years trying to develop products in a market that is highly regulated by some 13,000 different authorities in the US. (In Canada its 5 and even that is a pain.)
So I understand why the atittude towards excessive regulation exists.You live in an enormous country that is divided by more governments competing for authority and balancing a myriad of interests...)
However when attacked generally rather than specifically you end up with politicians elected who adopt a philosophy that ends up with the mess in the financial services sector. You end up enabling people who take advantage for their own gain, and without regard for the potential failure.
You have large mining operations that operate with impunity in their sector, due to defanged enforcement of regulations, until their ignorance of safety regulations kills people.
I'm not against the constant refinement of regulation to produce more efficient models. P art of that would require things like sunsetting laws and regulations. After a specific time they either are renewed or written off if they can't be supported...
And I saw Pelosi. Defending legal language is a thankless task. I've often offered clients a 15 page contract knowing that most of it is baloney, also knowing that it by itself is an impediment to a sale...
But i also know that somewhere, in some circumstance the specificity of the language might be vital to court decision should it come to that...
Perhaps thats why Volkers rule grew? Or perhaps its the predilection to specificity in law, rather than writing objective laws?

rickyp wrote:Ray, for the record , I've just spent the last three years trying to develop products in a market that is highly regulated by some 13,000 different authorities in the US.

Man, that's a big number. Sounds like school districts, or some other type of local authority/government. What are those 13,000 authorities to which you refer?

Geo:

There's enough blame to go around, but in my view, Fannie & Freddie were as culpable as the ore you dig out of the ground to fuel a flawed reactor, and about as smart. Wall St built the reactor, figured out how to enrich the uranium thorough leverage and put it to work.

Ricky:

We had a discussion on the old board about Fannie and Freddie's involvement in this by the way. I learned then that F&F entered the area of sub and off prime mortages 3 years after it started, and exited after 14 months. They were responsible for only a small part (I remember 14%) of the poorly qualified mortgages. And yes, they were pressured into the business by Washington politicians, because it was felt that lowering mortgage qualifications could increase home ownership significantly. Didn't work out. But even without Fannie and Freddie, there was an abundance of bad paper out there floating around in CDS's... Without their involvment it would still have happened.

I'm sure there are better quotes in other discussion groups on this issue. What is the culpability of Federal requirements for lending to low income borrowers, and FNMA and Freddie Mac following those requirements in causing the meltdown. (I'm not denying that WS packaging of those loans is also part of the problem.)

We are going to learn some important details here, including that many of the statistics on FNMA and Freddie Mac's involvement are incorrect. The SEC is suing the top execs of FNMA and Freddie Mac for hiding their involvement in sub-prime mortgages and misstating their pervasiveness on their activities.

http://online.wsj.com/article/SB1000142 ... lenews_wsj

Relying on the research of my colleague Edward Pinto at the American Enterprise Institute, I stated in my dissent from the majority report of the Financial Crisis Inquiry Commission that there were approximately 27 million subprime and other risky mortgages outstanding on June 30, 2008, and a lion's share was on Fannie and Freddie's books. That has now been largely confirmed by the SEC's data.

The SEC also charges that Fannie and Freddie's disclosures grossly understated the number of subprime and other risky loans they were holding or securitizing. For example, Freddie's Information Statement and Annual Report to Stockholders, in March 2006, reported that for 2005 and 2004 the company's exposure to subprime loans was "not significant." According to the SEC complaint, subprime mortgages at this point constituted 10% of Freddie's exposures.

Similarly, Fannie held over $94 billion in EA loans in 2007, according to the SEC—"11 times greater than the 0.3% ($8.3 billion)" in subprime loans Fannie disclosed for that year. (According to an SEC press release, both GSEs have agreed with the commission's "Statement of Facts" about their disclosure failures, without admitting or denying liability. They also agreed to cooperate with the commission's litigation against the former executives.)

Did you read Nocera's rebuttal to Wallison? It appeared in yesterday's Times editorial page:

Yet these real sins have been largely overlooked in favor of imagined ones. Over at the conservative American Enterprise Institute, two resident scholars, Peter Wallison and Edward Pinto, have concocted what has since become a Republican meme: namely, that Fannie Mae and Freddie Mac were ground zero for the entire crisis, leading the private sector off the cliff with their affordable housing mandates and massive subprime holdings.

The truth is the opposite: Fannie and Freddie got into subprime mortgages, with great trepidation, only in 2005 and 2006, and only because they were losing so much market share to Wall Street. Among other things, the Wallison-Pinto case relies on inflated data — Pinto classifies just about anything that is not a 30-year-fixed mortgage as “subprime.” The reality is that Fannie and Freddie followed the private sector off the cliff instead of the other way around.

http://www.nytimes.com/2011/12/20/opinion/nocera-an-inconvenient-truth.html

In my view, Nocera got it right.

I had read that ... on Tuesdays I often read both the NYT and the WSJ ... often the lead editorial is on the same topic with diametrically opposed viewpoints.

Frankly, I'm often flummoxed by this because even on the assumption that (in this case) the 3 of us (Pinto, Nocera, and I) are equally intelligent, there's no way I can spend as much time as the 2 of them researching this particular issue (or any particular issue vis-a-vis the experts).

I think this lawsuit will be very important because lawsuits often enable us to strip away much of the spin from all sides. Of course, in most of these situations we will find that both the defendant and the prosecutor are equally persuasive.

Why are you so sure that Nocera got it right? How do you know that your subjective opinion is not simply based on the culture (liberal educated NYC) within which you reside? I've been reading the WSJ religiously for about 25 years. No doubt is has had a powerful influence. But doesn't the reverse also hold?

Ray Jay wrote:Why are you so sure that Nocera got it right?

I'm not. It's just my sense of things, and I could very well be wrong along with Nocera.

Still, my sense is that these lawsuits against Fannie/Freddie will boil down to disclosure: what did the executives say vs. what they were actually doing, and that they may very well be found guilty, because disclosure is so hard. For senior execs you don't even have to prove intent to mislead, as I understand it.

None of this changes my opinion: Fannie and Freddie were the fuel of the crisis, and about as smart. Like with many questionable (criminal?) activities, the dumbsh*ts get caught while the brains get away.