My position is essentially unchanged.

Bad wording on my part. I should have said, "I now read your position..."

Here is one, maybe the CDS market so grossly of whack because people knew the government would intervene?

Been trying to get my head wrapped around this for about a week now and found the BH 2002 report on line. (I am sure you have read it). In it Warren Buffett said something along the lines of, the accounting method used allowed valuation errors that allowed the traders and the CEO's to report "impressive earnings", and thereby allow them to claim rather substantial bonuses, when in fact there were no real earnings. The stockholders get stuck holding the bag.

In other words, "Who cares? I got mine."

ps: anybody else interested in reading it the relevant part starts on page 13, under the heading "Derivatives"

I don't believe I said Fannie and Freddie where the only cause, but they sure did play a significant role with the securitizing of mortgages, snapping up lots of the sup-prime/alt-A loans, and couple that with the fact that they were backed by the government and you have a potential for a very serious problem.

Yes low interest rates and changes in lending standards played a role, but as the article notes Fannie and Freddie wanted some of those too--all the low hanging fruit had already been picked. To keep the thing going you had to make increasingly questionable loans.

Really very typical of a bubble, why this is such a problem for some I don't know. But the fact remains the government certainly did aid and abbet this bubble's growth if not its formation. Maybe it is that most people have grown up thinking that FDR and the government saved us from the Great Depression when that isn't the case at all. In fact...Fannie can trace its origins back to the New Deal. Interesting that these two crises would be linked this way, no?

Steve

Can you please elaborate now or repost what you you answered?

I don't believe I did, or if I did what my answer was.

If I recall correctly, I was reading your position as: gov't reg- "bad", bussiness- "good", gov't- get out of the way.

Your position seems to be a little more nuanced now.

My position is essentially unchanged. I don't think government does what many think it does--try to promote the common good. I see the current crisis as a failure of government, not simply that there was too much, too little or whatever amount of regulation, but that the very notion itself is just not viable.

Here is one, maybe the CDS market so grossly of whack because people knew the government would intervene?

Can you please elaborate now or repost what you you answered?

If I recall correctly, I was reading your position as: gov't reg- "bad", bussiness- "good", gov't- get out of the way.

Your position seems to be a little more nuanced now.

Steven P.,

My first comment was aimed at Steven D. not you.

Not buying that explanation, especially since Fannie Mae and Freddie Mac were involved in the CDS market as well.

The SEC and the AICPA failed to foresee this accounting blunder and offer better/alternative methods for valuation.

It isn’t the only contributing factor but to say, “Oh it is free markets,” is the liars position.

If it were only the bad loans that were causing the problem, your point would have more force. However, what is causing the systemic problem are the credit default swaps and the amount of unregulated leverage. So while "It is only the free markets" is a liars position, "the free markets made things far worse" is not.

The continuing notion that the credit crisis is a result of free markets is just laughable when you have the CRA, Fannie Mae, and Freddie Mac involved in the markets. The governments grubby paw prints are all over this mess. It isn’t the only contributing factor but to say, “Oh it is free markets,” is the liars position.

Exactly so.

And so, McCain's blaming it on 'wall street greed' is as much nonsense as Obama's position.