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Carter signed into law the Community Reinvestment Act which forced banks (regulated, if you prefer) to give credit to uncreditworthy buyers.What are some other examples of 'regulation gone bad'?
How about de-regulation? I think the deregulation of the energy markets in many states has been a disaster, sometimes regulation is a good thing.
How about de-regulation? I think the deregulation of the energy markets in many states has been a disaster, sometimes regulation is a good thing.
Lol, are you nygreenguy in disguise? Just kidding - he's a guy who mentioned the same thing in regard to the electricity over at NJO.I think in the short term, deregulation of a large industry that has been regulated for a while can lead to spikes in prices and people naturally get fed up with that and call for regulation once more. I think over time you'd see lower prices and more efficiency as more competition entered the market, but in the mean time the prices might bowl some people over. Since everyone needs electricity, the public probably wouldn't stand for such a thing. It might be the case where regulation in that market is necessary until/unless they can find a way to make a transition to deregulation which successfully allows competitors to compete for customers' services.As for the Carter bill, I think it would be hard pressed to blame the current credit crunch too much directly on that alone. Congress has had enough time between 1977 and today to tweak it if it saw problems (and it should have). Besides, there's a risk/reward scenario with extending credit to those who probably shouldn't qualify for it. The reward is higher economic activity (such as during the 1980s or late 1990s) because more people can buy on credit. The downside is that many people can default on their payments. Taking risks can have good or bad consequences, and taking big risks will exacerbate these.
The reward is higher economic activity (such as during the 1980s or late 1990s) because more people can buy on credit.
Doesn't that lead to an economic bubble though and isn't this what led to the current situation? Higher economic activity because more people can get credit doesn't seems like shaky ground.Maybe that's how it works, I know very little of this stuff anyway.
Market speculation, unsound regulatory policies, and the social desire for “status” is what caused this mess. People live beyond their means when they are given a blank check to do so. Credit is a wonderful thing until it's abused.
I brought up the energy market de-regulation because my electric bill in Texas doubled from April to May this spring and I actually used less electricity in May than in April. That to me, stunk of gouging. I just don't get how prices went from 11.4c per Kw/h to 24.7c per Kw/h in one month. Sometimes I think regulation is a good thing, especially in certain sectors of the economy such as public utilities.
I brought up the energy market de-regulation because my electric bill in Texas doubled from April to May this spring and I actually used less electricity in May than in April. That to me, stunk of gouging. I just don't get how prices went from 11.4c per Kw/h to 24.7c per Kw/h in one month. Sometimes I think regulation is a good thing, especially in certain sectors of the economy such as public utilities.
When I live in California it nearly drove them into the ground. It got so bad we were having rolling blackouts and Pg&e was near bankrutcy.
I read an article about how market deregulation led to huge price increases. I'm not sure why this is. Theoretically I would think that this might be a temporary jump that would level off in the long run. However, I would have to do some research on this. Specialized industries don't always act in accord with typical economic models… 🙁
In Califronia's case it was simple price gouging. They were buying power from places like Texas and were being charged much more than the average market price because it was well known California was desperate for power.
I know that after Texas deregulated the electricity market prices went up. They did kind of a phased in deregultion that was supposed to moderate any price spikes. What happened in reality is that companies got their foot in the door with low prices and talked people into signing a contract and as soon as the market was completely deregulated they had massive price increases.Kind of makes me glad I am living in energy regulated Germany after talking to friends who still live in Texas and are getting raked over the coals by TXU and Reliant every month so they can have the lights on.
