[Herbert Hoover[_3_]]

I've reproduced the entire speech to make things easy for you. You do
know the Deutsches Bundesbank, don't you?....you know, one of those
left-leaning, liberal think tanks?


Axel A Weber: Moral hazard, market discipline and self-regulation €“
what have we learnt?
Speech by Professor Axel A Weber, President of the Deutsche Bundesbank,
at the Ceremony for the 50th Anniversary of Bank Negara Malaysia: "50
Years of Central Banking €“ Stability and Sustainability", Kuala Lumpur,
10 February 2009.
* * *
1 Introduction
Ladies and gentlemen
I would like to congratulate the Bank Negara Malaysia on its 50th
anniversary. 50 years of central banking is a time span which allows a
central bank to gain experience and to learn from the various
challenges it is confronted with. Anniversary celebrations are usually
an opportunity to look back on this period, to honour the achievements
and remember what might have been done better. However, given the
global financial crisis, it is impossible to confine oneself to this
retrospective view. We have to find ways of how to respond to todays
financial market challenges. This is exactly what the Bank Negara
Malaysia is doing by hosting this conference on Central Banking in the
21st century and I am very glad to have been invited to contribute to
the discussion by talking about moral hazard, market discipline and
self-regulation.
These issues take centre-stage in global talks on crisis prevention. As
the current financial crisis dramatically shows, neither market
participants nor the global regulatory framework have kept pace with
the expansion and innovative forces of the global financial markets. At
present, regulators, central bankers, and market participants all over
the world are trying to identify the causes of the crisis and search
for lessons to be learnt from it. While resolute political decisions
are indispensable when it comes to immediate crisis management, it will
take much more time and effort to identify and remedy the causes of the
financial turmoil. For this reason, I will not present you complete
formulas today but I will try to highlight some critical issues that
need further attention. But first, let me briefly outline the
theoretical concepts of moral hazard, market discipline and
self-regulation.
2 Theoretical overview
Moral hazard €“ In order to illustrate the concept of moral hazard, I
would like to look at the process of credit risk transfer in the form
of securitisation, which played a key role in the events leading to the
current financial crisis. Principally, credit risk transfer is a very
beneficial means of allocating risk in the financial market as it
disconnects the originator of a risky asset from the ultimate
risk-taker. The downside of this separation is, however, that once the
credit risk is forwarded there is no incentive for the originator to
monitor the debtor. This is what we call moral hazard and what has
ultimately resulted in an erosion of credit standards not only in US
subprime but also in other credit market segments. In general, the
ultimate risk-taker does not have the necessary information to monitor
the debtor and the transfer process unnecessarily complicates the
default risk assessment of the securitised assets.
Market discipline €“ Market discipline describes a mechanism in which
market participants have an incentive to monitor the risk behaviour of
counterparties with the aim of readjusting their investment decisions
accordingly. In the aforementioned case of securitisation, the
risk-taker might be penalised by its share holders and other
counterparties if a lack of monitoring impairs his ability to assess
credit risk properly. Hence, market discipline has the potential to
correct inefficiencies arising from credit risk transfer. However,
there is a very important prerequisite for market discipline:
transparency. Only if the market participants recognise that
BIS Review 13/2009 1
a moral hazard problem is arising will they have the option of
adjusting their investment decisions accordingly. While transparency is
a necessary condition for market discipline, it is by no means
sufficient on its own. In addition, market participants must have the
ability and incentive to use the information. Especially in times of
economic expansion, the incentive to acquire and use the information
might be low as the general default risk remains relatively muted as
long as the upward trend continues. A restraining effect via market
discipline is rather unlikely in this case. Therefore, transparency and
market discipline can sustain financial stability but they should not
replace market regulation. In addition, market regulation itself is
necessary for enhancing transparency.
Self-regulation €“ In general, there are two possible paths that can be
followed with regard to market regulation. Regulation can either be
imposed on the relevant institutions in the financial sector by
regulator agencies or the institutions themselves can willingly agree
on regulation. In the second case, we are talking about
self-regulation. Self-regulation has the advantage that market
participants tend to identify with the self-imposed rules, which should
result in a higher acceptance of the regulation. Moreover, market
participants might have better knowledge of the market, leading to more
flexible and less costly solutions. However, as the current financial
crisis underscores, self-regulation bears the risk that regulation will
remain too lax or that the market participants will not comply with the
self-imposed rules. This is an example of the well-known problem of
collective action. Consequently, it has to be decided carefully whether
self-regulation can be sufficient for a well-defined field of finance.
3 What have we learnt?
Let me now turn to some specific aspects that I consider to be crucial
in the learning process that we are currently undergoing. First, I
would like to talk about some regulatory issues, asking how we can
enhance transparency and market discipline in the securitisation
market, financial institutions and hedge funds. Then, I would like to
focus on the role that monetary policy can play in preventing future
financial crises.
3.1 Regulation
Securitisation €“ The securitisation market has played a critical role
in the financial crisis. Prior to the crisis, a lack of transparency in
this market aggravated wrong incentives in the originate-to-distribute
business model. As credit risk was well hidden in highly structured
products, it was easily transferred to other market participants. This
in turn increased the incentive to originate credit risk. Consequently,
credit standards deteriorated, contributing to overheating phenomena
such as those seen on the American housing and loan market. The fact
that market participants often relied solely on credit ratings and that
these ratings did not always capture the credit risk adequately
aggravated the situation. Once the crisis had begun, the lack of
information on the risk profile and profitability of the highly
structured products increased the distrust among market participants,
thus aggravating the financial turmoil.
In order to revive this largely beneficial market, a necessary
condition is to restore confidence among market participants by
enhancing market transparency. The transparency and quality of credit
ratings is definitely one starting point in this process. I would like
to stress that credit ratings should never replace the investors
responsibility to evaluate the risk of a financial product. But
transparency in the rating process €“ especially in the segment of often
opaque and multilayered structured credit €“ is a prerequisite for
investors to behave responsibly. Only a sufficiently transparent rating
process that represents negative incentive effects for rating agencies
will enable the investors to make informed judgements about the product
characteristics as well as the quality of the rating process itself. It
should be mentioned in this context that initiatives led by IOSCO, the
international organisation of securities supervisors, point in the
right direction. In the course of this month, IOSCO is
2 BIS Review 13/2009
expected to report on improvements of transparency provisions in
individual Codes of Conducts of credit rating agencies.
Another issue at stake is the lack of market standards in the
securitisation market. Market participants must have easy access €“ for
example, via a central data portal €“ to information on transactions in
the securitisation market, the underlying asset portfolio and further
transformation of the securitisation. The information provided should
include, among other things, details about any retention of a share of
securitised products on the balance sheet of the originator. This would
reveal the originators incentive structure and thus unveil possible
moral hazard problems. In addition, there is strong need for
international harmonisation of common terminology as well as disclosure
requirements.
At present, there seems to be a consensus among regulating institutions
and market participants about the necessity of these standards. The
Institute of International Finance (IIF), a global association of
financial institutions, has stressed in its final report on market best
practices the need for common information standards in the market for
securitised products. Their package of measures is largely consistent
with the aforementioned requirements. Moreover, there are initiatives
underway from both the American Securitization Forum (ASF) and the
European Securitisation Forum (ESF) to develop disclosure requirements
for securitisations.
The Bundesbank welcomes these initiatives and is watching the process
carefully. We hope that market participants in the securitisation
market will agree on and abide by strong self-regulation. Otherwise,
legal disclosure requirements will have to be implemented globally.
Financial institutions €“ Another important starting point for
transparency-enhancing regulation is the treatment of special purpose
vehicles founded by financial institutions in order to transfer their
credit risk off their balance sheets. In the course of the crisis, a
significant loss of confidence in the money market resulted from the
construction of these off-balance-sheet vehicles. As their business
model is built on maturity transformation, they have run into liquidity
problems when money market froze during the crisis and, owing to
reputation concerns, the banks had to take them back onto their balance
sheets. Thus, huge risks that had previously been invisible suddenly
reappeared on the balance sheets of financial institutions, revealing a
severe case of insufficient transparency.
Transparency requirements for financial institutions arise from
accounting standards disclosure requirements as well as from
prudential rules for banking supervision. With regard to accounting
standards, international and national ambitions are to change the legal
framework such that financial institutions must consolidate their
off-balance-sheet vehicles. For both the international financial
reporting standards (IFRS) and for German accounting rules in
accordance with the Commercial Code (HGB), legislation amendments are
underway. Additionally, the Basel Committee on Banking Supervision
recently proposed revisions to the existing pillar 3 requirements of
Basel II, which aim at helping market participants to better understand
a bank's overall risk profile, comprising, for example, requirements to
disclose involvement in off-balance-sheet vehicles. In my view, these
steps are essential for enhancing transparency in the financial markets.
Hedge funds €“ Let me now come to a branch that has not been the core of
the financial turmoil but has still played a significant role in the
course of the crisis: hedge funds. Although the direct credit exposure
of financial institutions to hedge funds seems to have been relatively
modest, hedge funds activities, such as sudden large scale liquidation
and the influence on market price dynamics and market liquidity, have
posed an indirect risk to core financial institutions and the broader
financial system. Furthermore, the strong growth in the hedge fund
sector has been one manifestation of the €œshadow banking system€� that
has contributed to the overall high leverage and the vulnerability of
the global financial system. Hedge funds are prone to price and
liquidity shocks due to their usual combination of leveraged positions
and short-term financing. This underlines the relevance of initiatives
for containing stability risks resulting from the failure or the
collective behaviour of hedge funds.
BIS Review 13/2009 3
There are two basic channels for reducing potential macroprudential
risks associated with hedge funds if direct regulation is still
regarded as an inappropriate measure. The first is to strengthen the
risk management of the prime broker, which has been recommended as the
main instrument over the past few years. However, recent events have
clearly demonstrated that authorities should not rely solely on the
risk management of the prime brokers to contain potential risks.
Therefore, this indirect approach should be combined with a second
channel: strengthening market discipline through higher levels of
transparency and disclosure. The Bundesbank has been calling for
progress in these areas for some time.
As hedge funds operate in global financial markets, only a global
initiative will effectively deal with the international dimension of
this issue. Therefore, the Bundesbank greatly appreciates the fact that
the G20 has explicitly asked the hedge fund industry to bring forward
proposals for a set of unified, self-regulatory best practices building
on several initiatives launched in 2007 and 2008. I am convinced that
this is a suitable way to strengthen transparency and market discipline
as well as the internal management procedures of the hedge funds
themselves. However, the devil is in the detail and I believe the
following points to be crucial. The best practices should include an
adequate disclosure framework, particularly vis-Ã*-vis counterparties
and investors, which includes adequate and regular qualitative and
quantitive risk-related information. In addition, they should include
the requirement to comply with rules aimed at safeguarding the
integrity of the market as well as a transparent and effective process
to enforce the standards and to assess compliance. In particular, an
obligation for hedge funds to submit themselves to third-party reviews
of compliance to best practice standards would be appropriate.
Furthermore, in order to enhance the forces of market discipline,
regulated institutional investors should only be allowed to invest in
those hedge funds that comply with best practices. Finally, an
improvement in the insight of authorities into the hedge fund industry
is urgently needed in order to better assess vulnerabilities in the
broader financial system.
3.2 Monetary policy
So far, I have focused on regulatory issues that are relevant for the
stability of the financial system. I would now like to turn to the part
that monetary policy plays in this respect. In order to identify this
contribution, an analysis of the monetary policy in the years preceding
the crisis is essential. Different analytical methods €“ such as a
comparison of central bank interest rates with the forecast of a Taylor
rule €“ point to the fact that monetary policy in most industrialised
countries has followed a rather expansionary stance in the second half
of this decade. This was particularly the case in the USA after the New
Economy bubble had burst. However, in the euro area, too,
interest-based as well as money and credit-based indicators have
signalled a long phase of expansionary monetary policy.
Boom-bust cycles in the financial markets cannot form independently of
monetary policy. According to empirical results, low long-term interest
rates tend to increase the risk appetite of financial market
participants and thus contribute to a dynamic worldwide growth in
aggregate credit. Why is this the case? Two aspects should be mentioned
here. First, low long-term interest rates €“ which may indeed be
justified from a monetary policy perspective €“ are equivalent to low
financing costs in the financial markets and therefore promote highly
leveraged business models. Second, in the event that the target rate of
returns of financial market participants does not take into account
that the level of the risk-free interest rate has dropped, a €œsearch
for yield€� process starts to trigger an increase in risky business
activities. This process may come to an end very abruptly when market
participants become aware of their high risk positions, for example,
after monetary policy puts an end to the phase of low interest rates.
Consequently, a whole generation of business models will be brought
into question. Moreover, low short-term rates have supported business
models that heavily relied on maturity mismatches. These models have
run into severe problems when short-term rates rose.
4 BIS Review 13/2009
The influence of monetary policy on the behaviour of financial market
participants might be especially strong in the event that the central
bank follows an asymmetric monetary policy that is lowering rates
aggressively in the face of macroeconomic downturns but increasing
rates only gradually when downside risks have vanished. Contrary to
this approach, there is the idea of a symmetrical monetary policy,
which would not consider the boom-bust phases in the financial markets
as isolated events, but would try to look through the financial cycle
and stabilise monetary policy. Moreover, a symmetrical monetary policy
would consider a higher key interest rate in the event of an increase
in risk in the financial markets, even in the absence of inflationary
risk or macroeconomic risks within the usual time horizon for monetary
policy. This does not mean that the central bank would abandon its
primary goal of price stability in favour of other intentions. The
central bank would rather take a longer-term perspective and include
the future consequences of unfavourable trends in the financial markets
in its analysis.
Without a doubt, a symmetrical monetary policy will not be able to
eliminate future financial crises. But I am convinced that a more
symmetrical approach to monetary policy will better alleviate the
negative effects of the financial cycle than a monetary policy approach
that solely tries to limit the damage in times of a financial downturn
by aggressively lowering interest rates. This is even more the case
when one assumes that the higher moments of financial cycles are met
exogenous to the monetary policy strategy chosen by central banks.
In this respect, the Eurosystem has a very valuable analytical tool for
the medium to long-run perspective: monetary analysis. This tool forces
us to extend the analytical horizon beyond the usual time span of two
years and to include the low frequency movements of monetary and credit
aggregates in monetary analysis and the decision-making process. Hence,
the Eurosystem already has an important stabilising element that
enables us to counteract procyclical trends in our monetary
decision-making. In future, this aspect of monetary policy will need to
gain in importance.
4 Conclusion
With this request, I would like to close my speech. In my view, the
highlighted issues are crucial in the ongoing analysis and learning
process of the financial crisis. I think it has become clear that many
promising international initiatives have already been launched.
However, further effort is strongly needed in order to enhance
transparency, market discipline and financial stability.
Obviously, financial regulation is currently being improved on in other
aspects as well, in particular as regards banking regulation. But
getting into these details would surely go beyond the scope of my
speech.
Thank you very much for your attention.
BIS Review 13/2009 5

[Harry Lavo]

"Herbert Hoover" wrote in message
news:2009021311580516807-HHoover1928@gmailcom...
I've reproduced the entire speech to make things easy for you. You do know
the Deutsches Bundesbank, don't you?....you know, one of those
left-leaning, liberal think tanks?


Axel A Weber: Moral hazard, market discipline and self-regulation - what
have we learnt?
Speech by Professor Axel A Weber, President of the Deutsche Bundesbank, at
the Ceremony for the 50th Anniversary of Bank Negara Malaysia: "50 Years
of Central Banking - Stability and Sustainability", Kuala Lumpur, 10
February 2009.
* * *
1 Introduction
Ladies and gentlemen
I would like to congratulate the Bank Negara Malaysia on its 50th
anniversary. 50 years of central banking is a time span which allows a
central bank to gain experience and to learn from the various challenges
it is confronted with. Anniversary celebrations are usually an opportunity
to look back on this period, to honour the achievements and remember what
might have been done better. However, given the global financial crisis,
it is impossible to confine oneself to this retrospective view. We have to
find ways of how to respond to today's financial market challenges. This
is exactly what the Bank Negara Malaysia is doing by hosting this
conference on Central Banking in the 21st century and I am very glad to
have been invited to contribute to the discussion by talking about moral
hazard, market discipline and self-regulation.
These issues take centre-stage in global talks on crisis prevention. As
the current financial crisis dramatically shows, neither market
participants nor the global regulatory framework have kept pace with the
expansion and innovative forces of the global financial markets. At
present, regulators, central bankers, and market participants all over the
world are trying to identify the causes of the crisis and search for
lessons to be learnt from it. While resolute political decisions are
indispensable when it comes to immediate crisis management, it will take
much more time and effort to identify and remedy the causes of the
financial turmoil. For this reason, I will not present you complete
formulas today but I will try to highlight some critical issues that need
further attention. But first, let me briefly outline the theoretical
concepts of moral hazard, market discipline and self-regulation.
2 Theoretical overview
Moral hazard - In order to illustrate the concept of moral hazard, I would
like to look at the process of credit risk transfer in the form of
securitisation, which played a key role in the events leading to the
current financial crisis. Principally, credit risk transfer is a very
beneficial means of allocating risk in the financial market as it
disconnects the originator of a risky asset from the ultimate risk-taker.
The downside of this separation is, however, that once the credit risk is
forwarded there is no incentive for the originator to monitor the debtor.
This is what we call moral hazard and what has ultimately resulted in an
erosion of credit standards not only in US subprime but also in other
credit market segments. In general, the ultimate risk-taker does not have
the necessary information to monitor the debtor and the transfer process
unnecessarily complicates the default risk assessment of the securitised
assets.
Market discipline - Market discipline describes a mechanism in which
market participants have an incentive to monitor the risk behaviour of
counterparties with the aim of readjusting their investment decisions
accordingly. In the aforementioned case of securitisation, the risk-taker
might be penalised by its share holders and other counterparties if a lack
of monitoring impairs his ability to assess credit risk properly. Hence,
market discipline has the potential to correct inefficiencies arising from
credit risk transfer. However, there is a very important prerequisite for
market discipline: transparency. Only if the market participants recognise
that
BIS Review 13/2009 1
a moral hazard problem is arising will they have the option of adjusting
their investment decisions accordingly. While transparency is a necessary
condition for market discipline, it is by no means sufficient on its own.
In addition, market participants must have the ability and incentive to
use the information. Especially in times of economic expansion, the
incentive to acquire and use the information might be low as the general
default risk remains relatively muted as long as the upward trend
continues. A restraining effect via market discipline is rather unlikely
in this case. Therefore, transparency and market discipline can sustain
financial stability but they should not replace market regulation. In
addition, market regulation itself is necessary for enhancing
transparency.
Self-regulation - In general, there are two possible paths that can be
followed with regard to market regulation. Regulation can either be
imposed on the relevant institutions in the financial sector by regulator
agencies or the institutions themselves can willingly agree on regulation.
In the second case, we are talking about self-regulation. Self-regulation
has the advantage that market participants tend to identify with the
self-imposed rules, which should result in a higher acceptance of the
regulation. Moreover, market participants might have better knowledge of
the market, leading to more flexible and less costly solutions. However,
as the current financial crisis underscores, self-regulation bears the
risk that regulation will remain too lax or that the market participants
will not comply with the self-imposed rules. This is an example of the
well-known problem of collective action. Consequently, it has to be
decided carefully whether self-regulation can be sufficient for a
well-defined field of finance.
3 What have we learnt?
Let me now turn to some specific aspects that I consider to be crucial in
the learning process that we are currently undergoing. First, I would like
to talk about some regulatory issues, asking how we can enhance
transparency and market discipline in the securitisation market, financial
institutions and hedge funds. Then, I would like to focus on the role that
monetary policy can play in preventing future financial crises.
3.1 Regulation
Securitisation - The securitisation market has played a critical role in
the financial crisis. Prior to the crisis, a lack of transparency in this
market aggravated wrong incentives in the originate-to-distribute business
model. As credit risk was well hidden in highly structured products, it
was easily transferred to other market participants. This in turn
increased the incentive to originate credit risk. Consequently, credit
standards deteriorated, contributing to overheating phenomena such as
those seen on the American housing and loan market. The fact that market
participants often relied solely on credit ratings and that these ratings
did not always capture the credit risk adequately aggravated the
situation. Once the crisis had begun, the lack of information on the risk
profile and profitability of the highly structured products increased the
distrust among market participants, thus aggravating the financial
turmoil.
In order to revive this largely beneficial market, a necessary condition
is to restore confidence among market participants by enhancing market
transparency. The transparency and quality of credit ratings is definitely
one starting point in this process. I would like to stress that credit
ratings should never replace the investor's responsibility to evaluate the
risk of a financial product. But transparency in the rating process -
especially in the segment of often opaque and multilayered structured
credit - is a prerequisite for investors to behave responsibly. Only a
sufficiently transparent rating process that represents negative incentive
effects for rating agencies will enable the investors to make informed
judgements about the product characteristics as well as the quality of the
rating process itself. It should be mentioned in this context that
initiatives led by IOSCO, the international organisation of securities
supervisors, point in the right direction. In the course of this month,
IOSCO is
2 BIS Review 13/2009
expected to report on improvements of transparency provisions in
individual Codes of Conducts of credit rating agencies.
Another issue at stake is the lack of market standards in the
securitisation market. Market participants must have easy access - for
example, via a central data portal - to information on transactions in the
securitisation market, the underlying asset portfolio and further
transformation of the securitisation. The information provided should
include, among other things, details about any retention of a share of
securitised products on the balance sheet of the originator. This would
reveal the originator's incentive structure and thus unveil possible moral
hazard problems. In addition, there is strong need for international
harmonisation of common terminology as well as disclosure requirements.
At present, there seems to be a consensus among regulating institutions
and market participants about the necessity of these standards. The
Institute of International Finance (IIF), a global association of
financial institutions, has stressed in its final report on market best
practices the need for common information standards in the market for
securitised products. Their package of measures is largely consistent with
the aforementioned requirements. Moreover, there are initiatives underway
from both the American Securitization Forum (ASF) and the European
Securitisation Forum (ESF) to develop disclosure requirements for
securitisations.
The Bundesbank welcomes these initiatives and is watching the process
carefully. We hope that market participants in the securitisation market
will agree on and abide by strong self-regulation. Otherwise, legal
disclosure requirements will have to be implemented globally.
Financial institutions - Another important starting point for
transparency-enhancing regulation is the treatment of special purpose
vehicles founded by financial institutions in order to transfer their
credit risk off their balance sheets. In the course of the crisis, a
significant loss of confidence in the money market resulted from the
construction of these off-balance-sheet vehicles. As their business model
is built on maturity transformation, they have run into liquidity problems
when money market froze during the crisis and, owing to reputation
concerns, the banks had to take them back onto their balance sheets. Thus,
huge risks that had previously been invisible suddenly reappeared on the
balance sheets of financial institutions, revealing a severe case of
insufficient transparency.
Transparency requirements for financial institutions arise from accounting
standards' disclosure requirements as well as from prudential rules for
banking supervision. With regard to accounting standards, international
and national ambitions are to change the legal framework such that
financial institutions must consolidate their off-balance-sheet vehicles.
For both the international financial reporting standards (IFRS) and for
German accounting rules in accordance with the Commercial Code (HGB),
legislation amendments are underway. Additionally, the Basel Committee on
Banking Supervision recently proposed revisions to the existing pillar 3
requirements of Basel II, which aim at helping market participants to
better understand a bank's overall risk profile, comprising, for example,
requirements to disclose involvement in off-balance-sheet vehicles. In my
view, these steps are essential for enhancing transparency in the
financial markets.
Hedge funds - Let me now come to a branch that has not been the core of
the financial turmoil but has still played a significant role in the
course of the crisis: hedge funds. Although the direct credit exposure of
financial institutions to hedge funds seems to have been relatively
modest, hedge funds' activities, such as sudden large scale liquidation
and the influence on market price dynamics and market liquidity, have
posed an indirect risk to core financial institutions and the broader
financial system. Furthermore, the strong growth in the hedge fund sector
has been one manifestation of the "shadow banking system" that has
contributed to the overall high leverage and the vulnerability of the
global financial system. Hedge funds are prone to price and liquidity
shocks due to their usual combination of leveraged positions and
short-term financing. This underlines the relevance of initiatives for
containing stability risks resulting from the failure or the collective
behaviour of hedge funds.
BIS Review 13/2009 3
There are two basic channels for reducing potential macroprudential risks
associated with hedge funds if direct regulation is still regarded as an
inappropriate measure. The first is to strengthen the risk management of
the prime broker, which has been recommended as the main instrument over
the past few years. However, recent events have clearly demonstrated that
authorities should not rely solely on the risk management of the prime
brokers to contain potential risks. Therefore, this indirect approach
should be combined with a second channel: strengthening market discipline
through higher levels of transparency and disclosure. The Bundesbank has
been calling for progress in these areas for some time.
As hedge funds operate in global financial markets, only a global
initiative will effectively deal with the international dimension of this
issue. Therefore, the Bundesbank greatly appreciates the fact that the G20
has explicitly asked the hedge fund industry to bring forward proposals
for a set of unified, self-regulatory best practices building on several
initiatives launched in 2007 and 2008. I am convinced that this is a
suitable way to strengthen transparency and market discipline as well as
the internal management procedures of the hedge funds themselves. However,
the devil is in the detail and I believe the following points to be
crucial. The best practices should include an adequate disclosure
framework, particularly vis-à-vis counterparties and investors, which
includes adequate and regular qualitative and quantitive risk-related
information. In addition, they should include the requirement to comply
with rules aimed at safeguarding the integrity of the market as well as a
transparent and effective process to enforce the standards and to assess
compliance. In particular, an obligation for hedge funds to submit
themselves to third-party reviews of compliance to best practice standards
would be appropriate. Furthermore, in order to enhance the forces of
market discipline, regulated institutional investors should only be
allowed to invest in those hedge funds that comply with best practices.
Finally, an improvement in the insight of authorities into the hedge fund
industry is urgently needed in order to better assess vulnerabilities in
the broader financial system.
3.2 Monetary policy
So far, I have focused on regulatory issues that are relevant for the
stability of the financial system. I would now like to turn to the part
that monetary policy plays in this respect. In order to identify this
contribution, an analysis of the monetary policy in the years preceding
the crisis is essential. Different analytical methods - such as a
comparison of central bank interest rates with the forecast of a Taylor
rule - point to the fact that monetary policy in most industrialised
countries has followed a rather expansionary stance in the second half of
this decade. This was particularly the case in the USA after the New
Economy bubble had burst. However, in the euro area, too, interest-based
as well as money and credit-based indicators have signalled a long phase
of expansionary monetary policy.
Boom-bust cycles in the financial markets cannot form independently of
monetary policy. According to empirical results, low long-term interest
rates tend to increase the risk appetite of financial market participants
and thus contribute to a dynamic worldwide growth in aggregate credit. Why
is this the case? Two aspects should be mentioned here. First, low
long-term interest rates - which may indeed be justified from a monetary
policy perspective - are equivalent to low financing costs in the
financial markets and therefore promote highly leveraged business models.
Second, in the event that the target rate of returns of financial market
participants does not take into account that the level of the risk-free
interest rate has dropped, a "search for yield" process starts to trigger
an increase in risky business activities. This process may come to an end
very abruptly when market participants become aware of their high risk
positions, for example, after monetary policy puts an end to the phase of
low interest rates. Consequently, a whole generation of business models
will be brought into question. Moreover, low short-term rates have
supported business models that heavily relied on maturity mismatches.
These models have run into severe problems when short-term rates rose.
4 BIS Review 13/2009
The influence of monetary policy on the behaviour of financial market
participants might be especially strong in the event that the central bank
follows an asymmetric monetary policy that is lowering rates aggressively
in the face of macroeconomic downturns but increasing rates only gradually
when downside risks have vanished. Contrary to this approach, there is the
idea of a symmetrical monetary policy, which would not consider the
boom-bust phases in the financial markets as isolated events, but would
try to look through the financial cycle and stabilise monetary policy.
Moreover, a symmetrical monetary policy would consider a higher key
interest rate in the event of an increase in risk in the financial
markets, even in the absence of inflationary risk or macroeconomic risks
within the usual time horizon for monetary policy. This does not mean that
the central bank would abandon its primary goal of price stability in
favour of other intentions. The central bank would rather take a
longer-term perspective and include the future consequences of
unfavourable trends in the financial markets in its analysis.
Without a doubt, a symmetrical monetary policy will not be able to
eliminate future financial crises. But I am convinced that a more
symmetrical approach to monetary policy will better alleviate the negative
effects of the financial cycle than a monetary policy approach that solely
tries to limit the damage in times of a financial downturn by aggressively
lowering interest rates. This is even more the case when one assumes that
the higher moments of financial cycles are met exogenous to the monetary
policy strategy chosen by central banks.
In this respect, the Eurosystem has a very valuable analytical tool for
the medium to long-run perspective: monetary analysis. This tool forces us
to extend the analytical horizon beyond the usual time span of two years
and to include the low frequency movements of monetary and credit
aggregates in monetary analysis and the decision-making process. Hence,
the Eurosystem already has an important stabilising element that enables
us to counteract procyclical trends in our monetary decision-making. In
future, this aspect of monetary policy will need to gain in importance.
4 Conclusion
With this request, I would like to close my speech. In my view, the
highlighted issues are crucial in the ongoing analysis and learning
process of the financial crisis. I think it has become clear that many
promising international initiatives have already been launched. However,
further effort is strongly needed in order to enhance transparency, market
discipline and financial stability.
Obviously, financial regulation is currently being improved on in other
aspects as well, in particular as regards banking regulation. But getting
into these details would surely go beyond the scope of my speech.
Thank you very much for your attention.
BIS Review 13/2009 5

Very interesting and informative speech. Thanks for sharing it, Herbert.

[Jenn[_3_]]

In article
,
ScottW wrote:


Meanwhile the dumbass legislature in Ca. just adds another permanent
12c to a gallon of gas taking advantage of this temporary decline in
prices and another 1% sales tax for 3 years. These are measures sure
to "stimulate" our economy. sigh

ScottW

In CA, stimulus isn't the only goal.

[MiNe 109]

In article
,
ScottW wrote:

Meanwhile the dumbass legislature in Ca. just adds another permanent
12c to a gallon of gas taking advantage of this temporary decline in
prices and another 1% sales tax for 3 years. These are measures sure
to "stimulate" our economy. sigh

That's because reasonable tax measures are impossible due to CA's
bizarre rules.

However, the "stimulus" of not firing thousands of workers who depend on
the state is to be preferred to adding to the burden.

Stephen

[Jenn[_3_]]

In article ,
MiNe 109 wrote:


However, the "stimulus" of not firing thousands of workers who depend on
the state is to be preferred to adding to the burden.

Stephen

Yep.

[Jenn[_3_]]

In article
,
ScottW wrote:

On Feb 13, 10:36*am, Jenn wrote:
In article
,

*ScottW wrote:
Meanwhile the dumbass legislature in Ca. just adds another permanent
12c to a gallon of gas taking advantage of this temporary decline in
prices and another 1% sales tax for 3 years. * These are measures sure
to "stimulate" our economy. sigh

ScottW

In CA, stimulus isn't the only goal.

Raising taxes in a declining economic period only creates more
economic decline and further revenue shortfall.

Reality is the Ca. gov. has doubled in the past 9 years.
That pace is unsustainable and needs to be corrected.
Too bad the dems in command (and don't even call Arnold a Republican)
couldn't recognize that before disaster strikes.

You just watch, even with these tax increases they will be crying
about budget shortfalls again next year.

ScottW

Yes they will, and they will be correct. The state is too expensive to
run.

[George M. Middius[_4_]]

Jenn said:

about budget shortfalls again next year.

Yes they will, and they will be correct. The state is too expensive to run.

Fourteen words, Mistress? This is a dangerous precedent.



--

"It is you who are completely unaware of what I perceive until
I choose to tell you. I rarely do."
-- Scottie Witlessmongrel, RAO, Feb. 3 2009

[Jenn[_3_]]

In article
,
ScottW wrote:

On Feb 13, 12:40*pm, Jenn wrote:
In article
,





*ScottW wrote:
On Feb 13, 10:36*am, Jenn wrote:
In article
,

*ScottW wrote:
Meanwhile the dumbass legislature in Ca. just adds another permanent
12c to a gallon of gas taking advantage of this temporary decline in
prices and another 1% sales tax for 3 years. * These are measures sure
to "stimulate" our economy. sigh

ScottW

In CA, stimulus isn't the only goal.

*Raising taxes in a declining economic period only creates more
economic decline and further revenue shortfall.

Reality is the Ca. gov. has doubled in the past 9 years.
That pace is unsustainable and needs to be corrected.
Too bad the dems in command (and don't even call Arnold a Republican)
couldn't recognize that before disaster strikes.

You just watch, even with these tax increases they will be crying
about budget shortfalls again next year.

ScottW

Yes they will, and they will be correct. *The state is too expensive to
run.

LoL. "The state is too expensive to run".
Wow. That's deep and insightful. I guess we should just toss in the
towel and let the state not run. No gas for the state. LoL.

You don't believe that the state is too expensive to run? How much do
we have to spend to deal with illegal immigrators?

[MiNe 109]

In article
,
ScottW wrote:

On Feb 13, 10:36*am, Jenn wrote:
In article
,

*ScottW wrote:
Meanwhile the dumbass legislature in Ca. just adds another permanent
12c to a gallon of gas taking advantage of this temporary decline in
prices and another 1% sales tax for 3 years. * These are measures sure
to "stimulate" our economy. sigh

ScottW

In CA, stimulus isn't the only goal.

Raising taxes in a declining economic period only creates more
economic decline and further revenue shortfall.

And provides needed services.

Reality is the Ca. gov. has doubled in the past 9 years.
That pace is unsustainable and needs to be corrected.
Too bad the dems in command (and don't even call Arnold a Republican)
couldn't recognize that before disaster strikes.

You just watch, even with these tax increases they will be crying
about budget shortfalls again next year.

Sure, after thirty years of underfunding.

Stephen

[MiNe 109]

In article
,
ScottW wrote:

On Feb 13, 10:40*am, MiNe 109 wrote:
In article
,

*ScottW wrote:
Meanwhile the dumbass legislature in Ca. just adds another permanent
12c to a gallon of gas taking advantage of this temporary decline in
prices and another 1% sales tax for 3 years. * These are measures sure
to "stimulate" our economy. sigh

That's because reasonable tax measures are impossible due to CA's
bizarre rules.

However, the "stimulus" of not firing thousands of workers who depend on
the state is to be preferred to adding to the burden.

You really want an economy totally dependent upon government
employment?
Show me one economist who can support that?

Hell, show me where I support that.

Stephen

[George M. Middius[_4_]]

Jenn said:

You don't believe that the state is too expensive to run? How much do
we have to spend to deal with illegal immigrators?

How Collagen Lady and her 14 children? I wonder who paid for all the
in-vitro work.

[Jenn[_3_]]

In article ,
George M. Middius wrote:

Jenn said:

You don't believe that the state is too expensive to run? How much do
we have to spend to deal with illegal immigrators?

How Collagen Lady and her 14 children? I wonder who paid for all the
in-vitro work.

But that kind of thing is not unique to CA. Illegal immigration, while
not unique to our state, is a far larger burden here than anywhere else,
AFAIK.

[George M. Middius[_4_]]

Jenn said:

You don't believe that the state is too expensive to run? How much do
we have to spend to deal with illegal immigrators?

How Collagen Lady and her 14 children? I wonder who paid for all the
in-vitro work.

But that kind of thing is not unique to CA. Illegal immigration, while
not unique to our state, is a far larger burden here than anywhere else,
AFAIK.

If you want them to stop pouring in, then you have let your lawns go to weed
and quit eating at restaurants so much.

There. Problem solved. G

[Jenn[_3_]]

In article
,
ScottW wrote:

On Feb 13, 1:07*pm, Jenn wrote:
In article
,





*ScottW wrote:
On Feb 13, 12:40*pm, Jenn wrote:
In article
,

*ScottW wrote:
On Feb 13, 10:36*am, Jenn wrote:
In article
,

*ScottW wrote:
Meanwhile the dumbass legislature in Ca. just adds another
permanent
12c to a gallon of gas taking advantage of this temporary decline
in
prices and another 1% sales tax for 3 years. * These are measures
sure
to "stimulate" our economy. sigh

ScottW

In CA, stimulus isn't the only goal.

*Raising taxes in a declining economic period only creates more
economic decline and further revenue shortfall.

Reality is the Ca. gov. has doubled in the past 9 years.
That pace is unsustainable and needs to be corrected.
Too bad the dems in command (and don't even call Arnold a Republican)
couldn't recognize that before disaster strikes.

You just watch, even with these tax increases they will be crying
about budget shortfalls again next year.

ScottW

Yes they will, and they will be correct. *The state is too expensive to
run.

* LoL. *"The state is too expensive to run".
*Wow. *That's deep and insightful. *I guess we should just toss in the
towel and let the state not run. *No gas for the state. *LoL.

You don't believe that the state is too expensive to run?

No, I think it's buffoons like Davis and now Arnold and the state
legislators simply don't know how to run a state.

*How much do
we have to spend to deal with illegal immigrators?

Enough to offer them immigrators in-state tuition.
You're starting to sound like a good 'ol boy southern redneck

ScottW

Nope, I'm just facing reality. My views on this haven't changed much on
this over the years at all. If the Federal government is going to
require that CA educate the children of those who have immigrated here
illegally, they should pay for it.

That said, I think that is to the state's advantage to educate those
children and to offer in-state tuition for higher-ed. It lowers the
chances of those students being on the welfare rolls in the future.

Is this enough words for you? Just checking.

[Jenn[_3_]]

In article
,
ScottW wrote:

On Feb 13, 3:28*pm, Jenn wrote:
In article
,





*ScottW wrote:
On Feb 13, 1:07*pm, Jenn wrote:
In article
,

*ScottW wrote:
On Feb 13, 12:40*pm, Jenn wrote:
In article
,

*ScottW wrote:
On Feb 13, 10:36*am, Jenn wrote:
In article

m,

*ScottW wrote:
Meanwhile the dumbass legislature in Ca. just adds another
permanent
12c to a gallon of gas taking advantage of this temporary
decline
in
prices and another 1% sales tax for 3 years. * These are
measures
sure
to "stimulate" our economy. sigh

ScottW

In CA, stimulus isn't the only goal.

*Raising taxes in a declining economic period only creates more
economic decline and further revenue shortfall.

Reality is the Ca. gov. has doubled in the past 9 years.
That pace is unsustainable and needs to be corrected.
Too bad the dems in command (and don't even call Arnold a
Republican)
couldn't recognize that before disaster strikes.

You just watch, even with these tax increases they will be crying
about budget shortfalls again next year.

ScottW

Yes they will, and they will be correct. *The state is too
expensive to
run.

* LoL. *"The state is too expensive to run".
*Wow. *That's deep and insightful. *I guess we should just toss in
the
towel and let the state not run. *No gas for the state. *LoL.

You don't believe that the state is too expensive to run?

*No, I think it's buffoons like Davis and now Arnold and the state
legislators simply don't know how to run a state.

*How much do
we have to spend to deal with illegal immigrators?

* Enough to offer them immigrators in-state tuition.
You're starting to sound like a good 'ol boy southern redneck

ScottW

Nope, I'm just facing reality. *My views on this haven't changed much on
this over the years at all. *If the Federal government is going to
require that CA educate the children of those who have immigrated here
illegally, they should pay for it.

Show us where the federal gov't requires Ca. to educate rather than
deport illegal immigrants?

http://www.law.cornell.edu/supct/htm...7_0202_ZO.html

It's BS liberal school district administrators who are also motivated
by state dollars to fill seats that don't lift a finger to confirm
legality of their students.

Wrong again. See above.



That said, I think that is to the state's advantage to educate those
children and to offer in-state tuition for higher-ed. *It lowers the
chances of those students being on the welfare rolls in the future.

They could deport them if they are illegal.

I'm all for that.

How do you feel about some districts bussing in kids from TJ to fill
seats and up the state money which is paid on pupils/day.

"Some facts would be nice."

[Clyde Slick]

On 13 Feb, 18:28, Jenn wrote:
In article
,





Â*ScottW wrote:
On Feb 13, 1:07Â*pm, Jenn wrote:
In article
,

Â*ScottW wrote:
On Feb 13, 12:40Â*pm, Jenn wrote:
In article
,

Â*ScottW wrote:
On Feb 13, 10:36Â*am, Jenn wrote:
In article
,

Â*ScottW wrote:
Meanwhile the dumbass legislature in Ca. just adds another
permanent
12c to a gallon of gas taking advantage of this temporary decline
in
prices and another 1% sales tax for 3 years. Â* These are measures
sure
to "stimulate" our economy. sigh

ScottW

In CA, stimulus isn't the only goal.

Â*Raising taxes in a declining economic period only creates more
economic decline and further revenue shortfall.

Reality is the Ca. gov. has doubled in the past 9 years.
That pace is unsustainable and needs to be corrected.
Too bad the dems in command (and don't even call Arnold a Republican)
couldn't recognize that before disaster strikes.

You just watch, even with these tax increases they will be crying
about budget shortfalls again next year.

ScottW

Yes they will, and they will be correct. Â*The state is too expensive to
run.

Â* LoL. Â*"The state is too expensive to run".
Â*Wow. Â*That's deep and insightful. Â*I guess we should just toss in the
towel and let the state not run. Â*No gas for the state. Â*LoL.

You don't believe that the state is too expensive to run?

Â*No, I think it's buffoons like Davis and now Arnold and the state
legislators simply don't know how to run a state.

Â*How much do
we have to spend to deal with illegal immigrators?

Â* Enough to offer them immigrators in-state tuition.
You're starting to sound like a good 'ol boy southern redneck

ScottW

Nope, I'm just facing reality. Â*My views on this haven't changed much on
this over the years at all. Â*If the Federal government is going to
require that CA educate the children of those who have immigrated here
illegally, they should pay for it.


I agree

That said, I think that is to the state's advantage to educate those
children and to offer in-state tuition for higher-ed. Â*It lowers the
chances of those students being on the welfare rolls in the future.


no on in-state tiuition for illegal immigrants. It is a limited
capacity resource that should
be made available only to legal state residents. They
should be treated the same as out of state residents.

MAybe one exception is warranted. They can pay the
lower in state tuition if they go an agricultural
program and learn how to grow money on trees.

Is this enough words for you? Â*Just checking.- Ascunde citatul -

- Afişare text în citat -

[Jenn[_3_]]

In article
,
Clyde Slick wrote:

On 13 Feb, 18:28, Jenn wrote:
In article
,





Â*ScottW wrote:
On Feb 13, 1:07Â*pm, Jenn wrote:
In article
,

Â*ScottW wrote:
On Feb 13, 12:40Â*pm, Jenn wrote:
In article
,

Â*ScottW wrote:
On Feb 13, 10:36Â*am, Jenn wrote:
In article

m,

Â*ScottW wrote:
Meanwhile the dumbass legislature in Ca. just adds another
permanent
12c to a gallon of gas taking advantage of this temporary
decline
in
prices and another 1% sales tax for 3 years. Â* These are
measures
sure
to "stimulate" our economy. sigh

ScottW

In CA, stimulus isn't the only goal.

Â*Raising taxes in a declining economic period only creates more
economic decline and further revenue shortfall.

Reality is the Ca. gov. has doubled in the past 9 years.
That pace is unsustainable and needs to be corrected.
Too bad the dems in command (and don't even call Arnold a
Republican)
couldn't recognize that before disaster strikes.

You just watch, even with these tax increases they will be crying
about budget shortfalls again next year.

ScottW

Yes they will, and they will be correct. Â*The state is too
expensive to
run.

Â* LoL. Â*"The state is too expensive to run".
Â*Wow. Â*That's deep and insightful. Â*I guess we should just toss in
the
towel and let the state not run. Â*No gas for the state. Â*LoL.

You don't believe that the state is too expensive to run?

Â*No, I think it's buffoons like Davis and now Arnold and the state
legislators simply don't know how to run a state.

Â*How much do
we have to spend to deal with illegal immigrators?

Â* Enough to offer them immigrators in-state tuition.
You're starting to sound like a good 'ol boy southern redneck

ScottW

Nope, I'm just facing reality. Â*My views on this haven't changed much on
this over the years at all. Â*If the Federal government is going to
require that CA educate the children of those who have immigrated here
illegally, they should pay for it.


I agree

That said, I think that is to the state's advantage to educate those
children and to offer in-state tuition for higher-ed. Â*It lowers the
chances of those students being on the welfare rolls in the future.


no on in-state tiuition for illegal immigrants. It is a limited
capacity resource that should
be made available only to legal state residents. They
should be treated the same as out of state residents.

I agree. I'm just saying that it's to the advantage of all of us to
have as many educated people as possible.

[Jenn[_3_]]

In article
,
ScottW wrote:

On Feb 13, 3:52*pm, Jenn wrote:
In article
,





*ScottW wrote:
On Feb 13, 3:28*pm, Jenn wrote:
In article
,

*ScottW wrote:
On Feb 13, 1:07*pm, Jenn wrote:
In article
,

*ScottW wrote:
On Feb 13, 12:40*pm, Jenn wrote:
In article

om,

*ScottW wrote:
On Feb 13, 10:36*am, Jenn wrote:
In article

s.co
m,

*ScottW wrote:
Meanwhile the dumbass legislature in Ca. just adds
another
permanent
12c to a gallon of gas taking advantage of this temporary
decline
in
prices and another 1% sales tax for 3 years. * These are
measures
sure
to "stimulate" our economy. sigh

ScottW

In CA, stimulus isn't the only goal.

*Raising taxes in a declining economic period only creates
more
economic decline and further revenue shortfall.

Reality is the Ca. gov. has doubled in the past 9 years.
That pace is unsustainable and needs to be corrected.
Too bad the dems in command (and don't even call Arnold a
Republican)
couldn't recognize that before disaster strikes.

You just watch, even with these tax increases they will be
crying
about budget shortfalls again next year.

ScottW

Yes they will, and they will be correct. *The state is too
expensive to
run.

* LoL. *"The state is too expensive to run".
*Wow. *That's deep and insightful. *I guess we should just toss
in
the
towel and let the state not run. *No gas for the state. *LoL.

You don't believe that the state is too expensive to run?

*No, I think it's buffoons like Davis and now Arnold and the state
legislators simply don't know how to run a state.

*How much do
we have to spend to deal with illegal immigrators?

* Enough to offer them immigrators in-state tuition.
You're starting to sound like a good 'ol boy southern redneck

ScottW

Nope, I'm just facing reality. *My views on this haven't changed much
on
this over the years at all. *If the Federal government is going to
require that CA educate the children of those who have immigrated here
illegally, they should pay for it.

*Show us where the federal gov't requires Ca. to educate rather than
deport illegal immigrants?

http://www.law.cornell.edu/supct/htm...R_0457_0202_ZO....

It's BS liberal school district administrators who are also motivated
by state dollars to fill seats that don't lift a finger to confirm
legality of their students.

Wrong again. *See above.

from the above...

The court noted, however, that the increase in school enrollment was
primarily attributable to the admission of children who were legal
residents. Id. at 575-576. It also found that, while the "exclusion of
all undocumented children from the public schools in Texas would
eventually result in economies at some level," id. at 576, funding
from both the State and Federal Governments was based primarily on the
number of children enrolled. In net effect, then, barring undocumented
children from the schools would save money, but it would "not
necessarily" improve "the quality of education." Id. at 577.

So if states change the measure by which the pay schools (pupil days),
then a big part of this courts justification is dissolved.

You're introducing a "what if". If you want to get the FTES laws
changed, have at it. But the court ruled that we must educated these
children.


Further, I have a problem with attributing a Supreme Court ruling like
this to the government which provides funding.

It doesn't matter if you have a problem with it. It's a SC ruling.

The Supreme Court ruled but they didn't order it funded.

Kind of like "No Child Left Behind".

I still don't see them prohibiting school districts from referring
undocumented kids to ICE. Make that policy public and the first part
of the problem is solved.

You have to change more laws. If you feel strongly about it, lead the
charge.





That said, I think that is to the state's advantage to educate those
children and to offer in-state tuition for higher-ed. *It lowers the
chances of those students being on the welfare rolls in the future.

* They could deport them if they are illegal.

I'm all for that.

Then do it. Have your college enrollment office participate in E-
verify
and send the mismatches to ICE.

The law prohibits that.




*How do you feel about some districts bussing in kids from TJ to fill
seats and up the state money which is paid on pupils/day.

"Some facts would be nice."

Will the congressional record suffice?

http://bulk.resource.org/gpo.gov/rec...996_H02493.pdf

No, it would not suffice. There's no evidence that this actually
happened in this testimony.

[George M. Middius[_4_]]

Jenn said:

I'm just saying that it's to the advantage of all of us to
have as many educated people as possible.

An educated dishwasher is a bored dishwasher.

[Herbert Hoover[_3_]]

On 2009-02-13 13:29:54 -0500, ScottW said:

On Feb 13, 8:58*am, Herbert Hoover wrote:
I've reproduced the entire speech to make things easy for you.

A link does suffice. But in reproducing this speech you fail to make
any point of your own. Why?

For example, when Professor Weber talks of moral hazard and its
increased risk by securitisation and credit risk transfer, do you
really fail to see that controls on the originators and the recipients
of the risk can be equally effective?

You can't control who applies, only who receives, and that only by
creating regulations that bound the originators to certain standards.
This, of course, is directly against the Freshwater School principles,
as well as the Republican party espousal of "free markets"

Do you also fail to see that increasing credit risk is necessary to
facilitate home ownership for the poor? You cannot diconnect these
factors and the reluctance of democrats to They played together to
create the crisis we have.

Again, the CRA had a lower default rate than standard risks. It's not
about being poor. It's about being responsible. Try removing the word
"poor" from your vocabulary. It's not about wealth. It;s about ratios
and character.

Placing controls on Fannies and Freddie as repeatedly called and
repeatedly spurned by the likes of Barnie Frank would have
significantly diminished the market for securities backed by supprime
(risky) loans and significantly reduced the problem. The worst of the
loan originators could not parlay their trade with no market for the
loans they created. Even greater impact would have been the slowing
of the housing price bubble which upon bursting make even good loans,
bad.
Of course the government (fed, state, and local)

which has been entirely Republican for most of the past eight years. In
fact, since Reagan, the Democrats have occupied the White House for 8
Years, the Republicans for 20. S when you say "givernment, I assume you
mean the Republicans? Please remember your party held every branch of
government for 6 out of the last 8 years. So which government are you
referring to?


didn't really want to
do anything to slow the housing market as they too feed at the trough
of tax revenues and fees created by the boom. But for every boom
there is the inevitable bust.

Back to the Austrian school again, I see.

What was it Greenspan always said about sustainable economic growth?
Economic growth created by government stimulus is never sustainable.
In excess it creates a bubble whose pain of bursting is often worse
than the pain of the recession it was created to combat. The economy
is a pendulum. Nudge it to far and it comes back hard.

It was Greenspan who fostered the derivatives-fueled bubble. At least
get this straight.

Meanwhile the dumbass legislature in Ca. just adds another permanent
12c to a gallon of gas taking advantage of this temporary decline in
prices and another 1% sales tax for 3 years. These are measures sure
to "stimulate" our economy. sigh

California needs revenues. Where do you expect the state to find those
$? Have you entirely lost your mind? What is it you plan to do? Sht
down all the schools? Close al the firehouses? Shrink all the police
departments? Let every bridge, tunnel and road fell apart?

Herbert

[Herbert Hoover[_3_]]

On 2009-02-13 16:22:03 -0500, Jenn said:

In article ,
George M. Middius wrote:

Jenn said:

You don't believe that the state is too expensive to run? How much do
we have to spend to deal with illegal immigrators?

How Collagen Lady and her 14 children? I wonder who paid for all the
in-vitro work.

But that kind of thing is not unique to CA. Illegal immigration, while
not unique to our state, is a far larger burden here than anywhere else,
AFAIK.

Well......Scott's alien and he ught to be illegal.....


Herbert

[George M. Middius[_4_]]

Herbert Hoover said:

But that kind of thing is not unique to CA. Illegal immigration, while
not unique to our state, is a far larger burden here than anywhere else,
AFAIK.

Well......Scott's alien and he ught to be illegal.....

Alien? Really? The consensus is subhuman.

[Herbert Hoover[_3_]]

On 2009-02-13 13:12:48 -0500, "Harry Lavo" said:

Obviously, financial regulation is currently being improved on in other
aspects as well, in particular as regards banking regulation. But getting
into these details would surely go beyond the scope of my speech.
Thank you very much for your attention.
BIS Review 13/2009 5

Very interesting and informative speech. Thanks for sharing it, Herbert.

Thanks, Harry.

Herbert

[Shhhh! I'm Listening to Reason!]

On Feb 13, 9:11*pm, Jenn wrote (to 2pid):

If you feel strongly about it, lead the charge.

2pid is doing his part. He's whining about it on a Usenet audio
newsgroup, which is the equivalent of mobilizing masses of citizens
who are as outraged about this as 2pid is.