>snip>

>>The sub prime meltdown at the heart of the current financial mess is the direct result of regulation changes enforced by the government which made sound and time-tested lending practices illegal. The problem was compounded by a regulation change which allowed these new mortgages to be bundled and sold as a security. As such the lenders had no stake in the validity of the loans. Hence the greed, corruption, bubble and meltdown.
>
>As you and I know it is multifactorial, not only caused by the regulations, but also by de-regulations and the lack of regulation. Its a perfect example of where the government failed big time.

Exactly

>If the US government really wanted to make houses affordable to the US citizens it should have regulated the financing side of it.

There are many ways to encourage affordable housing and I would put government regulation as the worst of the ideas. We need to encourage people to invest in themselves and earn their homes.

>Though it partially did by having special arrangements with fannie mae and freddy mac, it failed to regulate how it should be financially backed up.

The Congressional oversight committee resisted all attempts to change the culture and rules at Fannie/Freddie.

>A nice summary, you can find here http://www.moneyweb.co.za/mw/view/mw/en/page662?oid=231125&sn=Blog%20detail%20back%20button
>
>I find it somewhat stunning that a republican president in a republican congress just worked out a socialistic plan to let every american citizen to own a house (Even our leftish democratic government would never propose something like this).

I'm not really surprised, W and his daddy are RINOs (Republican In Name Only). Big business and big government supporters.

>I did not hear any republican publically say that would be a wrong thing.

Newt Gingrich and Pat Buchanen both came out against it, and I'm sure they weren't alone, but I don't have time to search right now.

>Of course, now the financial buble busted, you'll hear the complaint that the tax payer should not pay for the results. So since, you did not answer my question, I'll ask you again.
>
>Do you really choose not to use tax money trying to resolve the financial crisis and let one bank fall after another, leaving millions of americans and american companies with empty hands, financially broke for something totally out of their control ? If so, I wonder whether you really realise the impact of this crisis to the american economy and its citizen.

I'm of 2 opinions.
1) I don't want to see a worldwide depression which I fully believe would happen without a bailout.
2) Maybe the western world needs a depression to wake us up so we understand what real hardship is.

Unlike most Americans, I had many discussions with my grandfather about the great depression. In addition, I still remember the financial mess of the 70s, while growing up on a farm, during a drought. I have a certain perspective on tough times that I feel is missing in the modern western world. Despite the hype, what we are going through right now is not on par with either.

>Also, do you still beleive that reducing the regulations would make things better rather than worse? Would there be less greed ?

It's not a function of how much regulation as proper regulation. Making sound lending rules criminal will be a wonderful historical lesson for future regulators. Will they learn it? Not a chance.
As to greed : you cannot legislate behavior and that is not the role of the government.

>>Investors do not concern themselves with the short term, gamblers do.
>
>Sorry, but I don't see the difference. Short term or long term, you still don't know whether you'll get your money out of it.

Yes I do.

>>>>Don't take my word for it, just ask the Oracle.
>>>>http://www.nytimes.com/2008/10/17/opinion/17buffett.html?_r=1&ref=opinion&pagewanted=print&oref=slogin