| From: James Knott via talk <talk@gtalug.org> Each of these problems was caused by multiple failures, each at varying levels in the system. | A big part of the problem is business has been claiming they need | deregulation to grow. Some deregulation makes a lot of sense. Some does not. Businesses love to control their regulators. Not only to reduce regulations but to put moats around their businesses. Often these moves are disguised (intentionally or not) as somehow beneficial to the broader society. | Well, that, coupled with lack of enforcement led | to the 2008 collapse. Lots of things (certainly including those) led to the 2008 near-collapse. - governments held down interest rates in a possibly ineffective attempt to boost sluggish economic growth. If I remember, this started with the Dot Com Bomb. But letting it run way too long (eight years!) seems like a bad idea. With low interest rates, investors did all kinds of wild things in a search for yield. CDAs seemed magical: safe investments (backed by real property!) with decent yields. - computers made it easy to devise complicated instruments like CDAs and made really fast trading possible and profitable. They also made derivatives of all kinds possible. - every few years a new financial instrument is invented, marketed, and then turns out to be not as great as it had seemed. - the biggest regulatory failure, throughout our economy: too big. It comes in the "too big to fail", "too big to regulate", and "too big for the free market" varieties, at least. - Entities made and priced loans but were not exposed to any consequent risk. Hard to imagine that stupidity. - Risk is managed by spreading it around. That makes failure less devastating. But if risks are correlated, failure cannot be avoided, it may even be amplified. - Some regulators (eg. New York) considered insuring bonds a risky business. So they required insurers of bonds to only insure bonds. These were the so-called monoline insurers. What a crazy concept: bond failures might easily be correlated and the insurance contracts would be worthless. | Bernie Madoff is a perfect example of what lack | of enforcement can do, as the SEC was pretty much handed the case on a | silver platter yet did nothing. And neither did his clients, some of which ought to have been smart enough to figure out that the numbers didn't add up. My impression is that Canadian enforcement is way less effective than US enforcement. | Another example of the "benefits" of | deregulation is the Lac Mengantic train wreck, which had just a single | person running the train after the railway convinced the government they | could do it safety. The investigation showed that the trigger for this | was the engine fire, which was due to lack of maintenance. It also | showed that the track was in such poor condition that it wasn't safe to | run any trains over it. And who knew that crude oil was explosive? The odd mixture of stuff from the Bakken had a lot of characteristics of gasoline or worse. Normal crude just doesn't act that way. Regulators didn't pay attention and neither (apparently) did the railroads or shippers. There were many ways (in hindsight) that the accident could have been avoided. If I remember correctly, the firemen turned off the idling / burning engine, not realizing that the airbrakes would therefore let go in a few hours. The driver had been too lazy to set dozens of the handbrakes; there is one on each car. After all, it is hard and slow work and was almost never needed. Perhaps a better method should be provided. This particular type of tank car is not very robust. It is easily breached. The driver had parked on a high point, on the main line. Not on a low point, on a siding. The town was built too close to the railway. I would guess it was built there to be close to the railway | Of course, we can't forget that our own federal | government set up the mechanism that enabled the wealthy and large | corporations to hide money offshore and evade taxes on it. To what mechanism are you referring?