Re: [tlug][OT] Free markets

[Edward Middleton <emiddleton@example.com>]

Stephen J. Turnbull wrote:
> Edward Middleton writes:
>
>  > So there is inherently a high level of uncertainty, i.e. risk.
> 
> Right.  Insurance (as in the regulated retail variety) depends heavily
> on the law of large numbers, which reduces the individual risk.  But
> there's still systematic risk (eg, natural disasters), and modern
> societies tend to ask insurance companies to bear at least some of
> that.  That requires a cushion, ie, capital adequacy regulation.  But
> this is a calculable need.

But wasn't that the problem,  i.e. AIGFP wasn't required to hold capital
to back the insurance so they didn't.  By not holding capital they could
write as many CDS's as they wanted.

>  > Well it would be democratic?  But would it lead to highly over
>  > regulated markets, an increase in trade barriers and a long drawn
>  > out depression?
> 
> I don't know.  That really depends on the politics, and the skill of
> the leading staff members in government and advising politicians.

So your basically saying we agree ? ;)

Edward