Tree of Eden

Bernanke Calls for Regulation to Fight Bubbles

Posted in Uncategorized by T.Salami on January 3, 2010

Bernanke Calls for Regulation to Fight Bubbles

Stronger regulation should be the first line of defense against speculative bubbles that could send the economy into a new crisis, Federal Reserve Chairman Ben Bernanke said Sunday.

Two points of interest about this:

1. How does this affect the free market ethos? More so, what does more government regulation imply? and is this an acknowledgement that markets can never be truly free?

2. It is worth considering how the prevailing notion that “real estate prices always rise” contributed to the housing bubble and might cause to future bubbles.

Bernanke, however, said the expansion of complex mortgage products and the belief that housing prices would keep rising were the keys to inflating the housing bubble. As a result, lenders made home loans to people to finance houses they couldn’t afford.

Posted via email from CNS


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