you are probably correct in your assumption that *if* we had the perfect regulations than they could have countered the problems (which were caused by government intervention but that is neither here nor there). The problem is that no such omnipotent perfectly wise uncorrectable regulator gods exist to create these perfect regulations. So even if we assume, for the sake of discussion, that the housing bubble would have occurred naturally in a free market, it still isnt clear that regulations (created by real people not imaginary regulatory gods) would have improved this situation. This is of course assuming that the regulators are not perfectly wise but do have noble intentions. If we assume (and i think this is a more realistic assumption) that regulators pursue their own agenda and so are likely corrupted by the same institutions that they are intended to regulate than it is almost certainly the case that they made things worse.
Thank you, came here to say exactly that.
More generally, when you look back at things after you have knowledge of failures and having pondered about how to fix them, it's natural to dream about a force that would execute those actions to result in a better now. If only someone had taken control and did this and that... This creates false trust in regulatory systems, and the fact that they don't work just leads to a snowball effect. In the end, you still have the same problems plus a bunch of side-effects caused by the newly invented rules you have to live by.
I'll give you both a +1 to your posts. In the end, one way or the other, I think it all came (and still comes) down to greed: people don't tend to have the best interest of others at heart when it comes to business.
What astounds me most about the whole property bubble and subsequent credit crisis and 'stepping in' of the authorities leading to the mess we're in today is that people looking at the same facts can come to such diametrically opposed opinions as to its underlying causes.
It's just different worldviews . Hindsight is 20/20, which I believe is what memvola was getting at. Everyone looks at what happened and what factors affected it, then apply their worldview to the situation. And we all know, of course, that every person on Earth believes the exact same thing.
