@Pericles, yes really. Deregulation commenced late 70's or early 80's. We had the '87 stock market crash...so where were you? Those high interest rates in '89 were Mr & Mrs Average paying the banks for their (the bank's) losses in '87. Then there was the '91 stock market crash, then Dot Com Bubble, then Subprime Loan fiasco and GFC.

Still feel condescending?

Cheers.

Dick Dastardly ,Pericles will always be a big bankers bitch just like our major political parties.

The banking system steals from us on many levels. Who creates the money for inflation? The banks do it as debt to inflate our housing prices, loans for consumerables, small businesses and finance to credit unions and loan sharks. It is a totally parasitic system destined to fail.

Our big banks now have leverage of 70:1 instead of the normal 10;1.This means they are depreciating our savings and wages via debt. We lose out 3 times. First via currency depreciation, then having to repay the principal and lastly the interest.

The same applies to the money they create from nothing for growth. So if inflation = growth and is expressed as debt by private banks, we can never repay the debt unless we sell off all our assets. What happens when we have no more assets to sell ?

Nice and vague, Dick.

>>Deregulation commenced late 70's or early 80's<<

What was the nature of the deregulation that took place in the "late 70's or 80's" that caused the stock market crash of 1987 and the high interest rates in 1989?

(You don't mind me calling you Dick, do you?)

People who understand these things attribute the high interest rates in 1989 to too much government intervention in the financial system, rather than too little. Have a look through this contemporary paper, and see whether you can refute any of its analyses:

http://www.cis.org.au/images/stories/policy-magazine/1989-spring/1989-05-04-terry-black.pdf

Do let me know what you find, won't you.

Oh, and don't forget to let us know what aspects of deregulation, and of what, caused the 1987 crash. Arjay is just dying to find out.

Pericles, one major change was that insurance companies, most of which were "mutual" companies, meaning their only shareholders were their clients...policy-holders, were now allowed to list on the stock exchange. Traditionally, stock markets were a way for companies that produced things, desired financing and rather than borrowing money, listed on the stock market, inviting shareholders to share in profits. It was better than borrowing monies which had to be secured and of course, paid back. They would finance such things as expansion of production, outlets, infrastructure, R & D, and so forth.

Insurance companies now listed after deregulation. They make nothing, produce nothing, and only use their funds for investment purposes, mainly in conservative securities, and a portion in the stock market. But now, their primary responsibility is to their stockholders, not policyholders, and also suddenly have vastly more money available to invest in the stock market from their listing.

So of course, the stock market overheats while insurance companies are throwing money at everything. Their focus not only changed from policyholder to shareholder, but due to market heating and every cat and his dog believing they can do no wrong as everything is rising, they push market linked products instead of "capital guaranteed" products, further heating the market. But more importantly, market linked products offer no guarantees, therefore no responsibility either...buyer beware.

Add the fact that superannuation was made mandatory in about 1983, and insurance companies managed most of those funds, and with women entering the workforce in the 60's and 70's further driving our economy, then by the early 80's there was a shitload of more money than ever before being pushed into the stock market, thus over-valuing everything. Naturally, a "correction" was inevitable.

That's just one example, and only a small part of the story.

Cont'd

That's not to say that the market wouldn't have overheated just from the advent of compulsory superannuation, but the change to how insurance companies functioned and their change of focus from conservatism in money management to cowboy economics and holding no responsibility for other people's monies, became endemic. Banks followed suit. They too listed, and not only employed the same cowboy economics of gambling with other people's money, but were even more inventive...particularly merchant banks.

Many mergers between insurance companies and banks occurred, each doing so to access the client base of the other, with the sole purpose of gaining monies to gamble.

The entire financial services industry, from a tradition of conservatism, securities and guarantees for their clients, turned into stock casinos, betting on everything, being responsible for nothing.

Had deregulation not occurred, that entire shift would not have happened, and the crashes we've seen would have been dips instead of free-falls.

If I'm vague on a date or two, it's because I'm talking off the top of my head, as I didn't read about it, I was in the industry watching it all unfold.

As I said, that's only a small part of the story, but it's profound in the effects it had.

Cheers.

Pure invention, Dick. Or imagination, one or the other. But patently not factual.

>>Pericles, one major change was that insurance companies, most of which were "mutual" companies, meaning their only shareholders were their clients...policy-holders, were now allowed to list on the stock exchange.<<

While there have been a number of mutual societies in the insurance industry, and while many of them have since opted to issue shares instead, there has never been a regulation requiring them to be, or remain, mutual. In fact, shareholder-owned insurance companies have been around since the eighteenth century.

I could go on and rubbish the rest of your post too, but since it is all based on the same discredited notion of "deregulation", it is hardly worth it.

I will of course be happy to do so, if you think I'm being unfair.

So, for the second time of asking, what was the nature of the "deregulation" that, according to you, led to the crash of '87, and the high interest rates of the late eighties? That is, what regulations were removed, and when.

>>If I'm vague on a date or two, it's because I'm talking off the top of my head<<

It's not the top of your head that is speaking, I suspect, but another part of your anatomy completely.

You don't mind me calling you Dick, do you?