Quote:
Originally Posted by pocketkangaroo
Investments have risks. Teach people that they should keep an eye on who they are investing with. You invest with bad companies, you lose money. If you don't want risk, then just switch the thing to communism where no one needs to worry about losing their 401k.
All this does is set us up for it to happen in another 5-10 years. People need to learn that they have to quantify their risks in life.
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You are correct that this only sets things up to happen again if something isn't done. Sorry, but the free market isn't working here. You can call it communism or socialism or whatever you want, but the free market, in this case, got us to this place. If there is not some kind of major changes or regulations made we will be right back here again in another 5-10 years. Clearly, left to their own devices, there are people and companies who only care about making money for themselves and not the clients they service and they will stop at nothing for that no matter what the outcome. If things are changed so that they take on some of the risk, maybe they won't be as willing to gamble as much with the investors money?
Investing in bad companies? Lehman Bros and AIG are two of the largest and, until now, most well respected companies in the financial world. They were talking about the possibility of Goldman Sachs seeing the same fate (until the short sales were cut off) and they are also well know and respected. Merrill Lynch & Co have been around forever. If you can't trust companies that have been the pillars of the US financial world for years and years who can you trust? And again I ask how is Joe Bob the auto mechanic supposed to know that the CEO of Lehman has put the company on a path to buy up a lot of high risk sub prime mortgage debt when have the people in the company itself didn't know?