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What would Abe Lincoln think about our times?

19 Mar , 2015,
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Abe Lincoln was a forward thinker and pragmatists. He knew the benefit of appropriate laws and regulation. Abe was a supporter of a thriving economy. The US and the world more generally have been through tough times recently with a recession aka the Global Financial Crisis (GFC) arguably caused by the repeal of good legislation leaving a regulatory gap that allowed the GFC to occur. The fact that mortgages sold by someone (with a financial interest to sell them and no consequence if they were repaid), that was never going to need them to be paid back resulted in many mortgages being sold that could not be repaid in hindsight does not seem surprising. This goes to show that bad regulation in one country followed by ignorance in financial investment banks throughout the world can have disastrous results. I think that if Abe Lincoln were around in these times he would be campaigning for laws to stop this type of thing happening again!

Laws should not be there to hinder business. It has been shown in Australia that mortgage brokers can be regulated efficiently so as to protect the borrower without impacting business negatively. In fact due to the trust of the consumer in Australia more consumers than ever are using a mortgage broker.

I suspect that Abe would want us to learn from the GFC and ensure that these types of regulatory gaps are not found in other areas of the economy, because business, and the rest of society need regulation to protect them from themselves or the bad apples amongst us. That is not to say that regulation cannot go too far, obviously it can and thus regulation must be carefully crafted. Often it seems that politicians throughout the world are basing their choices on what they think will look good in a 20 second media ‘headline’ rather than thinking what is best in reality. The media has something to answer here but often the media is just giving the reader/listener/viewer what they want and it is up to all of us better understand the issues and dismiss the one liner slogans and headlines.

 

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