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What Sugar and Collateralized Debt Obligations Have in Common

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Sometimes with the best intentions, the US government, as all governments do, makes a bigger mess by trying to fix a problem.  Back in the 1970s there was a great uproar over American waistlines and obesity.  The Food and Drug Administration (FDA) created a voluntary program in 1973.  All suppliers of healthy foods complied quickly and suppliers of unhealthy foods chose not to comply (small wonder here).  In 1977 the US government initiated a high-publicity ad campaign concerning links to cancer and heart disease with certain foods (mainly fats).  Between 1977 and 1985 consumption of fat diminished.  Under the Clinton administration Congress mandated labeling of food in 1990 and the FDA acted in 1994.  During this entire period obesity in America has increased rather than decreased. 

Now almost 20 years later, the real villain, according to a 60 Minutes exposé, is sugar.  Consumption of too much sugar is toxic and may be the reason behind the increase in heart disease, diabetes, metabolic syndrome and even cancer!  We see similar issues with the federal government in health care and financial regulation.  The US has regulated health care since Medicare/Medicaid in 1963.  The cost has increased and some say quality has decreased during the same period.  With financial regulation, the country spends billions a year but did not spend money on auditing Madoff and company nor did Congress allow either the Federal Reserve or the SEC to have anything but limited oversight in the subprime mortgage market.  In 2001 Congress banned the government from regulating Collateralized Debt Obligations (CDO) which is what took down Lehman Brothers, Bear Stearns and almost the entire financial system.  So, sometimes we have to be careful about what the government tries to do, because when the government errs, WE ALL PAY!

 

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