House, MD – The Real Cause of the Current Financial Crisis
Friday, February 5th, 2010 at
3:32 pm
High-quality version: www.youtube.com A free market analysis of how we ended up in the current financial crisis — and a simple sentence to clear it up for everyone else! Freedomain Radio – www.freedomainradio.com
Tagged with: crisis • economics • economy • financial • free market • Freedomain • housing • libertarian • objectivism • objectivist • Radio • US
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I do understand your arguments and I’m pointing out flaws in said arguments, as well as your avoidance of discussing the root causes of the bubble itself (which is really the crux of the debate). But if you’d prefer not to argue it further, then fine. However, you said to “read some more” about it,and since I cited my sources upthread,could you be so courteous as to do the same?
Also, on rereading “The Housing Boom and Bust”, I noted that ratings agencies got pressured by regulators to upgrade loans made under Community Reinvestment Act guidelines. Just throwin’ it out there. I might also suggest the poster confederalsocialist’s videos “Paul Krugman” and “Thunderf00t Lacks the Wisdom of the Acorn”.The relevant links are in the sidebars.
no you seem to have this obsession with the housing bubble and how its collapse is what caused the banks market to freeze, inter bank lending to stop, and the collapse of investment banks and insurance companies. In a nutshell, and in lehman terms, it is, but thats wat you’d say if you were explaining it to a child. The causes are far more intricate and complex, and you have to understand how the banks spread the risk. I keep repeating myself, you clearly don’t know how it all worked.
and no im not gona list every single financial times article i’ve read, every single terrestrial documentary i’ve watched, every single economist i’ve watched on the internet, and a host of debates, as well as management and financial accounting journals.
you can find out for yourself, as you seem to be relying on bizarre youtube vids, as your concrete sources. brilliant! i dont understand you’re arguments, i never disputed that low interest rates caused a bubble.
No, I addressed how the risk was created (see previous posts), why it was seen as viable, and how it proliferated (and acknowledged that private entities were involved in this step while pointing out the moral hazard created through government licensing of the agencies involved and the false impression of an all-knowing state protecting against bad investments). But UR too caught up cartoonworld where evil bankers plot economic destruction from their subtarranean base.
Not asking for every article, just a few good examples that go into specific causes and effects and explain how these specifically caused the financial crisis, not “Well, deregulation allowed banks to make and sell crap loans”. I gave you two print sources for my arguments, “The Housing Boom and Bust” by Thomas Sowell, and “Meltdown” by Thomas Woods. There are other sources, but those are the best general sources.
Damn. Almost 1500 and I haven’t eaten lunch yet.
well. it did. deregulation allowed banks to make and sell loans in ever more complicated financial packages to investors around the world, full of bad loans. the sooner you accept that the closer you’ll get to understanding what happened. by thinking that is a weak cause, i immediately recognise you dont have a clue. do you even know why lehman brothers collapsed? do you know how to read balance sheets? i get the impression you have no financial knowledge whatsoever.
you’re the one living in a cartoon world because you don’t know what happened lol. im not going to waste my time on here going into how MBS’s, CDO’s etc.. actually function. You can find that out for yourself. im not going to get sucked into a youtube debate with someone who knows nothing about the intricate causes, and im not gonna write a thesis on here. you just need to open your eyes and learn a lot more about it. start with some finance journals.
you’re also incredibly naiive if you think banks and evil bankers aren’t to blame and that they were just innocents. you clearly don’t know how the world REALLY works – try reading some sigmund freud, its a good start. watch some documentaries by tony curtis. you are clearly some old twat who bums free market probably.
“you are clearly some old twat who bums free market probably”
What the heck does that even mean?FYI, I actually do read sources that disagree with me but your incoherent,sophomoric posting style suggests that you’re some crank who read an article in the Financial Times or The Economist and decides he now has the creds to call everyone else an idiot. I tried to be as civil and non-demeaning as possible, but since you want to make it an insult contest, you are a pompous asshole.
Awright, that’s lunch.
A salient point that I forgot to mention earlier was, ironically, one mentioned in this video, that default rates were roughly equal in prime and subprime markets, suggesting the problem stemmed mainly from house-flipping in easy-credit-induced bubble conditions rather than fancy repackaging of loans.
“Read Sigmund Freud”.
Uh, okay. That’s a complete non-sequitur.
I never claimed bankers were helpless innocents, either, just not the key or prime movers of the false boom and eventual bust.
You haven’t gone into a clear explanation of cause and effect here. I understand basically how MBSs and CDOs work, and their role in the financial crisis, but I have also explained why I think their role is secondary and does not account for the genesis or perpetuation of the economic distortion that resulted in this recession. All you have done is talk about MBS without explaining why investors bought said assets and how the necessary economic distortion occurred in the 1st place.
16:58
Well, very true but you fail to point out how banks (the big ones like JPM, GS, CIT) are using our own government against us and that through their political connections forced a gargantuan trillion dollar bailout on everyone which if we decide not to pay will certainly result in VIOLENCE. I don’t think the police are going to storm the bankers houses any time soon but I’m sure people in default through no fault of their own will be. Your story is too simple.
How can you have freedom without a free market?
What kind of freedom is that?
The problem is the state violence, not the free market.
4) a market economy with private property produces two or three classes: capitalists, (coordinators), workers. when people without the means of production have to sell their labor force on the labor (force) market, their freedom is extremely restricted, they loose their right to decide how to use their creative energies and capacities, as the capitalist (or the coordinator in the name of the capitalist) tells them what to do. {2}
you asked for an alternative to the freedom of the market? in fact there are many possible economic alternatives, but you cant choose between them (like on the market) in a technocrats way. society doesnt work like this. its human beings who on the basis of the existing structures change, create and recreate new structures through their agency. {3}
every day we recreate (and this means we have the possibility to change) the dominant capitalist economy as well as our communist relations (with our best friends, with our family members: we give what the other needs, because we know they would do the same for us; open source: we give what we can give), gift relations (birthday presents, christmas presents), self-organised relations (food coops, self-managed workplaces) within our society dominated by the capitalist mode of production. {4}
these already existing economic relations can also become the dominant mode of production: {5}
1) gift economy: the gift is a hybrid form of freedom and obligation. the seemingly clear cut difference between freedom and obligation, self-interest and altruism is a very recent concept and it cannot deal with every part of social reality (marcel mauss: the gift). the gift creates relations but they are still somehow close to market relations, as these relations may be ended as soon, as a gift is given in return (david graeber: anthropological theory of value, ch. 6). {6}
2) self-organised economy like parecon (participatory economics): participatory planning, consumer and workers councils, decision making input in proportion to effect, balanced job complexes, remuneration according to effort and sacrifice (michael albert: parecon). here everyone (not just buyer and seller, not just the powerful, not just the dominant classes) has the freedom to live his/her life the way she/he wants to (and not just choose between ready-made options). {7}
3) communist economy: freedom for everyone to get what they need and the obligation to give what they are able to give to those who need and whom they trust and expect to do the same for them. the more trust there is between the members of a society, the more dominant this mode of production can become. (note, Im not talking about coordinator class dominated state socialism in the Soviet Union or in China, often wrongly referred to as communism) {8}
what kind of freedom is the freedom of the market? very narrow sense of freedom: 1) buyer can just choose between some ready-made options; 2) just the buyer and the seller have the freedom to make a decision, third parties that might be affected don’t have a say and their freedom is restricted; 3) the more powerful market participants have a bigger influence on the market exchanges and the freedom of the less powerful participants in the market is restricted; {1}