>> ^Winstonfield_Pennypacker:
I think that is a foolish & myopic approach that ignores the most important player (government) and gives a free pass to #3 (consumers).
Wasn't my point that some regulation is necessary and deregulation (while generally beneficial) can be harmful? You stated yourself that repeal of the Glass-Steagall act triggered a slow fuse.


Subprime mortgages are one thing - and by their very nature would be acknowledged as poor risks and treated as such. The problem could not have escalated to its eventual outcome had it not been possible for banks to rebrand (and obfuscate) these things into more innocuous packages.

(Wow, we went from healthcare to the mortgage crisis in a hurry, didn't we?)

There are some BIG problem with this video: it either, 1) omits key aspects of the issue (e.g., pressure on brokers and banks to repeatedly cold call & pressure current renters [i.e. potential homeowners] with unrealistic mortgage offers, selling of sub-prime mortgages to prime borrowers [because investors get a higher rate of return for sub-prime loans], and - very importantly - Wall Street's lobby to congress to deregulate lending laws so that Wall Street could create new mortgage products for less-than-prime borrowers or, 2) flat out gets some information wrong (the portrayal of sub-prime borrowers as neglectful or bad people (too many kids & cigarette smoking? really???); especially without informing the audience that most subprime borrowers only defaulted at the 5 year mark on their mortgage, when the monthly interest payment ballooned from 3 or 4 percent each month to 10 to 12 percent each month (an aspect of the mortgage agreement that most brokers assured borrowers would never happen: that by the time the balloon payment was due, that the homeowner could then refinance to a fixed rate at 6-7 percent -- that is if the broker explained that the balloon payment at all (many brokers covered that fact up).

These are key deceptive maneuvers conducted by banks, investors, lenders, brokers -- all in the name of making quick money. THEY were the ones lending, it was their job to properly discern who to and not to lend to; to specifically target people more likely to default and put families already struggling to make ends meet at risk of bankruptcy and homeless just to get a higher rate of return is criminal.

This site would be so much more pleasant if it wasn't completely overwhelmed by 16 year old liberal nutjobs like Nithern who haven't done enough research to realize that both Dems and Repubs have been complete fiscal retards for a really long time. Nithern, you bring up the old Clinton surplus myth. Read this:

http://www.craigsteiner.us/articles/16

If you can't understand it, let me break it down for you: there was never a surplus under Clinton. Ever. There are two parts of the national debt. Imagine you're a household and you have a mortgage and credit card debt. You take out a second mortage on your home and pay down some of your credit card debit. Home debt goes up, credit card debt goes down. Then you go all over the city and tell people you reduced your credit card debt! Whee! You don't tell them you went deeper into debt elsewhere in order to do it. Do you realize how ridiculous of an accomplishment this is?

Moreover, Social Security payments are adjusted for the CPI. The CPI is the government's way of calculating rises in the cost of living. In the 90s, the Boskin commission was formed to look for "bias" in the way the CPI was calculated. Let me translate that for you: hey guys, we need reduce Social Security obligations without anyone noticing by subjectively omitting certain price increases, thereby artificially lowering the CPI against which SS payments are adjusted.

http://www.financialsense.com/stormwatch/2005/0624.html

Perhaps there is no accurate measure for the underemployed, but discouraged workers (jobless for over a year) are no longer counted when they used to be prior to the Clinton admin. It's a goofy new category created to intentionally make the number look more timid that historical numbers and nothing more. Both the CPI and the way unemployment are calculated changed during the Clinton administration as short term "fixes" of problems that need real solutions that no citizen is ever going to vote for. So if you think Clinton solved jack shit fiscally, I've got news for you: we're going to need something 100x more potent. And it won't happen, because people are retards like you. Think about it. You bitch about the Iraq war, and rightfully so, but before you were born the Democrats started a useless little war called "Vietnam" that led to Nixon severing our currency's last link to gold. Oh, and we lost about 50k soldiers. Which is sad, because you can always count on communism to fail by itself, which is exactly what happened after we pulled out.

You cry about the lack of Republican regulation. We need more regulation like we need a hole in the head. You don't even know what the word means, it's just some magical decree for officiating infractions in a game that can't exist without "subsidy fever". I mean, there's laws against stealing and killing and defrauding, and then there's handing out free money while impossibly trying to stop people from gambling with it. People's hope for gain is NORMALLY offset by their fear of loss. That goes out the window in an economy where anyone can borrow foreign money cheaply for a depreciating asset that they're convinced is an infinitely appreciating piggy bank. It goes out the window WITHIN the government, because politicians are by nature operating with money it appropriated rather than labored for. A "GSE" like Fannie and Freddie need way more regulation that any bankruptcy-fearing company.

Moreover, no one cares what bank they give their money because all bank deposits are insured by the FDIC. No investor gave a shit what loans Freddie and Fannie were spewing out because they were implicitly backed by the federal government. The home bubble got a huge boost from a 97 tax law excepting certain home sales from capital gains taxes. Because politicians like being the candyman. They don't think about the unintended consequences of creating artificial demand and employment in certain sectors with all their subsidy intervention bullshit. TO THIS DAY, FHA loans are being made requiring only 3% down. All the private subprime lenders? Couldn't have happened unless a politically motivated central bank exists to PRICE FIX the cost of borrowing in the market. Spike the punch, see mayhem that ensues, then resolve that the solution isn't to kill the spiker, but rather to hire more police officers to regulate the effects caused by the spiker. That's great logic. I hope you're regulating your regulators, too, because the SEC was told of Madoff's scheme 8 FUCKING TIMES and didn't do jack shit about it. I have more confidence in genuine personal risk of loss regulating behavior than some fucknut at the SEC. If only you would support an economy that wasn't so awash in fucking subsidies.

Social Security is another Democrat timebomb. Why not bring that shit up? It operates like a ponzi scheme and if you know how ponzi schemes work, you know that early investors win at the supreme expense of later investors. Guess who that later investor is? It's you!

Yeah, of course that's the real reason, but the overt pretext is a ridiculous exaggeration of #1 and #2.

McCain made up a few more lies to slander ACORN. He blamed ACORN for the subprime mortgage crisis. That couldn't be further from the truth, considering ACORN counseled poor people on how to avoid predatory lending and obtain cheap housing (and THAT operation of ACORN in particular is the one that got federal funding).

He is right and wrong, this looks at actions after and not actions before that lead to a crisis like this.

Hudson claims fault with the government bailouts, yes a bailout by the US government is always a bad idea, but one must understand the root cause of why such an action took place, CDOs and subprime exposures were intertwined in complex financial instruments that exposed all the banks, Lehman had so much debt that no one wanted to touch it neither the US nor the UK government, Barclay's walked on buying it because no government wanted to under write it. After Lehman collapsed it spiraled confidence downwards in all sectors of the financial market. Government money and bailout was then needed to reignite confidence and loosen money and start allow interbank loaning to take place. If this didn't happen we would have been in a far worse position, is there problems with other incentives the government took? yes but one must understand the pressure induced by both the populace and economic interests to take all and any action, most of which was to shore up confidence in the financial sector.

How did this come about? the financial sector and believers like Alan Greenspan always believed that the financial market could always self regulate themselves to not taken actions that would lead to their own demise, CDOS and subprime packages actually evolved from greed and abnormal profits. This lead to a whole slew of deregulated financial instruments like NINJA loans, which allowed firms to give loans to people no have No Income No Job or Assets. Who would have prevented this? the SEC and Fed which were both pushed into taking more lenient positions with regards to financial markets (same thing happened before with junk bonds and derivatives).

But great sift indeed, I totally agree with his views on dissuading borrowing and creation of more debt. Financial markets do not produce wealth. They only transfer it. Old school investment doesn't occur, as its multinational and money doesn't have incentive to invest in the US then say China.

Tags for this video have been changed from 'american casino, foreclosures, subprime, homes, pools, mosquitos, wall street, bailout' to 'american casino, foreclosures, subprime, homes, pools, mosquitoes, wall street, bailout' - edited by calvados

Tags for this video have been changed from 'subprime lending, mortgage crisis, financial collapse' to 'subprime lending, mortgage crisis, financial collapse, american foreclosure' - edited by kronosposeidon

No that's not correct. Let's put the data on the table: what are the absolute numbers of subprime mortgages broken down by race?

>> ^bmacs27:
How exactly is force the exclusive domain of the government? What about the polluter that is forcing you to breath lower quality air? I can't do anything about that. I need a government to enforce my property rights over the air. Yes, the government employs force. It's our only recourse against the force employed by concentrated capital.

Everyone has access to some form of violence, and violent impulses are part of human nature. That's not necessarily a bad thing, but the initiation of violence against another usually is. There are many ways to repress the initiation of violence, but the ultimate resource is violent retaliation. In a civilized society, a government should try to establish a monopoly over the use of force, so that private citizens can concentrate on more productive endeavours and not have to worry about coercion from fellow citizens.

The level by which an individual is free of coercion from others determines how civilized a society is.

So, I'm not saying government has actual exclusivity over violence, but the reason we have government is so that it creates a monopoly over violence, so that it can use violence itself to repress those who use violence against each other. That doesn't mean government is allowed to go nuts and use violence to plan our lives, redistribute wealth, establish monopolies, control the currency, etc.

Services that *require* violence should be done by government. You can't have a "wagging finger" police, they're law enforcers, you can't have courts that can't apply punishment or incarceration, a military that shoots flowers, etc. However, any other service that doesn't *require* the use of force to be performed (education, healthcare, housing, insurance, product safety, space exploration, research, etc.), should be done and will tend to be done better by the private sector.

Please explain to me the law of nature which prevents corporate oligarchy in the absence of government force. Collusion is the rational selection for a small number of powerful agents. They reap the return, prevent entry into marketplaces, and price gouge when privy to exclusive control over an inelastic market (such as healthcare). You've been reading Ludwig too much... I'd recommend reading more of his brother Richard's work. He actually contributed to knowledge.

Well, how would they prevent entry into marketplaces in a free market? Usually it's the collusion between govt + corporations that stops new players from getting in a market with legislation and subsidies. If that's out of the picture, what's left, price dumping? Dumping can push competitors away, but, while it lasts, it's good for consumers (lower prices) and a dumping company's profit takes a hit. No matter how wealthy a company is, it can't practice dumping forever.

If, through price gouging, a company tries to take advantage of its "monopoly" in a market, that creates demand for competition. No matter how inelastic a market is, that doesn't stop the dynamics of supply and demand.

If you're dismissive of Ludwig's contribution to economics, yeah, I hear ya. Whatever knowledge he contributed got pretty much diluted in the mess that economics currently is. If after years of study you were lead to believe you're an economist, I can only offer you my sincere condolences.

Like I stated, healthcare is an inelastic market like police, fire, and water. As such, it should be provided by the government because the status quo of a small number of profit-driven actors in the market leads to price gouging.

You're talking about a highly regulated market that is about 60% provided by government. Gee, I wonder why it's so inelastic.

I'm not saying people got greedy... (loads of crap) It was the banks writing a junk bond, and slapping a smily face on it.

Look into how low interest rates set by the Fed for so long encouraged people getting into debt, how government pursued policies to encourage home ownership (good intentions gone bad), how the subprime market was only possible because of government guaranteed loans.

I've said this before, but I always find it curious how creative interventionists become when they come up with all sorts of "unsolvable" problems that arise from a free market, yet can't use any of that imagination attributing bad consequences to government intervention in a regulated market. It's always the market who gets the blame.

Actually, they do. If our dollar were to suddenly become worthless, they would have no currency reserves. While I agree, they have the upper hand in this, they've already seen what a collapse of consumption on our soil does to their own economic growth. (...)

China along with many other countries were duped into using dollars as reserves, pieces of paper we can print as many as we like. For a while now they've been accumulating actual reserves, such as gold, in preparation for the "quantitative easing" we'll soon be indulging ourselves in.

Consumption isn't a huge favor the world needs from us. Anyone can consume, it's not that hard. what matters is that you pay for it and America hasn't been able to do that for a very long time now. Hell, China has many more consumers than us who can actually pay for stuff with real money. Why would they care to export to us when they can consume most of their goods themselves?

Do you think a chinese is thankful he works in a dishwasher factory so he can go home and wash his clothes by hand on a rock? Or making cars for us so he can ride his bicycle to work?

Their government is also being stupid because they're still trying to prop up the dollar and devaluing their currency by keeping it pegged. They'll wise up eventually.

I didn't say hyperinflation... I said inflation. Between 2 and 4% inflation is a good thing. If you disagree, you are beyond help.

That's kind of a silly statement. Governments like inflation, people who have to produce and earn money don't. That's like saying "low interest rates are good". Depends on who you ask, they're good for debters, but not good for lenders and savers.

As for the Austrian school, yes, it's BS. (BS)

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." -- Hayek. Not that a keynesian would care.

No force, but enforce contracts. Right.

Touché Señor Nitpicker I meant something along the lines of "don't allow use of force among citizens".

It's easy not to worry about how the rules are set up so long as they are benefitting you. Once you see that not everybody is getting a fair deal, you realize the moral, and even selfish reasons for entering a broader scoped social contract. In the end, we all benefit from a well educated, healthy society. We just need to put up the VC.

Unfairness is, most often than not, advanced by the use of force. Problems that don't involve force to begin with, don't require force to be solved. Violence is in a different domain. That's like bullying people into liking you.

Why aren't you questioning the selfishness of those who advocate the use of force? They want power over a whole domain of other people's lives. They say people are being wronged yet they propose using the most destructive tool, something that opens up so much potential for abuse, to solve everything.

Libertarians are always worried about individuals instead of this group, or that group, or whoever claims to be speaking for the interests of society, not out of blind selfishness, but because "individual" is a very cool concept with the following magic properties:

An individual is the smallest minority, so when you help the individual, you help the minority that needs the most protection from abuse (they're the smallest!). An individual is the most numerous minority, so you help the most minorities. An individual is the majority because everyone is an individual. So when you keeps things always at the level of individual, individual rights, individual liberties, etc. you're helping everybody and people tend not to be benefitted at the expense of others.

That sounds a lot more fair to me.

>> ^gtjwkq:
Wow Nithern, your reply is a mess. I guess I should have explained to you that I'm not an anarchist, since that's what you understood by "free society", my fault for using such a loose term.
I meant a society free from government intervention in the economy, free market, preferably with a small government. Being mostly a libertarian, I don't like to be confused with an anarchist, the same way a social liberal might feel offended when called a socialist.
Well, one could argue that government of any sort is government intervention in the economy. That's why anarchists and libertarians so often get confused. Think about it. There's a market for murder. There's a market for "protection". There's a market for "waste disposal". So really, the question always boils down to 'what specific government interventions into the marketplace are you for?'

The problems with that line of reasoning are all those pesky externalities. Exploiting the commons for personal gain is the oldest trick in the book. It's also, unfortunately, the reason we need to regulate the marketplace. In our most recent episode, we removed long standing regulation on securities trading. They existed because in the 20's people had already figured out how to privatize gains and socialize losses. Without a government to overcome the transaction costs of collective bargaining, it would never be possible for people to prevent this sort of exploitation. To me, while anarchy seems like the end result of libertarian ideals... really it's rule by corporate oligarchy, with rampant exploitation of the commons. At least anarchy often does away with currency, and with it the power structure.


Ah I feel better already. Bureaucracies sure seem very efficient when you explain it like that.

How about like this: Medicare operates with 3% overhead, non-profit insurance 16% overhead, and private (for-profit) insurance 26% overhead. Source: Journal of American Medicine 2007

We're currently in a financial crisis because our government is broke, the world has been lending us money, but that will end when other countries realize we're never going to pay them back. Our government is currently spending money it doesn't even have.

I would disagree. We are currently in a financial crisis because an unbridled, short-term incentive laden banking industry leveraged itself into oblivion. Afterwards, they put a gun to our head and handed us the tab. In other words, print the dough, or the pitchforks and torches tear the whole joint down. The only reason their hustle didn't work indefinitely is because too many of US were spending money we didn't have. Changing that is going to take a cultural shift that is already beginning.

As for China, whom I presume you're referring to. I don't think they want to start selling their position. Ever hear of buy low, sell high? No, I think China is more likely to just borrow against it, and start picking up their part of the consumption. They're already pulling the world out of this recession.


Socialized healthcare as an option , doesn't make the idea any better, because it's still wasting money and it's unfair competition that will further distort the healthcare insurance market. Any reform in healthcare should involve reducing government intervention not increasing it.
I disagree. Also, can we call it a "public option" please? Our good friends in the public relations office spent a while coming up with that one. Listen, the bottom line is we already pay for everyone's health insurance. It's just that it's cheaper to pay for antibiotics than it is to pay for abscess removals on ER beds.


If people are having trouble understanding the rationale behind the Tea Party movement against socialized healthcare, it's mostly about excessive government spending and taxation. Was that too hard?

Yes. Define excessive.


I don't think social liberals will ever take the issue of spending seriously, even after the value of the dollar is destroyed and our economy collapses.

Spending is serious business, it's inflation you all gotta relax about. Is it worth having the "why inflation is good for the economy" argument with you? Or would you rather go back to your non-mathematical Austrian school BS, and we can just agree to disagree?

I think you need to educate yourself out of lies about the insurance business, on the government's major role in causing the housing bubble and subprime mortgage crisis, and on the utter uselessness and injustice of anti-trust laws.

I agree, it's difficult to write laws without unintended consequences. That is, you can always game the rules. One should not conclude from this, however, that you shouldn't try and write rules. Instead, you should just write them faster than the douche bags can game them. You always need more rules. Every time there is an advance in technology, you need more rules. Why? Technology makes it easier to game the rules, and exploit the commons, just like it makes it easier to do everything else.

Wow Nithern, your reply is a mess. I guess I should have explained to you that I'm not an anarchist, since that's what you understood by "free society", my fault for using such a loose term.

I meant a society free from government intervention in the economy, free market, preferably with a small government. Being mostly a libertarian, I don't like to be confused with an anarchist, the same way a social liberal might feel offended when called a socialist.

>> ^Nithern:
Sounds like a generalization, and not fact. There is structure within the goverment (local, state, and federal) to over see, and keep an accurate report of funds being spent (...)

Ah I feel better already. Bureaucracies sure seem very efficient when you explain it like that.

The concept of Health Care for all Americans is a good one. We can easily pay for it. If we can pay for Iraq ($3 trillion and climbing now...), we can pay for Health Care for 330 million people. Now, if an individual has better, or they like their health coverage, that's fine. This concept only gives people an option.

We're currently in a financial crisis because our government is broke, the world has been lending us money, but that will end when other countries realize we're never going to pay them back. Our government is currently spending money it doesn't even have.

Socialized healthcare as an *option*, doesn't make the idea any better, because it's still wasting money and it's unfair competition that will further distort the healthcare insurance market. Any reform in healthcare should involve reducing government intervention not increasing it.

>> ^NordlichReiter:
And that is why they are marginalized. Rational thought, and rational means they do not have.

If people are having trouble understanding the rationale behind the Tea Party movement against socialized healthcare, it's mostly about excessive government spending and taxation. Was that too hard?

I don't think social liberals will ever take the issue of spending seriously, even after the value of the dollar is destroyed and our economy collapses.

But for-profit health care companies are just that....the least effort for the most buck. They are not there, for the betterment of mankind, only their kind. I think we saw what happens when we go easy on financial rules during the Bush Administration and Wall Street companies. Do we really need this sort of crap with Health Care?

I think you need to educate yourself out of lies about the insurance business, on the government's major role in causing the housing bubble and subprime mortgage crisis, and on the utter uselessness and injustice of anti-trust laws.

>> ^TangledThorns:
Either way, the government option is dead thanks to the Tea Parties.

That would be a major achievement.

^ You're not making much sense to me either. The banking industry is one of the most highly regulated markets in existence. Regulate it an inch more and you might as well nationalize the whole thing.

If you want to find the biggest culprits behind our "collapse in credit" and the subprime mortgage crisis, look no further than the Fed, Fannie Mae and Freddie Mac.

It's not reasonable to ignore how distorted the financial and banking markets are, and blame only the market itself, instead of the government created agencies which are causing massive distortions, for any problems that arise.

>> ^enoch
how is reducing government size going to affect the "culprit" of america's current financial crisis?since when did goldman-sachs and the federal reserve become government agencies?


You're kidding, right? The Federal Reserve is as much a creature of government as any other agency or department that was brought into existence through legislation, granting it exclusive power over our nation's currency. The only remotely "private" aspect of the Fed is its secrecy and lack of oversight (something not even private companies fully enjoy anymore).

The subprime mess was only possible because of Fannie Mae and Freddy Mac.

In an economy, it's the private sector that is productive, and the public sector mostly lives off of that production. In a recession, we need more savings and productivity to grow ourselves out of it, but that won't happen if govt keeps expanding and spending/borrowing even more money than it already does, because that adds even more of a burden to the productivity that we need to dig ourselves out of this hole in the first place.

>> ^Mashiki:
Generally when dealing the a persons health you don't want "price competition" you want to aim for best service at reasonable price for the public dollar.

Price competition is *exactly* what allows any kind of push for quality of service at lowering prices, you can't have one without the other. What is a "reasonable" price anyway? Can you appreciate the irony of a bureaucrat deciding whether a price is reasonable dealing exclusively with other people's money? There is no question that the market process is a far superior judge of what prices should be than even the smartest and most well informed group of bureaucrats could ever be.

If there is one overriding issue with the current round of debates in the US over "healthcare", is that they want to have it at the federal level for one and all. Sorry, bad idea. Hell it's a terrible idea.

That's a good point: If 100% socialized healthcare were ever implemented in the US, it would be better (less worse) if it existed at the state level as opposed to federal. That would institute a faint glimmer of competition between the separate systems, and people would be able to "vote with their feet", which is terribly ineffective, but better than being completely helpless.

amazon command doesn't seem to work like in http://www.videosift.com/video/Vitalic-Your-Disco-Song#comment-818209 ... Maybe I messed up?

Also, using FlashBlock v1.3.14 extension in SeaMonkey v1.1.17 (Windows and Debian/Linux) blocks embedded videos completely! That only happens IN web pages and not on front page. Examples: http://www.videosift.com/video/Total-solar-eclipse-in-Iwo-Jima-Japan-22-July-2009 and http://www.videosift.com/video/subprime ...

I'll concede the semantic distinction you're drawing with tyranny and dictatorship.

I still don't see any reason to think of prophylactic legislation as tyrannical.

Part of the problem with couching everything in reckless endangerment is that it's highly subjective.

Is it reckless endangerment to sell cigarettes intentionally designed to addict people? To sell toys that you haven't checked for lead paint? Food with salmonella? To sell cars that don't have seatbelts? To give subprime loans to people without verifying their income?

I'm sure all the companies involved would bring their massive financial resources to bear on arguing the case that none of those constitute reckless endangerment.

They certainly do when it comes time to write legislation that might explicitly declare that those things are the seller's responsibility.

I also don't see the utility in telling people that traffic signals are optional if they think they can prove in court that they weren't recklessly endangering people by ignoring them. Seems a bit more logical to just say "obey the signal", and if people think an intersection with a light shouldn't have a light, go ahead and petition their city government to have the intersection changed.