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Last week I've been bored to the point of listening talk radio garbage. Nope, from now on, it's sightseeing only. Apparently, talk radio heads (all of them) were given instructions to stir up "Regulations keep companies from hiring" and "Bankers were just caving to Federal Government, they would never loan money to the poor people and thus they (bankers) deserve every penny of compensation they get, they are innocent, they were just abused by big, bad government". It's amazing line considering that today's bankers will be tomorrows government and vice verse , but it works its magic on the eager audience.
In essence what talk radio heads were asked to do - to redirect blame on the poor people (again) whose combined wealth of less than 0.4% and pathological personal irresponsibility gave them sufficient leverage to tank splendid US economy in less than a month.
That makes me wonder. Let's say an average price of a subprime home $100,000 and let's say there were 2,000,000 of totally irresponsible poor folks that bankers were forced to serve. $100,000*2,000,000= $200 billions. This unrealistically high estimate is for argument only. In theory, big bad government giving away $200 billions to poor people to buy their homes for cash should have prevented financial collapse (that would be communism I know). However, Marxist Obama gave away $800 billions+ to the bankers (but not to the poor) in order to prevent financial collapse and generate all those jobs. In addition to $800 billions, bankers foreclosed on millions of properties to generate extra hundreds of billions. There is something deeply absurd about all of this. Does anyone understand US economy and banking to explain why absurd (from common sense standpoint) things happen here?
From what I understand it is pretty much like wiki says:
According to the U.S. National Bureau of Economic Research (the official arbiter of U.S. recessions) the recession began in December 2007. The financial crisis is linked to reckless lending practices by financial institutions and the growing trend of securitization of real estate mortgages in the United States. The US mortgage-backed securities, which had risks that were hard to assess, were marketed around the world. A more broad based credit boom fed a global speculative bubble in real estate and equities, which served to reinforce the risky lending practices. The precarious financial situation was made more difficult by a sharp increase in oil and food prices. The emergence of Sub-prime loan losses in 2007 began the crisis and exposed other risky loans and over-inflated asset prices. With loan losses mounting and the fall of Lehman Brothers on September 15, 2008, a major panic broke out on the inter-bank loan market. As share and housing prices declined, many large and well established investment and commercial banks in the United States and Europe suffered huge losses and even faced bankruptcy, resulting in massive public financial assistance.
Last week I've been bored to the point of listening talk radio garbage. Nope, from now on, it's sightseeing only. Apparently, talk radio heads (all of them) were given instructions to stir up "Regulations keep companies from hiring" and "Bankers were just caving to Federal Government, they would never loan money to the poor people and thus they (bankers) deserve every penny of compensation they get, they are innocent, they were just abused by big, bad government". It's amazing line considering that today's bankers will be tomorrows government and vice verse , but it works its magic on the eager audience.
In essence what talk radio heads were asked to do - to redirect blame on the poor people (again) whose combined wealth of less than 0.4% and pathological personal irresponsibility gave them sufficient leverage to tank splendid US economy in less than a month.
That makes me wonder. Let's say an average price of a subprime home $100,000 and let's say there were 2,000,000 of totally irresponsible poor folks that bankers were forced to serve. $100,000*2,000,000= $200 billions. This unrealistically high estimate is for argument only. In theory, big bad government giving away $200 billions to poor people to buy their homes for cash should have prevented financial collapse (that would be communism I know). However, Marxist Obama gave away $800 billions+ to the bankers (but not to the poor) in order to prevent financial collapse and generate all those jobs. In addition to $800 billions, bankers foreclosed on millions of properties to generate extra hundreds of billions. There is something deeply absurd about all of this. Does anyone understand US economy and banking to explain why absurd (from common sense standpoint) things happen here?
The financial cartel owns the media. They have been buying it up ever since the turn of the century.
I know someone who has a journalism degree and when he graduated none of his class could get a job but one. Every newspaper in the country was being bought up by Gannet and they said they were not hiring. Thus in Gen-x there was a culling of independent reporting. Its the internet that has been allowed to fight this back.
Gannet like all the others are institutionally owned.
The way around it is to know that the truth reemerges so look where history is repeating itself. The financial take over of the US happened during to so called Gilded age. Thus control was not established as they were accumulating assets. At that time they were largely exposed and the media reported on their activities.By the 20th century they used this financial muscle to buy up the media.
I'd treat it like Soviet television at this point. We are in a dark age. I'd suggest literature from the enlightenment period more or less before the 20th century.
It's more pervasive than that. Both parties powerful representatives and the special interests they serve protected themselves. While they carry on this dramatic stage show pretending to care about the majority they were elected to represent they just use the rhetoric to distract the populace. The talk show hosts are like carnival barkers firing up the people so that they turn on each other as opposed to holding our representatives responsible. Our leaders, their special interests, and the barkers all are enriched by this arrangement while the majority watches and pays for the show.
This show can't last forever. At some point the people will realize how much they are being played and wake up. I don't think we'll see that until 2016.
I think the root causes go back more than a decade. The government deepened its involvement in the housing market, making it more affordable and accessible to more people. Its efforts were abetted by the Federal Reserve that not only put interest rates at nearly zero, but also loosened lots of restrictions of lending instruments, lending requirements, etc., to the point of practically strongarming lenders. The beefing up of the Community Reinvestment Act is a good example of this. Finally, the Federal government began allowing securitization in 1997 beginning with Bear Stearns.
As someone who was involved in a lot of consulting for banks and mortgage companies, I remember the late 90s when a lot of the old hands were really beginning to worry about the fate of the housing market. And, as it turns out, they were right.
As far as I am concerned there are three reasons for this crisis... government, government, and government.
Markets, businesses, and individuals all make smart and stupid moves to adjust to the financial environment but they are mostly reacting to the influence of government at all levels.
All of us really really need less government and more freedom to succeed and fail.
Talk radio hosts are an especially-bad source of economic analysis most of the time.
One problem is that people get very uncomfortable with multi-factoral answers. In a complex situation with a lot of different "actors," it might turn out that several actors have some degree of fault when something goes wrong.
This is not what a lot of people want to hear. They want quick villains and easy heroes. They want simple narratives, even if those narratives are dishonest or incomplete.
You can see this happen all the time in debates over the causes of the financial crisis. People gleefully leap between logical errors in an attempt to defend the simplistic narratives that they were given by others (including talk radio hosts). They are unwilling to contemplate the very notion of multiple bad actors, since that might go against some other simplistic narrative that they have already swallowed. And in any case, it's too messy.
It's much easier just to find some wrongdoing by an actor you are predisposed to dislike anyway, and attribute all the blame to that actor. If someone points out other wrongdoing by other actors, you can retreat into "what-about-ism" where you point out the sins of the actor you hate over and over again until the other person gives up or stops talking to you altogether.
government is the primary cause and reason for all the other causes. government is supposed to regulate and not supposed to be bought by corporate interests or other political interests. the problem is bad government which then leads to bad business.
As far as I am concerned there are three reasons for this crisis... government, government, and government.
Markets, businesses, and individuals all make smart and stupid moves to adjust to the financial environment but they are mostly reacting to the influence of government at all levels.
All of us really really need less government and more freedom to succeed and fail.
The media is private.
Less government is the kind of thing you hear all the time in the 20th century. The problem was sleepy, silly people allowed it to be privatized. Read the Federalist papers for the purpose of having a democratic republic protect you. The same force that has eaten your government would, without the government, be saved the trouble of indirectly oppressing you and do so directly. The only way is to take it back.
Look, from a common sense point of view, if I deposit $1000 to my bank account and it bursts, my $1000 should not disappear. It's true that I've lost $1000, but somebody else gained that $1000 and that somebody else would take my $1000 to another bank. Sure, there would be personal "crisis" but on the national level me losing $1000 and my bank folding shouldn't matter at all (if and only if money cannot appear out of nothing and to disappear into nothing).
Mortgage companies should not be be any different, they "originated" $100,000 in a bad loan, they've lost their $100,000, somebody else gained that $100,000 and that somebody else may even take his newly found $100,000 to the very same bank. What crisis?
Apparently American monetary system doesn't operate on the common sense basis I can understand. There is something else, something that talking heads and professors of economics omit/don't understand themselves. My hunch is - it has something to do with fractional banking, interest, leverage and the way bankers inject new money into the system.
We just "know" that economy must grow or we are in the trouble, if economy grows - money supply grow. Abstract rhetoric of "markets" aside, money supply doesn't grow on its own, there are anointed folks making money supply decisions. Apparently there are some rules of money supply that allow bankers to issue new money fresh out of their butts but at the same time rules curb unlimited money creation using a leverage/fraction condition demanding "write off" of $10 in lending capability for every $1 in bad loans lost. This fractional rule may explain why bank losing my $1000 may lead to shrinking "money supply" that bankers are allowed to pull from their arses, a couple of loses like that may "bury" a "well leveraged" bank, but whose fault is that? Is it a fault of a poor guy who fell on hard times or it's a fault of fractional system of money creation based on barely limited "leveraging"? Note, a loss of $1000 in a bad loan would be limited to the loss (and somebody's gain) of just $1000 if a bank/you/whomever lends "real" money that existed in circulation already, lending "leveraged" (a.k.a. freshly pulled from banker's arse) money is totally another game, I don't know who and why created this system.
Let's use the simplest interest formula Returns=P*(1+i)^years. Let's assume I lend $1000 for 30 years at 5% of interest. In 30 years I should expect $4321 back. If I want my $1000 be of about the same value as $1000 I lend, a rough condition for that - economy/population/consumption/pollution must grow 4.3 fold in 30 years. It's a lot of growth, and I don't think that American economy grew that much in the past 30 years (it might doubled at most), if we to discount "wealth" created in the financial wizardry....
Naturally, since economy doesn't grow as fast as usury formulas demand it to grow, monetary system (and people who run it) should work around limitations of the physical world. It's done by 1) inflation 2) controlled number of bankruptcies (a.k.a bail out and cheap money are limited to the chosen ones. Yup, people who control the money - control the bankruptcy & foreclose rate and they hire a few high priests of "personal responsibility" on top of that.)
Look at that simple formula and just think about this - a) all money in circulation are created as debt, b) at any given time there is more debt than there are assets in current prices c) old debts are paid with creating new money. d) if creation of new money slows downs (for whatever reason) everything falls apart and come to the halt.
Most likely, super leveraging (a.k.a going wild with money creation) created current economic mess (corporate veil definitely contributed to the banker's appetites) but let's not forget that bankers are not the only ones having effect on money supply - resource availability, disasters, etc. may also contribute. In two words, current financial and monetary system is unstable in more than one way. Remember, if it doesn't grow, it falls apart, there is no middle.
Last edited by RememberMee; 11-24-2011 at 02:18 PM..
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, but it works its magic on the eager audience. 
