related:
The Two Documents Everyone Should Read to Better Understand the [Economic] Crisis
http://freerepublic.com/focus/f-news/2222456/posts
By the way... PBS? You must be a troll. :)
Well I rip a lot of liberals on other boards so I am always scouring “sources” they can’t argue against.
PBS is a perfect one.
Regardless of party though our system is so full of corruption it really is time for a new third party based on conservatives and people that actually believe in our constitution and I think for the first time in history we would have a good shot in 2012.
Unfortunately, Black fails to mention three other major causes of this mess. First, the disaster was not merely caused by deregulation as Black repeatedly asserts; it was caused by bad regulation. Even after the repeal of Glass-Stegall, banking remained one of the most highly regulated industries in the economy. There is a very strong argument that bad regulations essentially mandated many of the underlying mortgages and MBS that Black calls fraudulent. It is a matter of fact that the Congress, the President, the Press, and the Government Sponsored Enterprises heaped praise upon some of the most “fraudulent” entities. Second, he fails to mention that original liars on the “liar loan” mortgages were the individuals who applied for the mortgage, who are now objects of popular sympathy. Finally, he fails to mention how the Federal Reserve’s easy-money policy created the fuel for economic conflagration.
If one really wants to understand the incentives that led to this mess, read Prof. Stan Liebowitz’ “Anatomy of a Train Wreck”. (http://johnrlott.tripod.com/Liebowitz_Housing.pdf) Unlike Black, Liebowitz predicted trouble in the mid-1990s. The eagerness of the Congress, the Executive, the Federal Reserve, and regulatory agencies to appease liberal activists and to buy votes from various constituencies also contributed to the current debacle.
If one wants to understand how Federal Reserve policy contributed to the meltdown, an understanding of the Austrian school of economics would be helpful. Barron's had a pretty succinct article a couple of weeks ago titled “Ignoring the Austrians Got Us in This Mess”. (http://online.barrons.com/article/SB123680667244600275.html) Unlike the Keynesians that dominate government, the Austrian school economists predicted this calamity well before it occurred. They were usually derided (remember the smirks that Ron Paul got when he commented that the economy was on the verge of collapse during the campaign last year.)
The incentives to lie to get a mortgage in a market that “everybody” breathlessly says “real estate always goes up” are obvious, but the root cause is a moral collapse of the American culture. I suppose one should also blame real estate brokers and builders for perpetrating that particular fraud.