House, MD - The Real Cause of the Current Financial Crisis

[vladimiros95]

hi man!! i'm 16 years old and i've got to tell you, i really like your videos (yeah i know kinda weird for my age) ... you are really far better than those cups of the young people (teachers) like you said in one of your videos... great work..

[skwlsdnek]

thank you for the video. It's awesome!

[apocalypticcandy]

Thank you. I'm fairly young and I'm not going to college (I feel I should and I will when other things are taken care of but...I've done my own research in high-school and I passed everything and tended to know more about real history and bitched about curriculum,....rambleramble)

I honestly feel like I'd learn more from you than any economics class. Is the point of that.

[YellaStarsa]

._. you look like you know your stuff, but i was hoping for a video about the tv show.

[StandUp555]

Excellent presentation ... I concur with your work, well done.

[omadeon]

I sympathize a lot with whaty you are saying, and you are dilligently consistent in your views. However, consistence does not imply completeness (as you know). E.g. in a world full of states and governments, who will be the first lucky people to abolish their own? Or e.g. there are tasks that require a government to accomplish. A government is not necessarily violent in pursuing these tasks, and so on.

[Hostile]

It's fucking CRAZY that sweatybollocks2's comment is one of the highest rated. Are freedomainers really compelled towards sexism, or was there a sudden influx of Alex Jones nutbags into the comments section? Either way, for shame.

[bettyswolloks2]

I was really impressed with your views, fascinating, then you go and ruin things by talking about ending the abuse of women and children. Wake up man, take off your blinkers, it is MEN that we need to stop abusing. You have been brainwashed by feminism an ideology based on hatred and misandry towards men while hiding behind such things as equality. i,e. More rights and less responsibilities for women. Feminists are but useful idiots of the elite to cause massive social distruption.

[jdbrown371]

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.

[hamechonit]

16:58

[nonantianarchist]

Awright, that's lunch.

[nonantianarchist]

Damn. Almost 1500 and I haven't eaten lunch yet.

[nonantianarchist]

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.

[schumiisking]

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.

[nonantianarchist]

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.

[schumiisking]

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.

[nonantianarchist]

In general,schumiisking, the opposite situation held: the home buyer was a speculator wanting to flip the house before their rates adjusted and pocket the difference. For more info, read "The Housing Boom and Bust" by Thomas Sowell, or "Meltdown" by Thomas E. Woods. Good stuff in both books if you're interested in examining actual causal relationships rather than repeating empty generalities and platitudes.

PS-I consider Sowell more balanced than Woods.Try Sowell's book first.

[schumiisking]

some of this...wrong. it was the banks that went to the government and imposed that they wanted to increase their leverage ratio's. Lending standards went down because banks saw house prices going up, and so it didn't matter if people defaulted, because they would get a return on the property.

now this wasn't helped by government pushing for more home ownership, but if you look at the specifics of how the banks made money of these mortgages...it is clear deregulation had a huge part to play

[nonantianarchist]

Banks usually lose money on foreclosures, even when prices are rising, simply because they are not in the house-flipping business. So it still was problematic if folks defaulted. Lending standards went down because 1. Interest rates were held artificially low by the fed and 2. because the banks were afraid of lawsuits. Moreover, it was these aforementioned interventions and their effect on lenders' behavior that caused rising prices. Your argument confuses cause and effect.

[schumiisking]

no.........lending standards went down because A. the government and especially the FSA in the UK said 'free market knows exactly what its doing, let them do what they want, they know best'.

2. because of the lending standards going down, that ALLOWED the banks to capitalise, because they could now give out mortgages to people who were likely to default, even thought they were branding these CDO's Triple AAA securities.

That is a clear cause. Not an effect. The cause was deregulation.

[nonantianarchist]

First, the government was complaining that the market was "failing" to provide affordable housing and so pushed for easier credit standards or GSE's to provide easy credit (see Community Reinvestment Act and FannieMae/FreddieMac). The CRA basically mandated lower lending standards. And, as I said before, the banks could profit off high-risk loans because they were getting easy credit from the fed. And you seem SO intelligent when your bullet points go from "A" to "2".

[schumiisking]

yes but it happened in 2 stages. you seem to be in denial that house prices were on average rising lol, i dont geddit. .... banks were happy going into the sub prime mortgage market because if the house had foreclosure, ON AVERAGE they could sell and not lose money. Deregulation ALLOWED banks to then sell mortgages to people who had no chance of paying them back, and they betted on the fact that house prices would never fall. How much more simply can i put it?

[nonantianarchist]

I'm not denying that housing prices were rising, just your assertion that it resulted in banks wanting/not caring about defaults. Once again, banks do not specialize in flipping houses, and you have 0 proof other than your shrill assertions that they made money, on average, from foreclosures. And I was pointing out the housing bubble began in the first place from government action,such as applying demand side subsidy to supply side price increases.

[schumiisking]

i dont need proof that they werent making money..................house prices were going up. at the very least they would break even.

you seem to be in total denial that house prices were going up lol.

[nonantianarchist]

Yes,you need proof for your basic argument. As I've said before,I'm not denying therewas a rise in housing prices, just disputing your version of why they rose so rapidly and why banks made crap loans.

[schumiisking]

you dont seem to get the relationship that yes, even though banks aren't in the housing business. that doesnt matter. rising house prices would give any bank the IMPRESSION that if people defaulted, they wouldn't lose. hence the term 'mortgage BACKED security'. it is totally irrelevant whether banks were making money on selling houses or not, its such a minute detail. all you need is the impression, used as a selling point to sell cdo's to people around the world. you're missing the point.

[nonantianarchist]

Oh, for Godssakes, the IMPRESSION was that the loans would be paid back. You're arguing that banks were engaging directly in housing speculation or using it to sell their loans to third parties. That's not even what most statists are arguing. They argue that banks were able to sell crap loans to 3rd parties because the allknowing regulators weren't there to prevent the fleecing, not that those parties expected to profit (or break even) by selling foreclosed properties.

[schumiisking]

no...they sold these cdo's containing MBS's among other things to other investors, some of whom didn't even know what they were. you clearly don't know the ins and outs of how the banks actually made money from what happened. my facts are all historical....its what actually happened. i dont even know what your point is.you seem to be getting all your arguments from about 2 sources. try researching about the entire event. you dont seem to understand how they actually made money.

[nonantianarchist]

Are you then admitting that your previous argument (rising home values caused banks and investors who bought their securities to believe they would come out ahead on foreclosures, on average, and therefore deliberately made/bought  loans/securities that they knew would be subject to high levels of default) was bullshit?

[schumiisking]

No. because once they'd sold their security to someone else, it didn't matter, they'd made the money. you've demonstrated in your arguments that you don't know how they actually made the money, how the transactions were made, which is why you're blaming it mainly on one primal cause, low interest rates. even though the freezing of the credit market has got nothing to do with that, it was simply the START.

[schumiisking]

if you don't think deregulation was a major cause then you clearly don't know Why its a major cause. If you don't know that, it means you don't know how the banks actually made money, and why regulation would have helped, and by deregulating everything it was the real start of a crisis. as i said theres no point continuing this coz you dont seem to know the financial ins and outs of how they made these transactions. forget it. until you read more about it theres no point having this discussion.

[nonantianarchist]

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?

[schumiisking]

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.

[nonantianarchist]

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.

[schumiisking]

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.

[nonantianarchist]

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.

[schumiisking]

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.

[nonantianarchist]

"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.

[nonantianarchist]

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.

[nonantianarchist]

It takes more than a current rise in housing prices to convince banks they won't lose on loans, since defaults could happen at any time during the tenure of the mortgage and are most likely to occur when housing prices are falling. We're obviously not getting anywhere, since you seem to be pulling "facts" out your ass. I've previously mentioned two sources with cited figures and sources that directly contradict your assertions. Look them up if you want to check my assertions.

[nonantianarchist]

Finally (I know, comment glut) YOU don't seem to get the relationship that government intervention was a key factor in creating the housing bubble in the first place BASED ON THE STATEMENTS OF A STATIST SHILL ECONOMIST WHO WAS ANALYZING THOSE INTERVENTIONS (NAMELY, FEDERAL RESERVE RATE CUTS) AT THE TIME THEY WERE BEING MADE!

[schumiisking]

i never SAID ANYTHING about how the housing bubble was started. im not even disputing that you moron. wtf is your point. Im well aware the fed lowered interest rates and therefore it was easy to get cheap credit to buy houses. Im not disputing that for christ sake. im talking about the trigger events after that, and how it ended up into a global recession, because the risk was spread, by the banks, globally. 50% was the banks gambling money, 50% was lack of regulation.

[nonantianarchist]

HOw the bubble was created is a central question here, since it was the creation of more or less fake real estate value that created the necessary conditions for the crisis.

[schumiisking]

Low interest rates don't immediately mean the banking system collapses and the world goes into recession. THINK.

[nonantianarchist]

No, but they played a key role in creating the housing bubble and the resultant massive misallocation of resources which was the ROOT cause of the crash. Did bad ratings agencies play a part by making it easier to distribute toxic debt? Probably. But where did they derive this misused authority. Not from a good reputation with investors that they would have every reason to preserve but by a license grantedby the state, giving the IMPRESSION (gotcha) that securities were safe if agencies said so.

[nonantianarchist]

THINK beyond stage one.Here's the breakdown.

Stage 1:Fed lowers interest rates.

Stage 2:Banks start making higher-risk loans because, since they get a lower interest rate,the overall yield neednot be as high to turn a profit. This contributes to formation of toxic debt and higher-than-market levels of demand for real-estate and inflating a bubble.

Stage 3:Bubble collapses,disappearance of moreor lessartificial value causes value of assets based on said assumed value to collapse

[schumiisking]

there was multiple reasons, it wasn't JUST an abundance of easy credit. deregulation ALLOWED these banks to spend this easy credit. and make money off loans and huge leverage. if you had proper regulation in place and doing their job none of this would have happened. Blame the bush administration for deregulating everything and letting wall street get on with it, because apparently they were the experts.

[nonantianarchist]

Well,yeah,there were multiple reasons. But the housing bubble was primarily inflated by fed interest rate cuts. Back in 2001 statist shill Paul Krugman was saying either

A.The fed would inflate a housing bubble with interest-rate cuts,but wasn't recommending that action or

B.The fed SHOULD inflate a housing bubble with easy credit.

Either way, the world's biggest statist shill acknowledged the power of the fed's rate cuts to inflate a housing bubble.

[schumiisking]

oh yeh great insult, picking up on grammatical mistakes which clearly weren't meant. you must be a lawyer.

[schumiisking]

also it might be the case that banks would lose money on foreclosures..........but you're using that as the main feature of your argument. and its simply not true, if house prices are going up at a silly rate......obviously on average the banks wouldn't really lose out. What opened the floodgates was lending standards dropping, allowing them to sell loans to people who couldn't pay them back. That was the main trigger, deregulation on free markets and lending standards on loans. 2 sides.

[nonantianarchist]

Look, you can simply gainsay anything I state, but that doesn't make you right. The fact was that before, during, and after the housing bubble it was always extremely difficult for banks to so much as break even on foreclosures. THEY ARE NOT IN THE HOUSING SPECULATION BUSINESS. However, lower fed interest rates DID make it easier to make highrisk loans, as the overall yield on the loans didn't need to be as high to be profitable. Even lefty shills don't claim banks were hoping to flip houses.

[schumiisking]

oh, you can still have low interest rates and have high lending standards......i dont understand how youve linked those 2 together. Low interest rates simply meant these banks could borrow tons of money to fund these buying of loans to repackage into CDO's to sell on to 3rd parties.

[qiaokelisi]

part 2

why would people, who are exploited, alienated and restrained from self-management in a capitalist economy (like workers or indigenous people in a society with a non-market economy), accept private property and markets, if there was no coercion. they would not. in order to have a free market, you need coercion. if your goal would truly be a free society (not just a market) without authority, violence and coercion, you would not only oppose the state, but also the free market.

[chicalleje]

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.

[qiaokelisi]

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}

[Hostile]

@qiaokelisi Nobody's freedom is restricted, every person is free to choose to do whatever they want. Nobody is forced to sell their labour: they can do whatever they want with it. What you're proposing is the state's dominance over every person's decisions, restricting the ability of anybody who wishes to capitalise, attacking our creativity.

Didn't you read about the millions of peasants who starved to death when Communism decided to save them from capitalist farmers in the last century?

[qiaokelisi]

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}

[qiaokelisi]

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}

[qiaokelisi]

these already existing economic relations can also become the dominant mode of production: {5}

[qiaokelisi]

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}

[qiaokelisi]

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}

[qiaokelisi]

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}

[Hostile]

@qiaokelisi Russia and China weren't communist enough for you? Wow... I'm so glad the basic fact of human nature is going to prevent communism from ever rising again because beliefs like yours are just offensive to every free human being.

[qiaokelisi]

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}

[Hostile]

@qiaokelisi Third parties do not have their freedom restricted, they have the freedom to say whatever they feel, they just don't have the right to interfere with the exchange.

Same goes for number 3, no participant's freedom is restricted; all are equally free to compete.

1... you're whining about having a choice of products? That's crazy.

[qiaokelisi]

i'm not sure if i get it right, but you seem not only to suggest that a free market would be desirable, but also that it would be possible for a free market to exist without coercion. karl polanyi showed in his book "the great transformation" how the market economy and the nation-state historically developed hand in hand. private ownership of the means of production and the market were and are still enforced by coercion.

[carveawoodeneye]

thank you !!!

[mikeybrumbrum]

In the days of Julius Caesar, he faight against the senate, who wanted "Free Trade". He sounds bad, right ?

Well, free trade, meant that they could trade with NO restrictions whatsoever. They could kill or punish anyone, and no one had any rights, or possibilty of advancement -- PURE slavery.

Caesar wanted "restrictions" on trade, os that even SLAVES had ways to work themselves free, after a certain period.

So, when yu hear stinkers shouting about Free Trade, look at them, more closely !!!

[HeroesofGrammar]

I never comment on anything on this site but you my good sir are all kinds of awesome.

[stefbot]

Thank you so very much! :)

[mikeybrumbrum]

You're missing a comma, there !

[L33Tism]

I like this video just up to the end. You give a factual documentary-style dialogue about the events that lead us to our financial crisis.

However, it is slightly undermined by your personal perception of government. Namely when you get to the True Causes section of your presentation:

I don't think this crisis started by governments mandating people to pay a bill when refusing rules. From here you imply that refusal to pay this bill results in rape or death. This seems to veer off topic.

[atripa645]

Another "free market" ideologue. I'm out of here.

[stefbot]

Interestingly enough, because I am not a government, you are free to do just that! :)

[atripa645]

Come on, corporations(not all) do as much or more to affect the freedom of the individual. Left unregulated they have virtually wiped out the middle class in America. Like many on Wall street they are of a sociopathic nature and care nothing for the well being of the country. It's no wonder they have led us to this financial crisis. The government under Bush and the republicans are the ones who are taking rights away and oddly enough they are the biggest "free market" proponents.

[pearlfloyd27]

You need to do some research on monetary policy, and it's impact on economic "booms and busts." The Austrian theory of the business cycle has a remarkable track record for predicting these types of calamities. At the very least, please stop insisting - all evidence to the contrary - that Bush and his cronies are "free market proponents."

[siziam]

Interesting video,just more information to be considered when forming a hopefully informed opinion.

[PancakesHouse]

I was so on board with this video until you got to your fundamental premise that the state's use of the threat of incarceration is inherently evil. Compared to what alternative, exactly? Mob rule? Societies need laws, whether written or unwritten, and they need a method to enforce those laws. I have a pretty strong libertarian streak in me, and I agree with much of what you have to say, but you seem to take the concept of libertarianism way past the breaking point and right through to anarchism.

[stefbot]

I know what you mean, it sounds impossible - you might want to check out my free books on a stateless society on my web site if you'd like to learn more about this possibility... :)

[pretorious700]

@PancakesHouse Considering voluntarism and non coercion serioulsy requires IQ and imagination most people don't possess. You are a good example.

[666pandemic]

The title of this video is misleading. I'm leaving now. Slam!

[Grak70]

I'm with you on everything except bashing fiat currency. The flexibility of interest rate controls is too powerful and useful to abandon entirely.

[stealthswimmer]

turns out it's not really that useful and often times throughout history has caused more harm than good.

[Grak70]

As opposed to the gold standard which is renowned for crashing economies in times of crisis and war. Gotcha.

[stealthswimmer]

lol, actually turns out that gold didn't crash economies. It was central banking in the US for example that decreased the money supply even though we had an INCREASE in the amount of gold (they locked it up without increasing the money supply...and before then they inflated it, so this made the decrease even more painful later on).

As well, most "gold shortages" were actually produced by government intervening and printing paper that they said HAD to be accepted as if it were as good as gold

[esalian9]

So basically you're saying that the reason we have to obey edicts is because we fear a bill or jail time. Of course, there's penalties whenever someone disobeys the law. It seems that the problem is not violence to solve social problems, but rather these laws themselves.

[jjnature]

Yes, the ego, the thinking mind, seeks to control as much as possible out of fear and want. In this case it is a collective trait.

[TheOpinionGuy2]

Occam's Razor says it's just a principal-agent problem. The Ps (loan originators) did not care what happened to the As (loan applicants) b/c the Ps would be selling the loans to someone else. The Ps simply earned transaction fees and then sold off the loans to idiot others. That was a "free market exchange"; it had nothing to do with govt rules about loans in FHA. The Ps knew they would not have to keep the loans on their books, and so they didn't care. End of story. Was a free market exchange.

[stefbot]

I can see where you got your youtube name from. I like ice cream! :)

[TheOpinionGuy2]

I like ice cream, too. :-)

Is there anything in your rant that provides greater clarity than the idea that it is simply a Principle-Agent problem?

Your video needn't be so long. It needs to be about two minutes long. Principal-Agent problem brought about by the fact that originators did not have to hold the debt that they originated. It's that simple. Really.

[dieoom]

Good video sir. Well done.

[SeventhCity]

Do you live in the US?

[stefbot]

I do not.

[modelmark]

The pundits always come up with these funny names 3-6-3 banking and also the NINJA loan (no income, no job, no assets).

[smabres]

I do not agree, I think that you have underestimated the "Fiat Money", the creation of value out fill air is in my humble opinion much more important than stated.

[stefbot]

Did I not put it first? :)

[Panserborne1]

Of course you did suddenly change the subject at the end into an anti government tirade because this crisis is effectively the end of the free market. That is the problem, the lack of regulation, the vast majority of economists agree. When banks are free of any regulation or oversight, their only motivation is profit. This leads to myopic, irresponsible actions (the subprime mortgage issues).

[stefbot]

Unfortunately, assertion is not proof. Just saying stuff doesn't mean anything - you need to provide reasoned arguments and empirical evidence. It is the curse of YouTube...

[TheCapt4in]

Could you make a video with graphs and such supporting your argument? I would gladly watch it and compare it to this one.

[jjnature]

Panserborne1, both Wall Street and our financial institutions are highly regulated and manipulated through coercion. Don't fool yourself that this economic drama is the product solely of the private sector or of no regulation. Our current situation is a product of corporatism, not capitalism. Learn the difference between corporatism and capitalism please.

[swingdocta]

Do you even know how monetary policy works? For the last 10 years the Federal Reserve has taken a proactive policy of inflating credit lines its primary dealers. Credit is expanded by cash injections and using mortgage backed securities as collateral.....From Fannie Mae and Freddie Mack. Working with the federal government mandates on banks were established to loosen qualifications for mortgages and other loans.

[Panserborne1]

OK this made me angry. I'm sure your intentions are good but... we have here now a global financial crisis, the worst since 1929. And you're claiming the problem is...violence. No it's not an economic issue! The problem is that there is a Government who can put us in prison if we break the law! Of all the possible times to advocate libertarianism and anarchism, now is one of the worst. To twist this disaster into a social issue is deeply, deeply disrespectful.

[curzond]

clueless.

[curzond]

what a fuckhole.

'leave the market rampant to rape it all.'

all wrong.

OOH 'PRECIOUS GOLD'.

fucking idiot, go attend a proper economics school cause you're clueless.

[rudyhenkel]

Thanks for the insightful analysis. Can you tell me what the sources for your data are, specifically the 25% of housing is for flipping, and the fact that the speculators are mostly lower income.

Thanks!

[stefbot]

You're welcome -- you can pick up the presentation on my website, which has the link for the data, just click on the 'books' link :)

[rudyhenkel]

Thank you, I read the primary source report. I think you summarized it very well. As a student in economics (currently working on my masters) I am often frustrated by the attitude of some of my fellow students. "Sure, government intervention screwed up A, but I'm sure it will work for B! Oh, it screwed up B too? Well, C is another matter altogether." They jump all too eagerly on any perceived weakness in the free market, any opening for government. Thank you for the breath of fresh air.

[dover1982]

In your opinion, is the situation similar in Canada?

[stefbot]

No, the high risk mortgages are only 5% of Canadian loans -- as opposed to over 25% in the US.

[DillonX]

I wish you'd put up a graph showing the # of mortgages made each year.

It's my understanding we had a tremendous spike in 2003/2004 with speeches & actions by Bush to encourage this. And that the loan defaults now (many of which were ARMs) are from the 2003/2004 period.

[Dyule]

A fantastically logical moral deconstruction of the financial crisis albeit on the assumption that mortgage defaults of the poor are the cause of the financial crisis. It seems to be coming clearer that it is rather fully explained by a planned theft and takeover by a narcissistic deterministic elite eager to impose totalitarian control over the world.

All power to you and your truly fabulous brain.

[Johnnydmb23]

Jolly good presentation Stef.... brilliant and right to the point as always... MORE!!!

[Nasikabatrachus]

"It's not lupus, it's luger."

*grooaaan*

Stef, that was pure evil. But great video anyway.

[LibertarianOnline]

"Violence does not solve social problems"

bravo stef!

[lukeev]

Stef cuts through to the chase as always. No messing around. 5 stars!

[atypicalguy]

9:20 did you mean 'net worth' rather than network?!?

[stefbot]

Thank you for your very kind words -- I think it is mostly because I am not dependent upon the government for "news" or interviews. You that old song -- when you have nothing, you have nothing to lose... :)

[peterscottfrost]

"The true cause of the economic meltdown is coercion." "Violence does not solve social problems." Right on! Great video, Stefan.

[dakshinamurti]

Very very very well explained! Totally systematic, organized and thorough explanation.

[DownWithCommies]

This is perfect, I just had a debate with a prof about this. He said I put too much emphasis on the government forced loans for two reasons:

1. There are no statistics saying the forced loans are the ones being defaulted on

2. If they were bad loans they would have damaged bank profits initially (I believe this is explained by the artifical demand bubble though).

He then said the problem was a lack of regulation on bundling these debts

Any thoughts would be appreciated (especially from Stef)

[stefbot]

Sure, the statistics are in the PDF article that I mentioned late in the video -- the variable rate mortgages collapsed first, since they were most used by speculators, who were generally more poor. If you don't want to type in the URL, you can get the presentation from my website - and thanks!

[Moragauth]

Even if he were right on that, he'd be wrong that it's a lack of "regulation" that caused this problem. See the Austrian business cycle theory.

[BrightAnarchist]

Excellent analysis, thanks Stef.

[btbking]

Thank you stef!

[D4Shawn]

I dare call zis video "superb"! I sink once you post z audio file, it vill go in my car CD player for at least a few days.

Holy shit! Zere's a new button zat makes my comment talk! I didn't sink we'd develop zat sort of technology until 2015.

[chris3443]

My favourites list is getting embarrassing, all you!

[kvan1917]

Another fantastic analysis of what really is happening. Great video!

[ybworld]

I appreciate you speaking clearly on this issue (not that you aren't clear usually) and also I appreciate you mentioning the responsible parties.

[617stork]

Enjoyable.. a bit overdramatic, but great for drowning out the presidential debate my roommate is watching

Keep it up

[stefbot]

I hope that it's not just my presentation that you find overdramatic in this situation... ;)

[overmind25]

FREE MARKET ANARCHISM!

[AzoreanProud]

RESOURCE BASED ANARCHY!!!!!!!