PBS NOW | Stiglitz: "A Gun at Our Heads"

12/26/08

Nobel Prize-winning economist Joseph Stiglitz talks about misplaced priorities in handling the economic meltdown, and what we should do next.

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[sobul24]

The reason that the banks were decided to make all of the sub prime loans was not because the gov't forced them to , rather it was seen as an easy way to make a buck becuase you could just sell the loan on up the chain. all you have to do is notice the fact that 80% of sub prime loans came into existence after 2003, and that most of those were for refiniancing, not original home purchases.

[FarFromEquilibrium]

I will look that up but do you know what that would do to high perfromance computer components for one thing?? gold is actually used for more than jewlery. It is a very good conductor, low reistance metal. I know this is somewhat tangent to the discussion but if that was the case there would be rampant inlfation in gold dependent materials among other things. How would that solve problems of dollar value and economic stability?

[axltyler]

gold should be above 6000 dollars an ounce! there's been a 1500+ annual supply/demand deficit! They're double counting their gold inventory. They say that they have 32000 tonnes in the vault. More than likely they have only 16000.

Look up Gold Rush 21 on YouTube. Please.

[FarFromEquilibrium]

well thats odd b/c gold went up. and I dont tink there is a conspiracy against gold. they all own lots of gold themselves.

[axltyler]

the bank derivative crisis was part and parcel to the operation of the scheme. They used securitized mortgage notes to suppress the price of gold.

[FarFromEquilibrium]

much of what you say is true but that would have made little differnce in the current housing crisis had we still been on a gold standard and lending been done like it was for the last 20 years. gold is an issue for another discussion and it doesnt change that govt passed laws that required lending be done contrary to standard lending practices. I know banks have a lot of control, that doesnt meant they never were forced by govt to do anything, in this case something stupid that collapsed.

[axltyler]

To do this the Federal Reserve agreeing with 15 other banks began to sell gold through the CFTC, recording gold as a dual-posted asset -- by claiming the gold they had out on loan and gold in the vault as one line item. And also by lying about how much gold they had in the vault.

[axltyler]

The value of the dollar has been in decline since the Fed was created. In the 80s they realized that if they didn't manipulate the price of gold they would have to raise interest rates and no would want to borrow if interest rates went too high. By manipulating the price of gold, they kept the value of the dollar artificially higher than it should've been. The Fed has acted criminally in prolonging the inevitable, thereby making conditions worse than they should've been.

[FarFromEquilibrium]

are you saying that the banks are the ones that wanted the community reinvestment act and GSE sponsored political demographic based policies in order to make more low income people home owners?

[axltyler]

actually, the banks have had power over the government since the Federal Reserve was created. Most people aren't understanding the situation. This isn't the fault of a Democrat or Republican. It's the fault of Lawrence Summers and Robert Rubin who initiated central bank manipulation of the gold market through the sale of commodity futures and manipulation of the interest rates in their relationship to gold. It's very complicated to explain. Bill Murphy and Chris Powell are pretty good experts.