Economics 101: Moral Hazard

This CF&P Foundation's Economics 101 video discusses the Moral Hazard, which occurs when bad choices are subsidized. This often happens when government intervention lets people take risks while having little or no skin in the game. Housing policies, for instance, subsidized mortgages, thus enabling irresponsible borrowing and leading to bubbles and bailouts. Politicians may be setting the stage for the next crisis with a too big to fail policy that will subsidize the biggest financial institutions. www.freedomandprosperity.org

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[michael0156]

Bank execs lobbied for relaxing regs requiring banks to hold mortgage notes. This video tries to wrongly blame corporate greed on the govt. This is part of a concerted corporate world's attempt to get rid of govt regulation by bankrupting/demonizing govt AND it's people

Just as free people require laws by which to live, "free markets" need regulations within which they must function

Freeing bankers didn't force them to make bad loans, they did it out of greed

This shows regs are NECESSARY

[Trimbler00]

This video is a lie when it comes to Frannie and Freddie. F+F's market share dropped 20 percentage points during the housing bubble, and defaults on securities were 6 times higher in the private sector. This completely shatters this fantasy that banks were relegating their "dodgy loans" to the government. Complete factual inaccuracies on her part. Please, though, feel free to rebuttal :)

[Buddy212002]

Greenspan drove up the price of houses by artificially keeping interest rates low. The banks gave those loans out without verifying income requirements and assets because if they actually did that then they couldn't have given those loans out. Government played a role by requiring that banks relax standards but private business ignores government policies that they don't like but in this case they made billions from this deception and drove up housing costs more. They own the government. FRAUD

[michael0156]

@world - of course there is no problem with my assessment

We have to elect representatives and we have to monitor them as a responsible citizen should do. Properly regulated representatives will properly regulate corporations and people too... laws regulations... we are in the business of controlling behaviors

It is not easy and our current political systems are set to discourage true participation by citizenry... but the alternative is extreme poverty for the majority of Americans

[worldofdraculas]

@michael0156 There's no such thing as corporate greed. Corporations are made up of people. Politicians are also people. They're all greedy. You're greedy. Everyone is greedy.

The problem with your assessment is that you are confusing what the government does with regulation. Do Fanny/Freddie REGULATE? No, they exist to serve the purposes of the few (those politicians and evuuuul corporate types with sufficient clout) at the expense of all other citizens and honest politicians.

[pritpalsandhu100]

Explained so Well, Thank you

[michael0156]

@59arkady Greenspan was not mistaken, he KNEW he was wrong & helped cause the 2008 economic crisis & sink the US govt by fraudulently bankrupting it

Greenspan helped strip Brooksley Born's office of regulating derivatives. If she had been allowed to do her job in the 1990s we would not have been involved in the worldwide collapse of 2008

Greenspan worked with Rubin & Summers to deregulate the derivatives market & destroy the Glass Steagel act

Summers duped Clinton to sign the 2000 CFMA

[Placebogsu83]

@michael0156

watch front line the warning

[pas9ify]

Thanks michael0156, indeed I have watched the Frontline documentary "The Warning" a few times. It is one of my favorites when the interviewed Greenspan admits basically "My whole world view was wrong"! Every Alisa Rosenbaum enthusiast should see it.

[59arkady]

@michael0156 It sounded like Greenspan was mistaken, if you take him at face value when questioned. I am tempted to think he was mistaken about what were once considered known aspects of human nature. I also think that's true regarding Barney Frank and the goverment backed mortgage lenders, and much else that gets done in the name of attempting to help people by legislation going either way... A blind eye, turned by popular demand, seems to be the norm. Probably affects all parties.

[michael0156]

@59arkady

Greenspan duped us. Rubin & Summers helped him & banksters

Every Central Bank I have investigated performs a variation of the debt fraud the USA Fed has perpetrated

The Fed, a private bank, prints money. We borrow FIAT $ $ & give them Treasury bonds. The Fed banks use bond interest to run the banks & return excess interest to the Treasury

Instead of holding the bonds, The Fed sells them, creating fraudulent debt for the USA. The Fed should pay those fraudulent bonds & reimburse us

[59arkady]

@michael0156 Regarding "The Warning"... Interesting piece of the puzzole. I'm wondering how many other

warning, about how many other sectors of the economy, were made. I suspect there were many such details that never got to see the light of day. I'm guessing, too, a lot of information, about many sectors of the fianancial system, and government, including those pertaining to regulation, or the lack thereof, and consequences, still never see the light of day -until the deals are done.