[ExI] "This American Life" on global credit crisis

Eschatoon Magic eschatoon at gmail.com
Tue Oct 14 07:49:48 UTC 2008

We have seen the same thing in Europe - I wonder why we immediately
copy all questionable new fashions from the US and never copy the good

Little people have been encouraged to spend money that they don't
have, and in most cases will never have. Big real estate development
projects have been funded with virtual money and resold to little
people at artificially outrageous prices. And the idiotic government
policies to which Max refers are, of course, not caused by stupid
bureaucrats, but by greedy bureaucrats who have made and continue to
make a lot of money this way.

At the end, of course, the little people will pay the price of the bailout.


On Tue, Oct 14, 2008 at 6:43 AM, Max More <max at maxmore.com> wrote:
> Damien: If that's what Lee said (I'm behind on those posts), then he's
> right--as *part* of the cause. Certainly more regulations are the answer
> only to the most bone-headed statist observer.
> It's very disturbing to see otherwise smart people continue to blame the
> greedy capitalists for acting within the context of incentives distorted by
> idiotic government policies.
> Another viewpoint from someone whose work I've read before and thought well
> of:
> Anatomy of a Train Wreck: Causes of the Mortgage Meltdown
> Stan J. Liebowitz
> The Independent Institute, October 3, 2008
> http://www.independent.org/publications/policy_reports/detail.asp?type=full&id=30
> http://www.independent.org/pdf/policy_reports/2008-10-03-trainwreck.pdf
> Why did the mortgage market melt down so badly? Why were there so many
> defaults when the economy was not particularly weak? Why were the securities
> based upon these mortgages not considered anywhere as risky as they actually
> turned out to be?
> This report concludes that, in an attempt to increase home ownership,
> particularly by minorities and the less affluent, virtually every branch of
> the government undertook an attack on underwriting standards starting in the
> early 1990s. Regulators, academic specialists, GSEs, and housing activists
> universally praised the decline in mortgage-underwriting standards as an
> "innovation" in mortgage lending. This weakening of underwriting standards
> succeeded in increasing home ownership and also the price of housing,
> helping to lead to a housing price bubble. The price bubble, along with
> relaxed lending standards, allowed speculators to purchase homes without
> putting their own money at risk.
> The recent rise in foreclosures is not related empirically to the
> distinction between subprime and prime loans since both sustained the same
> percentage increase of foreclosures and at the same time. Nor is it
> consistent with the "nasty subprime lender" hypothesis currently considered
> to be the cause of the mortgage meltdown. Instead, the important factor is
> the distinction between adjustable-rate and fixed-rate mortgages. This
> evidence is consistent with speculators turning and running when housing
> prices stopped rising.
>> At 02:29 PM 10/13/2008 -0700, PJ wrote:
>> >The second podcast, "Another Frightening Show About the Economy",
>> >http://www.thisamericanlife.org/Radio_Episode.aspx?episode=365
>> >is the most eyeopening, on credit default swaps -- something, btw, most
>> >analyses I've seen never even touch on.  This is scarier than the worst
>> >slasher movie ever.  Talk about losing sleep over the endless greed and
>> >stupidity of people...
>> Oh, PJ, don't you understand anything? Lee has patiently explained
>> that it's all due to the government bowing and scraping to the poor,
>> forcing their will upon those luckless "very careful
>> (and very self-interested)" finance people you so unkindly dub greedy
>> and stupid.
>> Damien Broderick
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Eschatoon Magic
aka Giulio Prisco

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