MeltUp: The Beginning Of A US Currency Crisis And Hyperinflation
- 08-18-2010, 03:49 PM
As far as the labour unions go. I agree that they have not helped matters but I do think that their culpability has been exaggerated. Even without unions, production costs would have still been lower in 3rd world countries.
Investors and upper management have been able to extract increasingly larger portions of the 'economic pie' at the expense of the working class. The latter, in order to maintain their standard of living, have had to progressively reduce the amount saved to the point where they are now borrowing - much to the pleasure of the finance industry. Of course this was not sustainable but bankers were making so much money is was impossible for them to quit.
You are correct that the role of government should not be to directly create jobs. However it is the government's job to ensure that there is sufficient regulation in industries in order to create a sustainable economy. In that sense it has failed miserably. The actions on the part of the banking and investment community are, in my opinion, criminal. To top it all off, the government bailed them out (at guess who's expense!) This begs the question: has the government any spine left or is it completely in the pockets of the leaders of big industry?
- 08-18-2010, 04:43 PM
- 08-18-2010, 05:53 PM
In the past the finance industry would not give the lower classes that amount of credit; they were classified as too risky. More recently the finance industry not only started to offer increasing levels of credit to them but also implied that they could afford it (ie. subprime mortgages). Consumers were only making decisions based on the info provided by the experts...
Now this begs the question: should those consumers have known better? Personally, I don't think so. Industries have become more and more specialized over the years. Getting a law degree in order to tell if the lawyer that one hires is doing a good job defeats the purpose of having to hire one in the first place. This would be the same for getting a B.Comm, an accounting designation, or a CFA in order to tell if your banker or financial planner is behaving ethically. These professions are often regulated and supposedly have internal codes of ethics in order to convince clients that they will not behave 'opportunistically.' With increasing drive for more profits and the lack of regulation of the derivatives market, ethics fell by the way side.
Most people are like sheep, they will do what you tell them, including going to the slaughterhouse...
I was going to recommend a good, easy enough read, book on the subject
but I can't for the life of me remember the title. I will try to track it down.
08-18-2010, 06:03 PM
I disagree there The subprime mortgages weren't pushed by the finance companies as much as it was forced down their throats by the Community Investment Act. And people should understand the truth in lending form, or shouldn't sign their name to it. Its a contract, it shows the repayment amount. The people who took a variable rate with "i'll sell it or refinance it before it goes variable" deserve losing their homes. At that same point in time, I got a 5% fixed mortgage (2005). It doesn't take a math degree to understand that buying a house that is 7x your annual income won't work in the long run.
08-18-2010, 06:43 PM
08-19-2010, 07:57 AM
so its largely people who have no real applicable skills for a 21st century non-third world economy. Not the government nor industry's fault that people refuse to spend the time and energy to educate themselves, but somehow have time to follow baseball, football, and basketball. People choose to invest their time in leisure instead of education/skill building, thats nobody's fault but their own.
08-19-2010, 08:32 AM
08-19-2010, 11:56 AM
Also worth noting, it was these government entities that created the mortgage backed securities and derivatives that are so maligned in the crisis. The government also gave special privileges to these securities by letting banks buy back the securities and use those as collateral, thus giving even more incentive for shaky loans.
Or it was all just greed, appearing for the first time, and confined to the housing industry.
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