Who Caused the Economic Crisis?

[tongodeon]

The economic collapse is on everyone's mind and a major factor in the presidential election, and there are a lot of mistakes and distortions flying around especially with regard to how Fannie Mae and Freddie Mac were involved in the problems. The planetmoneymp3 podcast covered a lot of this ground this week. Here's my summary.

1. If the collapse is the fault of

Comments

[ikkyu2]

Please tell me you didn't just omit the Federal Reserve Board from a page-long post on the causes of the current economic crisis.

[ikkyu2]

Lacker?

[tongodeon]

Um, no, I didn't. Do a text search of my post. "Fed" and "federal reserve" come up a couple of times.

Would this be a bad time to talk about milton friedman?

[drieuxster]

And the culture that he helped spawn and spread???

If not, then yes, we can probably all go back to sleep and smile happily that this is all a problem where there is no need to worry about assessing guilt and/or blame.

The alternative may be that this would be a really great time to talk in terms of technical issues like why was it that Francis Fukuyama opted out of his End of History mythos in his start of a critique of the failures of the NeoCons.

Granted this way would mean addressing which parts of Milton Friedman do we want to risk the nation with, and which parts of Friedman were best set for his time with Generallissimo Pinochete.

In that context we can probably start looking at how NeoCon was Clinton, as well as what sort of "wise regulatory oversight" - that the AEI is now saying it had always supported back in 2005, SHOULD havee always been the true dogma of the Holy Church of True Economics...

It's an interesting idea, who knows americans might like to keep some of their republic...

[crisper]

In March of 2005, when Carmel and I were starting our own home-buying process, we were talking to our next-door neighbor Wendy. She was a freelance loan processor, doing contracted work for multiple mortgage brokers as their need expanded or contracted. She mentioned at the time that there was an out of control practice she had personally witnessed from most of the brokers who had sent her business - they were maintaining entirely separate paperwork for applicant & underwriter

[glaucon]

I agree that the brokers bear a big chunk of the blame for how screwed the whole process was. they were dishonest, they knew it, and they didn't care 'cuz they were making $10K or so *free and clear* on every loan they closed. a lot of people have sold out their sense of ethics (and their customers and business partners) for a lot less

[crisper]

I knew my loan guy was the right choice when a) he told me straight up that he wouldn't touch sub-prime, or really almost any ARM, deals unless *I* could convince *him* it was a good choice for me and b) asked me if I knew anything about Excel, and when I did, sent me a bunch of Excel worksheets he uses so that I could fiddle with the numbers in parallel to our conversation on the phone.