One great aspect of the Internet is the amount of information that is to be found out there. Here are some links about the current financial crisis.
First up, a discussion between Bill Moyers and Kevin Phillips from the site:
Bill Moyers sits down with former Nixon White House strategist and political and economic critic Kevin Phillips, whose latest book BAD MONEY: RECKLESS FINANCE, FAILED POLITICS, AND THE GLOBAL CRISIS OF AMERICAN CAPITALISM explores the role that the crumbling financial sector played in the now-fragile American economy.
Next up a couple of recent shows from This American Life. The first episode is from way back in May when the increase in foreclosures started rising rapidly, The Giant Pool of Money. The second show was from a few weeks ago (Enforcers). Part II of this episode is about the SEC and naked short selling.
This segment was itself expanded into a feature on NPR called Planet Money, which includes a daily podcast dedicated to the current financial crisis.
(rant is below the fold)
I'm also frankly amazed that all these libertarians are comming out of the woodwork to preach deregulation at a time like this. One of the main problems with our economy is the premium placed on short term profit, even if it is at the expense of long term viability and stability. In the absence of any regulation, the emphasis on short term profit seems to increase. Get in quick, get money, get out (and hope you don't get screwed). The crisis in the financial market can be traced back to this type of behavior. These greedy individuals were propelled forward by excess capital coming out of Asia and caused a huge bubble in the housing market.
Now if it was just a couple of bad investors now getting the shaft, it wouldn't be so bad, but what ended up happening is a drop in the amount of liquidity throughout the entire financial sector - so much so that paper trading (credit used by businesses to balance their day-to-day activities) froze. In fact an upcoming episode of This American Life will describe exactly what happened.
The problem of course is that unregulated markets have too many fluctuations and decreased stability. Without regulation the market is invaded with sharks who pray on individuals and make risky decisions. An uber-free market allows those with too much power (financially) to take advantage of the majority of Americans. What this second group wants (and needs) is stability.
The disciples of Milton Friedman and the invisible-hand remind me of extreme left is who hang on to their ideology so tightly that they refuse to acknowledge reality. They claim that the way to fix the current situation is to be even more extreme. Just like communism, uber-free marketeers lack one basic concept, an accurate picture of how human motivation and human desires. Those pulling the strings want to abuse their power and extract as much from the public at large as much as possible, the rest want fairness and stability. Regulation must be put in place to modulate this interaction. The New Deal, a mix economy (i.e. Keynesian economics) is what built the middle class. The demise of the world economy by free-market radicals is best documented in Naomi Klein's The Shock Doctrine. In this book, Klein focuses on how laissez-faire economics takes advantage of the confusion triggered by catastrophes to swoop down and change the economic setup of a country. She starts with Chile in '73, then South America in the 70s and 80s, Russia after the collapse of the USSR, the Iraq war and even the aftermath of the Tsunami in Sri Lanka. The extent to which Milton Friedman and the department of economics at the University of Chicago are intimately involved with all of these affairs is stunning.
What is striking is that the ideology of the uber free-marketeers is held onto so tightly that it begins to resemble some holly quest or a jihad. Any individual who promotes Keynesian ideas or a mixed economy is treated as the worst enemy of all.
But I guess this is too complicated for the average American, and is not in the interest of anyone in power.
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Does not the Shock Doctrine go both ways?
This crisis has caused the Fed to create hundreds of billions of new credit out of thin air for companies that made bad financial bets and should have failed (read: they were too greedy... the market can and should be allowed to self-regulate these things). Further, the people are now being scared into supporting a bailout package that amounts to nationalizing of the whole financial system.
The end result: massive inflation that cripples the middle class and only serves to put more power in the hands of the government.
A Shock Doctrine is merely when there is a crisis and the first ones to come in with a viable solution (but not necessarily the best one) wins. The New Deal was a Shock Doctrine, and we are enduring another one now.
Also, I don't believe these issues are too complicated for the average American. Unfortunately, however, the media and politicians do. Why don't we ever hear Barack, McCain, or the major media outlets talk about the role of the Fed in this? Or how the government-sponsored Fannie Mae and Freddie Mac seriously screwed up and should have been held to much tougher regulations? Or how the Community Reinvestment Act was a flawed policy?
Support third-party activities and inclusion in the debates to help wake people up!
http://www.thirdpartyticket.com/
I guess shock doctrines may go both ways, although The New Deal was not enacted out of design while Milton Friedman (according to Klein) promoted rapid economic changes in the aftermath of shocks because he knew that in the aftermath of a calamity, people are focused elsewhere. Democracies would never support the type of radical changes that he favored.
Are these issues too complicated? I guess I was trying to be ironic. Certainly there is a segment of the voting public that is paying attention, but the fact that about 1/3 of Americans think that Obama might be a secret Muslim doesn't inspire confidence.
This talking point needs to die. The available data show that loans made in compliance with the CRA were *safer*, not riskier, than other loans. Moreover, they were less likely to be repackaged and resold (hence they contributed much, much less to the problems created in the mortgage-backed securities market).