Video: Burning Down the House--What caused our financial crisis?
This is a devastating video that will soon be everywhere because Drudge just posted a link to it. Viral video is turning into an unpredictable force in these campaigns. With almost six weeks to go, what else will go viral, and what will be the impact on the campaigns and the issues?
[update: The same basic story appears in an editorial in Investor's Business Daily.]
1 comment:
After watching the video, I have to conclude that we have many clever and innovative people. And the information is well researched. The presentation connects the dots very well even if one sets aside the presidential political message.
Other writers have concluded that the root causes include the same factors. David Littman, retired chief economist from Comerica Bank, in a 2008 Sep 24 commentary in the Detroit News assigned several root causes: The "Community Reinvestment Act (approved in 1977)" which required banks to write mortgages previously considered unsound to meet a social policy of more home ownership; the "very thin capital reserves" for Fannie Mae and Freddie Mac as required by Congress; "Insane accounting rules, the Sarbanes-Oxley regulatory regime and Securities and Exchange Commission rules have contributed to the mess, especially the devastating "mark-to-market" requirement"; and the "Federal Reserve spurred subprime lending by pursuing inflationary money policies". Others have included the repeal of the Glass-Steagall Act in 1999 which had previously prevented banks from being both commercial and investment banks.
Only the politicians, with the help of professionals who bend with the political winds, believe they can legislate new principles of economics and new laws of physics (like the arbitrary requirement to increase fuel economy by 40% by 2020).
Don Nordeen
Governance of Property Owners Associations
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