Capitol Hill Blue Forums Political Issues Finance, the economy & Economics How will the financial crisis develop?

The irony is that when Howard F. Ahmanson owned Home Savings, which Washington Mutual purchased in 1998, Home Savings was the soundest savings and loan and mortgage company in California. Home Savings was managed so conservatively, that if they were still around today, I doubt they'd be involved in the sub-prime mess.

Unfortunately, I bank with Washington Mutual.

Just a note, I didn't say it was illegal, only that it was irresponsible. I am very careful about bandying the term "illegal" about, as I am a lawyer and it means a whole lot to me to be accurate. There was some illegality going on, however, when the lenders colluded with borrowers to misrepresent the underlying basis for the loan. If someone claims an income and the lender knows it is false, they have committed a fraud upon whomever buys the loan.

You are absolutely right about the percentage of loans that are actually defaulting, too. It is the overleveraging - the same problem that led to the collapse of the system in the 1930s - that created the "crisis." The end result, however, is that the house of cards falls down - and we are the ones it falls upon.

That's a good article you cited, numan - although I have no respect whatsoever for Ambrose Evans-Pritchard. Nevertheless, your writer puts it all together in a very cogent way.

Here's an interesting assertion from the middle of the article:
What are your thoughts on that?

The marketing referred to has been very much the marketing of a economic philosophy.... that itself has been equated with the founding principals of American political philosophy.

Free markets have been proposed as the economic reflection of the principals of democracy and thus fundamental to our national character. Pseudo free-market economics has been identified as being at the core of a ersatz survival of the fittest view of human existence where wealth is socially worshiped as the ultimate reflection a successful well lived life. Following along this logic, the power of the United States is itself a vindication of the idea that we, and our system, are better than anyone else. We stand as the sole remaining super power at the apex of humanity.

Given the collapse of the US Dollar, the rise of the Euro, the emergence of the Chinese, and the fact that Osama Bin Laden clones have more or less fought us to a draw around the world... one wonders at what point our nation might re-evaluate it's role in the world.

Yet "ordinary people" can take individual actions that will cumulatively affect the outcome. They can withdraw, at least partially, from the consumerism culture.

But then it is easier to point the finger at someone else than to do what one can do.

Is this a good idea?
MSNBC

Los Angeles Times

I sounds like a great idea Phil. Free market capitalism is also a great idea, until that is, the US financial system is faced with collapse and deep pockets are wiped out. And that indeed is what would likely have happened if the feds had not involved themselves with Bear Stearns and now covered their Fannies.

And as I said before the beauty of all of this is that no one actually pays for it. Ever more bonds are issued to cover the debt and the US backed Ponzi scheme continues for the foreseeable future. Don’t tax—but spend. It’s a wonderful country.

I think your argument fails because you mistakenly believe that a free market economy is operating within the financial sector, Ken. And you are also incorrect when you claim that no one actually pays for it. You need only look at the diminishing purchasing power of the dollars in your pocket to see that you and I and most of the rest of America are paying dearly for it.
Yours,
Issodhos

I think you missed the sarcasm, Iss