Having difficulty understanding the 2008 US Financial Crisis? Here’s a short animated video that explains – visually!
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Can you guys get a pop-filter on your microphone(s) please? I really think it would make your video more ‘professional’. Anyway, good videos. Keep it up!
youre missing the point. its about incentives.. the government used its power to incentivize extremely stupid behavior that would not have otherwise occurred in a free market.
the government shouldnt have repealed the glass-steagal regulation, given the circumstances, but none of those regulations would have been necessary in a market in which failure had consequence.
the government has made stupidity and frivolity profitable.. and theyve done so with our money. thats not our fault.
@SayItVisually : You can only achieve balance in a free market. US havent been using free market for decades.
Great content material, Thanks!
I didn’t say any policies mandated borrowing I said policies mandated foolishness (eg Community Reinvestment Act, “mandated” loans be made available to people whom banks knew were bad risks, thus “mandating” foolishness) But I agree with you, people are responsible for their own actions. My contention is that you cite “free-markets” playing a role when obviously “free-markets” don’t exist because that requires absence of Government. What exists is the abomination known as the “mixed-economy”
however boneheaded the policies, the fact remains that choosing to borrow or not borrow is a choice made by the individual; that, from my perspective, constitutes a degree of freedom. In turn, acting within that freedom (distinct from “free”) confers some degree of responsibility. No policy “mandated” borrowing.
How can we possibly assign blame to something that does not even exist? We’ve had nothing remotely close to ‘Free-markets’; The Feds artificially low interest rates, FDIC, Community Reinvestment Act, Freddy Fannie etc…all Government creations..and all violating and perverting ‘free’ market forces. When the Government unleashes these creatures, of course people are going to act foolishly…..the policies mandate it! The ‘free market’ is a victim of, not the cause of these problems,
The factors in last year’s crisis go way beyond the scope of a short video, but if your point is that “free markets” played no role, i’d have to disagree.
thanks, much appreciated. Obviously much has changed since this was created
excelent work done in explaining the prob.
There is something to be done though, get rid if the goverment policies that discordinate the markets, create moral hazards, reward failure, punish success, and rob people through inflation. Abolishing the Fed and returning to a market-based monetary system would be another plus. Plenty to be done.
Unfortunately, Obamas policies are even worse than Bush. His regulations are more onerous on businesses, his spending is higher, interest rates are lower. Everything Bush did to bring on the last crash, Obama is doing twice as bad. The next crisis will be hyperinflation and that will make the Bush crisis look like fun times.
Alan Greenspan abandoned his free market principles a long time ago. (How could anyone be at the FED, a Government creation, and then claim to be pro free-market? Its a total contradiction)
Artificially low interest rates completely screw the entire market system by creating asset bubbles, not to mention creating inflation.
Every government regulation you want causes 100 new problems, which then you need a hundred new regulations to contain. Regulation is just like putting gasoline on a fire.
Well your response really proves my whole point. Follow this logic:
1. First, the Government interferes in the free market for some political purpose (eg push housing to low income earners)
2. In response, the free market gets distorted and behaves in ways it otherwise would not do if it were not for government interference
3. When the market ‘fails’, the people that support the government legislation BLAME the market, and not the actual LEGISLATION that caused the problem to begin with.
Even ayn rand’s disciple Alan Greenspan admitted he was wrong to fight the regulation for the bank.. a champion of free-market
1- by the unregulated bank (free)
2- B.S.! you got Fox’s talking point memo it seem
3- again unregulated investment bank
4- B.S. the mortgage salesman pushed those because the banker where taking them without check and resell to investor in AAA package NOTING to do with ACT.. Fox did a good job with you
Next you will tell us that ACORN is evil, if you care to check the fact you would learn otherwise
Ok BIG reality check – Last years crisis was caused by:
1- the Federal Reserves low interest rate policies which encouraged reckless speculation in housing
2- Freddy and Fanny – Government Sponsored Enterprises buying loans backed by people with no job, no income
3- Deposit insurance – Creating moral hazards – no one cared what the banks did with their money.
4- Community Reinvestment Act – punishing banks who did NOT make risky loans
it goes on and on
…and then you blame free markets???
clear history ? ..just check last year ! ..unregulated wall street bring crisis worldwide!
I don’t think Obama will do much, but public insurance is already an improvement…. it would have been worst with McCain..
You generally don’t care about the rest of the world, but the rest of he world was relief when you elected Obamam it should be an indication.
A query : could you point a moment in US’s history when it was good ? ..a golden age ? just wonder..
History is absolutely clear. As societies move closer towards free-markets, the more the living standards of people in that society improve. As societies move further away from free-markets, the more the living standards of people in that society is brought down (except perhaps for a few bought and paid for politicians and their friends). Do you honestly think what Obama is doing will improve the standard of living of Americans? Will more regulations + more taxes + more debt = more prosperity?
Using the other extremes to justify your own..is not pragmatism…
Better check out Canada, UK, France, sweden etc… some of socialism some of free market.. check out the healthcare rank, the ‘hapiness’ rank
Those are more pragmatic society.. there is some fault, but we can work to improve this, not blindly put our faith in ’socialism’ nor ‘free market’ just see what work.
Neither extreme are perfect…. a good balance between the two are better
Learn from history…
The societies whos poorest people have the highest living standards are ALWAYS the societies that have the freest markets. We could continue socialising and be like North Korea/ former Soviet Union whos societies became so impoverished and dysfunctional, not only could they not afford health care, millions of people die from starvation!. Is that the kind of ‘experience’ that you think ‘works’? People wept when the Berlin wall was built and rejoiced when it fell..Have you ever asked yourself why?
Free market fundamentalist, it work so well for religious type.. go on
You lack pragmatism, use what work with experience..
Now you advocating going back to the ’snake oil saleman’ era..good luck
Economies of scale applies to everything. Saying it doesn’t work well for humans is like saying that gravity works fine in the US but not in Canada.
And who is served by ’some barriers’? Don’t you see, ’some barriers’ blocks competition, making medicine expensive and this CREATES the ‘medical elites’ and ‘non productive insurance’. The only barriers you need..When someone does a bad job, people don’t use them, and they go bankrupt. Free market is just as much about loss as it is about profit.
Economy of scale work fine for food and cloth .. not so for human, see outsourcing..
You do want some barrier for the medical profession..unless..
You know what, guess my next argument, and continue back and forth… maybe a light will go on someday.. I’m done here
The ‘medical elite’ only exist because the AMA lobbies the Government to create barriers to entry (its illegal to open your own medical school, its illegal to sell insurance across state lines) which prevents competitive forces from pushing down costs and push up quality. Where are the food elite? Where are the clothing elite? You NEED clothes and food to survive too and you NEED many specialised people (not mere high school drop outs) and equipment to bring clothes and foods to the marketplace