What is the goal of capitalism?

[Toddsterpatriot]

Ya, what a load.

First, before healthcare and health insurance came about people faced early death and financial ruin from bad medical event.

Second, college costs have increased as state governments decreased funding for them. For example in 1982 WI financed 50% of the UW system while today just 17%.


Also, both hospitals and colleges compete for excellence by offered better care or education which doesn’t mean cutting the product.

Second, college costs have increased as state governments decreased funding for them.

Costs have increased despite unlimited piles of federal money?

 

[TruthNotBS]

Poorly informed borrowers and low-skilled workers have less information and fewer choices than well-informed borrowers and high-skilled workers.

They still aren't forced. Don't understand the docs, don't borrow. Don't like your employer, quit.

Using the words force or coercion is just silly.

The statement "Don't understand the docs, don't borrow. Don't like your employer, quit" greatly oversimplifies the complexity of the economic and social pressures that individuals often face. While technically people have the freedom to not take out a loan or quit their job, practical realities can make these decisions far from simple or realistic for many individuals.

1. Necessity: Many individuals seek loans or accept certain employment not out of desire, but out of necessity. For instance, someone may need to take out a loan for emergency medical expenses or to keep a roof over their family’s head. The idea of simply not taking the loan fails to take into account the urgent needs that drive people to these decisions. It's not about the lack of understanding or not liking the terms; it's sometimes the only option they have to address immediate needs.
2. Power Imbalance: There is a significant power imbalance between financial institutions and individual borrowers, and between employers and low-wage workers. Financial institutions and employers often have the resources and information that can be used to their advantage. Borrowers and low-skilled workers, especially those in desperate situations, don’t always have the luxury of shopping around.
3. Information Asymmetry: Financial documents, especially for loans, can be extremely complex. The financial industry sometimes uses this complexity to their advantage. It’s not realistic to expect every person to have the knowledge base of a financial expert. This asymmetry is sometimes exploited, which can lead individuals into agreements that are detrimental to their financial well-being.
4. Labor Market Realities: The advice to simply “quit” one’s job if they don’t like it overlooks the realities of the labor market. For low-skilled workers, job opportunities are not always readily available. Moreover, the economic consequences of unemployment can be severe, especially for individuals living paycheck to paycheck.
5. Psychological Pressure: Financial and employment decisions are often made under stress, which can lead to decision-making that is not in the person’s best interest. This psychological pressure, particularly when combined with aggressive tactics by lenders or employers, can push individuals into making choices they might not have made under different circumstances.

Using the words “force” or “coercion” in this context reflects the range of pressures and imbalances that can limit the practical choices available to individuals. While they may not be physically forced into a decision, the constraining circumstances can amount to a form of coercion. It is essential to recognize the broader social and economic context in which these decisions are made.

 

[TruthNotBS]

Government’s Role in the Crisis: While government policies encouraged home-ownership, blaming government mandates for subprime lending ignores the fact that the majority of subprime loans were issued by institutions not subject to such mandates. Furthermore, Fannie Mae and Freddie Mac entered the subprime market late and purchased the safer tranches of MBS, rather than the riskiest ones.

Entered late, but huge. How safe were those GSE tranches? $191 billion in bailouts safe?

The narrative that the financial crisis was solely due to government intervention oversimplifies a complex crisis that resulted from the interplay of multiple factors

Solely? Hardly.

The crisis was multifaceted and resulted from an amalgamation of various factors.

1. Non-Bank Lenders and Subprime Loans: A significant share of the subprime loans were originated by non-bank lenders, which were not subject to Community Reinvestment Act regulations that encouraged lending to low and moderate-income households. The non-bank lenders operated with a greater degree of freedom and sometimes engaged in predatory lending practices.
2. Private Sector’s Role: Financial institutions, motivated by profit, securitized these subprime loans into mortgage-backed securities (MBS) and sold them to investors. The demand for these securities led to a decrease in lending standards. This was not mandated by the government but was a result of the private sector seeking higher returns.
3. Fannie Mae and Freddie Mac: While Fannie Mae and Freddie Mac did eventually become significant players in purchasing MBS, they were following, not leading the private sector in this market. A study by the Financial Crisis Inquiry Commission (FCIC) found that they entered the subprime market "in a substantial way beginning in 2005, at the height of the bubble and when the quality of the loans was already declining." The bailouts they required were significant, but their late entry into subprime MBS was more a consequence of market dynamics than the cause of the crisis.
4. Global Savings Glut and Cheap Credit: There was an excess of savings, particularly in China and oil-exporting nations. This capital was often invested in U.S. financial products, including MBS. This influx of capital helped to keep interest rates low and fueled the housing bubble.
5. Failures in Risk Assessment and Management: Financial institutions, credit rating agencies, and investors failed to adequately assess and manage the risks associated with mortgage-backed securities. Many believed that housing prices would continue to rise and failed to prepare for a downturn in the market.
6. Regulatory Failures: There were gaps in the regulatory structure that failed to keep pace with the evolving financial markets. The existing regulations did not adequately address the risks in the financial system, particularly in the shadow banking system.

In conclusion, it is an oversimplification to lay the blame solely at the feet of government interventions. The crisis was a complex interplay of global and domestic factors, market behavior, regulatory failures, and systemic risk-taking. It is critical to analyze the financial crisis through a comprehensive lens that takes into account the multitude of contributing factors.

 

[Toddsterpatriot]

The perspective that "Your employer isn't coercing you to work there. They can't prevent you from quitting and working elsewhere." is, indeed, an oversimplification of the realities of labor markets and the lived experiences of workers. While it's technically true that employees have the legal freedom to quit their job, this assertion overlooks the complex web of economic and social factors that constrain the choices available to workers.

1. Economic Constraints: Many American workers live paycheck to paycheck. According to a report from CNBC, approximately 61% of Americans were living paycheck to paycheck in 2020 (CNBC, 2020). This economic precarity means that leaving a job without having another one lined up is a gamble with potentially disastrous consequences, including the loss of housing or the ability to put food on the table.
2. Lack of Alternative Employment: The availability of alternative employment is often overestimated. The nature of local labor markets, educational qualifications, and the state of the economy can severely limit the employment options available to people. Moreover, job searching and hiring processes can take several months.
3. Employer Market Power: Monopsony power, where employers have significant market power and workers have little, means that workers are often in a poor position to negotiate wages and working conditions. A study by Naidu, Posner, and Weyl (2018) argues that monopsony power is more widespread than previously thought and has a detrimental impact on wages (Naidu, Posner, & Weyl, 2018).
4. Benefits and Healthcare: For many workers, especially in the United States, healthcare benefits are tied to employment. Leaving a job might mean not just loss of income but also loss of healthcare for themselves and their families. This ties workers to their jobs and makes it hard to leave even if working conditions are suboptimal.
5. Psychological and Social Factors: There is also a psychological aspect to consider. Job security and stability are critical components of a person’s mental well-being. The uncertainty of leaving a job, combined with the social stigma often associated with unemployment, can be daunting and act as a deterrent for workers considering leaving unsatisfactory employment.
6. Skill and Geographic Lock-in: Sometimes workers have skills that are highly specialized to their current employment, or they might be in a geographical location where options are limited. This makes switching jobs or careers not a viable option without significant retraining or relocation.

Taken together, these factors demonstrate that the idea of simply leaving a job is not as straightforward as it might superficially appear. The economic, social, and psychological costs of such a decision can be significant, and for many workers, it is not a realistic option.

Policies aimed at improving labor market conditions, ensuring a social safety net, providing affordable healthcare, and protecting worker’s rights are essential to grant workers the actual freedom to make choices regarding their employment.

References:

• CNBC Report
• Naidu, Posner, & Weyl, 2018

The assertion that "If the dozens of pages of disclosures are too complicated for you to understand, you still aren't being forced to take out the loan," reflects a lack of understanding of the realities faced by many individuals who are compelled to resort to such loans. Here's why this perspective is problematic:

1. Information Asymmetry: Financial documents are often very complex and use jargon that the average person may not comprehend. This creates an information asymmetry where the lending institution has significantly more information and understanding than the borrower. While technically no one is holding a gun to a person’s head, the inequality in information can lead to choices that are not in the person’s best interest.
2. Desperation and Urgency: Many people who resort to high-risk loans do so out of desperation. They might need money for urgent medical bills, repairs, or to avoid eviction. In such cases, the immediate need for funds can overshadow the long-term costs and consequences of the loan.
3. Lack of Alternatives: Often, individuals who turn to subprime loans do so because they have no other alternatives. Traditional banks might not lend to them due to low credit scores or lack of collateral. In such situations, saying that they aren’t being forced is ignoring the fact that their choices are severely limited.
4. Predatory Practices: Some lending institutions use high-pressure sales tactics, misleading information, or even outright deception to push individuals into taking on loans. These predatory practices can make it difficult for individuals, especially those who are desperate or lack financial literacy, to make informed decisions.
5. Social Determinants and Financial Literacy: A person’s background, education, and social environment play a significant role in their ability to understand financial documents and make informed decisions. To place the entire burden of understanding complicated financial documents on individuals, without recognizing the social determinants that might impair their capacity to do so, is unjust.
6. Cognitive and Emotional Factors: Behavioral economics has shown that people often don’t make purely rational choices, especially under stress. Emotions, biases, and cognitive limitations can lead to poor financial decisions. Expecting everyone to act as a perfectly rational agent is unrealistic and doesn’t account for the human element in decision-making.

In conclusion, while technically people have the ‘choice’ not to take out a loan, saying that they are not being forced ignores the context in which these decisions are made. Addressing this issue requires consumer protection, education, and policies that ensure fair lending practices and provide individuals with real, meaningful choices.

The perspective that "Your employer isn't coercing you to work there. They can't prevent you from quitting and working elsewhere." is, indeed, an oversimplification of the realities of labor markets and the lived experiences of workers. While it's technically true that employees have the legal freedom to quit their job, this assertion overlooks the complex web of economic and social factors that constrain the choices available to workers.

The employer can't force you to work there.
Is the government forcing you to work there?
If not, then there is no force. Sorry.

 

[Mexicano]

I was once credit manager of a small rural hospital which meant I met with all the people who lacked insurance or were underinsured and couldn't pay their hospital bills at the time. I worked out payment plans for them and for most it was pay $10 or $20 or so a month because hospital costs weren't crippling for people back then. Not even for most of the uninsured. Health insurance was mostly for hospitalizations and we paid our doctor's modest fees for office calls and vaccinations for the kids and such out of pocket. Almost all common medications were affordable for pretty much everybody including us low income people. In other words paying for healthcare was a problem for some, but for the most part it was manageable. The federal government wasn't involved.

From almost Day #1 that Medicare and Medicaid went into effect, costs began escalating. The government was a deep well of cash and everybody in the medical field from hospitals, doctors' offices, pharmaceutical companyies, pharmacies, medical supply and equipment companies, ambulance services etc. all were cashing in on it. An Xray machine tube that cost $100 in that small country hospital before Medicare, 10 years later would cost $10,000. Then Obama double downed on all that adding thousands of pages of new rules and regs with Obamacare and costs escalated even more. An injection that would have cost about $50 out of pocket back then now costs insurance almost $3,000. You can't blame inflation for all that.

To not have insurance in the 1960s was an inconvenience but also not financially crippling for the vast majority. Only the financially wealthy can afford healthcare now without having insurance or else they have to depend on charity and the taxpayers pick up the bill or the doctor or hospital has to eat the cost to the detriment of all the other patients.

College was once affordable for the vast majority of Americans who wanted a college education and those of us who had to do it ourselves could work out way through our education, live in the dorm on campus that included three meals a day, and not accumulate much if any debt. Once the federal government got involved--it now funds colleges and universities almost as much as it funds the Defense Dept.--college costs are out of reach for most without grants, loans, scholarships.

The government does very few things more efficiently, effectively, or economically than the private sector does it.

That's a nice story Foxfyre, I wish there were more clinics like the one you used to work in.
I've seen the charts of healthcare costs, yes , there is a noticeable increase in the market prices since medicare and Medicaid were enacted.
The problem I have with this narrative relates to the following question: who sets the prices in a capitalist system?
Mostly the same question goes for college education. Correct me if I am wrong, but the price of tuition went up long before any government intervention. How can the government be the cause in this specific case?

Average Cost of College Over Time: Yearly Tuition Since 1970

The average cost of college by year, expressed in current dollars and adjusted for inflation, itemized and broken down by institution type.

educationdata.org

 

[TruthNotBS]

The perspective that "Your employer isn't coercing you to work there. They can't prevent you from quitting and working elsewhere." is, indeed, an oversimplification of the realities of labor markets and the lived experiences of workers. While it's technically true that employees have the legal freedom to quit their job, this assertion overlooks the complex web of economic and social factors that constrain the choices available to workers.

The employer can't force you to work there.
Is the government forcing you to work there?
If not, then there is no force. Sorry.

The capitalist system, in its unrestrained form, systematically perpetuates a power imbalance between workers and employers, which often coerces workers into accepting suboptimal working conditions and wages. This phenomenon can be explained through various socioeconomic mechanisms.

1. Wage Stagnation and Inequality: Over the past few decades, wages for the average worker have remained largely stagnant, while productivity has increased. According to the Economic Policy Institute, from 1979 to 2018, net productivity rose 69.6 percent, while the hourly pay of typical workers essentially stagnated—increasing only 11.6 percent over 39 years. This discrepancy indicates that the economic gains from increased productivity are not being shared equitably among workers.
2. The Decline of Labor Unions: The decline of labor unions has contributed significantly to wage stagnation and the erosion of worker's rights. Labor unions have historically played an essential role in fighting for better wages and working conditions. According to Harvard Business Review, the financialization of the economy has contributed to the weakening of unions.
3. Lobbying and Political Influence of Corporations: Wealthy employers and corporations often employ extensive lobbying to shape policies in their favor. According to Open Secrets, billions are spent on lobbying activities in the US. This often leads to the undermining of public goods, as policies may be skewed towards the interest of corporations over workers.
4. Austerity and Public Services: The promotion of austerity measures often leads to the defunding of essential public services such as education, healthcare, and social safety nets. This, in turn, affects the working class predominantly, as they rely more heavily on these services. The lack of a solid social safety net can make workers more desperate for employment, even under unfavorable conditions, as they have no alternative means of sustenance.
5. Labor Market Competition: The capitalist model favors a labor market where there is an excess supply of labor. This often leads to a “race to the bottom” where workers are forced to accept lower wages and poor working conditions as they compete with each other for a limited number of job opportunities.

In summary, the capitalist system in its unregulated form can create systemic forces that effectively coerce workers into accepting lower wages and poor working conditions. This is not an unintended consequence, but rather an inherent feature of a system where capital interests take precedence over labor. It is essential for policies and regulations to be in place that ensure fair wages, labor rights, and access to essential public services in order to create a more equitable society.

 

[Toddsterpatriot]

The repeal of the GSA should not be viewed in isolation. It is part of the larger picture of financial deregulation and the environment that allowed the 2008 crisis to occur.

First, while it is true that banks could originate and sell mortgages during the GSA era, the extent and nature were different. Before the partial repeal of GSA by the Gramm-Leach-Bliley Act in 1999, commercial banks were relatively conservative in their mortgage lending compared to afterwards.

Second, the argument that the scale of subprime lending was primarily due to government pressure on Fannie Mae and Freddie Mac to buy more subprime mortgages overlooks the fact that much of the subprime mortgage securitization was done by private investment banks. Investment banks such as Lehman Brothers and Bear Stearns were heavily involved in packaging and selling mortgage-backed securities (MBS), and they did so on a massive scale. Their involvement contributed significantly to the bubble in housing prices and the subsequent crash. The investment banks were not subject to the GSA, but their risky behavior was symptomatic of the broader culture of deregulation and risk-taking that permeated the financial sector.

Third, the securitization of these mortgages, particularly through the creation of complex financial products like collateralized debt obligations (CDOs), contributed to the spread and scale of the crisis. These financial products often obscured the risks and were based on the faulty assumption that housing prices would continue to rise. The ability to securitize mortgages into complex financial products was enabled by an environment that was progressively deregulating the financial sector.

Finally, it’s essential to recognize that deregulation and the consequent failure of regulatory oversight were multifaceted. The Financial Crisis Inquiry Commission, which was set up to investigate the causes of the 2008 financial crisis, identified widespread failures in financial regulation as a crucial cause. The culture of excessive risk-taking was not just an abstract concept; it was practically manifested in the actions of financial institutions and the products they created.

In summary, while the Glass-Steagall Act itself was not a panacea that could have prevented the crisis, its repeal was indicative of the larger trend of deregulation and lax regulatory oversight that set the stage for the 2008 financial crisis. The argument is not just about Glass-Steagall; it's about the need for a comprehensive and efficient regulatory framework that can safeguard against the excesses of the financial industry.

Second, the argument that the scale of subprime lending was primarily due to government pressure on Fannie Mae and Freddie Mac to buy more subprime mortgages overlooks the fact that much of the subprime mortgage securitization was done by private investment banks

All of it was done by private banks. Fannie and Freddie weren't allowed to buy crappy mortgages, until HUD forced them, starting in the early 90s. Well before the GS repeal.

Investment banks such as Lehman Brothers and Bear Stearns were heavily involved in packaging and selling mortgage-backed securities (MBS), and they did so on a massive scale. Their involvement contributed significantly to the bubble in housing prices and the subsequent crash.

Of course. That in addition to the CRA mandates and the Fannie and Freddie mandates and the too low for too long Fed rates in the lead up to Y2K. And once you get a bubble going, it's hard to stop. FOMO, when your bonus is on the line, is a powerful force.

The investment banks were not subject to the GSA, but their risky behavior was symptomatic of the broader culture of deregulation and risk-taking that permeated the financial sector.

Exactly!
And with the GSEs buying trillion$ of mortgages of ever decreasing quality, what could go wrong?

it's about the need for a comprehensive and efficient regulatory framework that can safeguard against the excesses of the financial industry.

Who is going to safeguard against the distortions caused by the excesses of the federal government?

 

[Toddsterpatriot]

The statement "Don't understand the docs, don't borrow. Don't like your employer, quit" greatly oversimplifies the complexity of the economic and social pressures that individuals often face. While technically people have the freedom to not take out a loan or quit their job, practical realities can make these decisions far from simple or realistic for many individuals.

1. Necessity: Many individuals seek loans or accept certain employment not out of desire, but out of necessity. For instance, someone may need to take out a loan for emergency medical expenses or to keep a roof over their family’s head. The idea of simply not taking the loan fails to take into account the urgent needs that drive people to these decisions. It's not about the lack of understanding or not liking the terms; it's sometimes the only option they have to address immediate needs.
2. Power Imbalance: There is a significant power imbalance between financial institutions and individual borrowers, and between employers and low-wage workers. Financial institutions and employers often have the resources and information that can be used to their advantage. Borrowers and low-skilled workers, especially those in desperate situations, don’t always have the luxury of shopping around.
3. Information Asymmetry: Financial documents, especially for loans, can be extremely complex. The financial industry sometimes uses this complexity to their advantage. It’s not realistic to expect every person to have the knowledge base of a financial expert. This asymmetry is sometimes exploited, which can lead individuals into agreements that are detrimental to their financial well-being.
4. Labor Market Realities: The advice to simply “quit” one’s job if they don’t like it overlooks the realities of the labor market. For low-skilled workers, job opportunities are not always readily available. Moreover, the economic consequences of unemployment can be severe, especially for individuals living paycheck to paycheck.
5. Psychological Pressure: Financial and employment decisions are often made under stress, which can lead to decision-making that is not in the person’s best interest. This psychological pressure, particularly when combined with aggressive tactics by lenders or employers, can push individuals into making choices they might not have made under different circumstances.

Using the words “force” or “coercion” in this context reflects the range of pressures and imbalances that can limit the practical choices available to individuals. While they may not be physically forced into a decision, the constraining circumstances can amount to a form of coercion. It is essential to recognize the broader social and economic context in which these decisions are made.

The statement "Don't understand the docs, don't borrow. Don't like your employer, quit" greatly oversimplifies the complexity of the economic and social pressures that individuals often face.

Not forced. Simple, but true.

 

[Toddsterpatriot]

The crisis was multifaceted and resulted from an amalgamation of various factors.

1. Non-Bank Lenders and Subprime Loans: A significant share of the subprime loans were originated by non-bank lenders, which were not subject to Community Reinvestment Act regulations that encouraged lending to low and moderate-income households. The non-bank lenders operated with a greater degree of freedom and sometimes engaged in predatory lending practices.
2. Private Sector’s Role: Financial institutions, motivated by profit, securitized these subprime loans into mortgage-backed securities (MBS) and sold them to investors. The demand for these securities led to a decrease in lending standards. This was not mandated by the government but was a result of the private sector seeking higher returns.
3. Fannie Mae and Freddie Mac: While Fannie Mae and Freddie Mac did eventually become significant players in purchasing MBS, they were following, not leading the private sector in this market. A study by the Financial Crisis Inquiry Commission (FCIC) found that they entered the subprime market "in a substantial way beginning in 2005, at the height of the bubble and when the quality of the loans was already declining." The bailouts they required were significant, but their late entry into subprime MBS was more a consequence of market dynamics than the cause of the crisis.
4. Global Savings Glut and Cheap Credit: There was an excess of savings, particularly in China and oil-exporting nations. This capital was often invested in U.S. financial products, including MBS. This influx of capital helped to keep interest rates low and fueled the housing bubble.
5. Failures in Risk Assessment and Management: Financial institutions, credit rating agencies, and investors failed to adequately assess and manage the risks associated with mortgage-backed securities. Many believed that housing prices would continue to rise and failed to prepare for a downturn in the market.
6. Regulatory Failures: There were gaps in the regulatory structure that failed to keep pace with the evolving financial markets. The existing regulations did not adequately address the risks in the financial system, particularly in the shadow banking system.

In conclusion, it is an oversimplification to lay the blame solely at the feet of government interventions. The crisis was a complex interplay of global and domestic factors, market behavior, regulatory failures, and systemic risk-taking. It is critical to analyze the financial crisis through a comprehensive lens that takes into account the multitude of contributing factors.

While Fannie Mae and Freddie Mac did eventually become significant players in purchasing MBS, they were following, not leading the private sector in this market.

The most damage in a bubble comes at the very end.

In conclusion, it is an oversimplification to lay the blame solely at the feet of government interventions.

Solely? Hardly.

 

[TruthNotBS]

Second, the argument that the scale of subprime lending was primarily due to government pressure on Fannie Mae and Freddie Mac to buy more subprime mortgages overlooks the fact that much of the subprime mortgage securitization was done by private investment banks

All of it was done by private banks. Fannie and Freddie weren't allowed to buy crappy mortgages, until HUD forced them, starting in the early 90s. Well before the GS repeal.

Investment banks such as Lehman Brothers and Bear Stearns were heavily involved in packaging and selling mortgage-backed securities (MBS), and they did so on a massive scale. Their involvement contributed significantly to the bubble in housing prices and the subsequent crash.

Of course. That in addition to the CRA mandates and the Fannie and Freddie mandates and the too low for too long Fed rates in the lead up to Y2K. And once you get a bubble going, it's hard to stop. FOMO, when your bonus is on the line, is a powerful force.

The investment banks were not subject to the GSA, but their risky behavior was symptomatic of the broader culture of deregulation and risk-taking that permeated the financial sector.

Exactly!
And with the GSEs buying trillion$ of mortgages of ever decreasing quality, what could go wrong?

it's about the need for a comprehensive and efficient regulatory framework that can safeguard against the excesses of the financial industry.

Who is going to safeguard against the distortions caused by the excesses of the federal government?

It's important to note that attributing the crisis solely to the government policies and mandates overlooks the crucial role that private financial institutions played in the lead-up to the financial crisis. Here's a breakdown:

1. Lack of Adequate Regulation: The crux of the financial crisis was not the existence of government policies but rather a lack of adequate oversight and regulation. For example, the Gramm-Leach-Bliley Act of 1999, which repealed part of the Glass-Steagall Act, allowed investment banks and commercial banks to consolidate, and contributed to the financial institutions taking excessive risks.
2. Risky Behavior by Financial Institutions: Investment banks played a significant role in the housing bubble through the securitization of mortgages. The creation of complex financial instruments, often with opaque structures and risk profiles, allowed banks to offload risk onto others. This securitization chain contributed to the inflating of the housing bubble. Lehman Brothers, Bear Stearns, and other investment banks were heavily engaged in these practices.
3. Misaligned Incentives: Financial institutions had incentives to continue these practices. For example, bonuses and compensation structures were often tied to short-term profits rather than long-term sustainability. This created a moral hazard, as individuals within these institutions could take excessive risks without bearing the personal consequences.
4. Role of Credit Rating Agencies: The reliance on credit rating agencies, which had conflicts of interest, contributed to the crisis. These agencies gave high ratings to mortgage-backed securities, thus masking their risks. This was not a government operation but an issue within the private sector.
5. Predatory Lending: Many financial institutions engaged in predatory lending practices, offering loans to consumers who did not have the ability to repay. They did this knowing they could securitize these loans and sell them to investors, thus removing the risk from their books.
6. Global Factors: The crisis was not just a domestic issue; it had global dimensions. The influx of foreign capital into U.S. treasuries and other investments contributed to easy credit conditions.

In conclusion, while government policies might have had an impact, it is overly simplistic to blame the government for the crisis. The financial crisis was largely a result of excessive risk-taking by private financial institutions, lack of adequate regulation, and a failure of the market to correct itself. A more robust regulatory framework could have potentially averted or mitigated the impact of the crisis. The multifaceted nature of the crisis points to the need for a comprehensive approach that addresses systemic risks and ensures that financial institutions have incentives aligned with the long-term health of the economy.

 

[Toddsterpatriot]

It's important to note that attributing the crisis solely to the government policies and mandates overlooks the crucial role that private financial institutions played in the lead-up to the financial crisis. Here's a breakdown:

1. Lack of Adequate Regulation: The crux of the financial crisis was not the existence of government policies but rather a lack of adequate oversight and regulation. For example, the Gramm-Leach-Bliley Act of 1999, which repealed part of the Glass-Steagall Act, allowed investment banks and commercial banks to consolidate, and contributed to the financial institutions taking excessive risks.
2. Risky Behavior by Financial Institutions: Investment banks played a significant role in the housing bubble through the securitization of mortgages. The creation of complex financial instruments, often with opaque structures and risk profiles, allowed banks to offload risk onto others. This securitization chain contributed to the inflating of the housing bubble. Lehman Brothers, Bear Stearns, and other investment banks were heavily engaged in these practices.
3. Misaligned Incentives: Financial institutions had incentives to continue these practices. For example, bonuses and compensation structures were often tied to short-term profits rather than long-term sustainability. This created a moral hazard, as individuals within these institutions could take excessive risks without bearing the personal consequences.
4. Role of Credit Rating Agencies: The reliance on credit rating agencies, which had conflicts of interest, contributed to the crisis. These agencies gave high ratings to mortgage-backed securities, thus masking their risks. This was not a government operation but an issue within the private sector.
5. Predatory Lending: Many financial institutions engaged in predatory lending practices, offering loans to consumers who did not have the ability to repay. They did this knowing they could securitize these loans and sell them to investors, thus removing the risk from their books.
6. Global Factors: The crisis was not just a domestic issue; it had global dimensions. The influx of foreign capital into U.S. treasuries and other investments contributed to easy credit conditions.

In conclusion, while government policies might have had an impact, it is overly simplistic to blame the government for the crisis. The financial crisis was largely a result of excessive risk-taking by private financial institutions, lack of adequate regulation, and a failure of the market to correct itself. A more robust regulatory framework could have potentially averted or mitigated the impact of the crisis. The multifaceted nature of the crisis points to the need for a comprehensive approach that addresses systemic risks and ensures that financial institutions have incentives aligned with the long-term health of the economy.

Solely? Hardly. <third time

 

[otto105]

Second, college costs have increased as state governments decreased funding for them.

Costs have increased despite unlimited piles of federal money?

Costs have increase certainly, but state funding has also contributed to tuition increases.

 

[Rigby5]

Capitalism is merely one way to address issues of goods, services etc in any society or set of societies. It posits the notion that negotiation between those who seek products or services or raw materials and those who may be able to fulfill those things will lead to the most effective way of providing for them.

It has more to do with being an effective system than it has to do with seeking any particular form of providing for liberty and freedom.

But it does incidentally serve the interests of freedom and liberty. You don’t buy an item by holding a gun to the seller’s head and threatening him to sell you a product. He doesn’t hold a gun to your head to compel you to buy his product, either.

I disagree that capitalism "serves the interests of freedom and liberty".
Capitalism is just the profit motive, and if the buyer or seller could get away with holding a gun, then capitalism would support that, since that would increase profits.
Infact, all despots, dictators, pillagers, pirates, invading hordes, etc., are all profit motivated capitalists.
Ideally everything should be socialist, where the society invest in what means of production is necessary, and then no additional costs have to be tacked on everything, for profit.
The only reason why we need some capitalism is that capitalism tends to allow for more innovation and rapid advancement in development.
Which is only necessary in a highly competitive world that is constantly at war.

 

[TruthNotBS]

The statement "Don't understand the docs, don't borrow. Don't like your employer, quit" greatly oversimplifies the complexity of the economic and social pressures that individuals often face.

Not forced. Simple, but true.

It's forced because capitalists with their money force the public at large to live under conditions that they created through their lobbying of the government, mass deregulation, and privatization, resulting in crumbling infrastructure, fewer worker rights and options, lower wages, higher cost of living, less access to healthcare, an education..etc.

 

[Rigby5]

Slavery is the foundation of most socialism and communism systems. They also have prostitution, drug use, and violence(gulags).

Piss poor attempted to justify your personal greed to steal from others, and defend your deadbeat arse.

Wrong.
Socialism and communism comes from the inherent human instincts of all humans.
All families, tribes, etc., are always socialist inherently.

 

[Cougarbear]

Hilarious

True

 

[Toddsterpatriot]

It's forced because capitalists with their money force the public at large to live under conditions that they created through their lobbying of the government, mass deregulation, and privatization, resulting in crumbling infrastructure, fewer worker rights and options, lower wages, higher cost of living, less access to healthcare, an education..etc.

Sounds awful!
You're still not forced.

 

[TruthNotBS]

Solely? Hardly. <third time

Practically all of the experts disagree with you. I already mentioned several of them with studies and data. Deregulation often leads to capitalist misconduct which then results in an economic crisis that the government has to resolve with public funds. The big-money capitalists privatize profits and make their losses public. Socialism is constantly saving capitalism from itself.

 

[Rigby5]

no thats capitalism throughout the history of mankind,,, its never changed,, whats changed is the government forcing both employers and employees to work in a way they demand,,

and youre giving laws that force capitalism to deteriorate away from being true free market capitalism into crony capitalism,,

I disagree.
Without strict regulation, capitalism, (the profit motive), has always resulted on slavery, murder, theft, dictatorships, invasion, imperialism, colonialism, etc.

 

[Mexicano]

Wrong.
Socialism and communism comes from the inherent human instincts of all humans.
All families, tribes, etc., are always socialist inherently.

Cooperation and competition are both human traits.
My take is competition should be as in "game competition". You compete to get better at a sport or a craft. But getting into life-or-death situations for the sake of competition is a no-go zone for me.
- letting people starve to death
- letting people die without healthcare