[4Tran]

Originally Posted by Dynames/ Virtue

Pretty lame though, considering everybody consider the economy and election highly now. It would be like robbers trying to steal in a stadium with the safe in the middle with everybody watching.

I think that part of the problem is that American elections don't work the way that they're supposed to anymore. If the U.S. were a dictatorship, the leaders would simply come out and give the people the bad news that the financial crisis has shot everyone's grand plans to pieces, and that the country has to buckle down, make sacrifices and try to get by as well as possible. Unfortunately, this is political suicide in the middle of an election, so everyone is more afraid of doing something to evoke anger from the voters than to actually doing their jobs.

Even worse, it's a very complicated problem, and it has lots of red herring tangents so it's not easy to figure out the solution. So it's sort of natural that the politicians put their faith in the people who they have in place to address this kind of crisis: Paulson and Bernanke in particular. The problem here is that they were also responsible for getting the financial system into this mess to begin with; and that their proposed plan doesn't seem to do anything to actually fix it. And all that despite threatening to empty the taxpayers' coffers.

Originally Posted by Reckoner

In response to the videos Karasuma posted up...

It kind of bothers me that I am not really able to understand the second video. Unless someone is knowledgeable in both finances and economics, it is hard to know if certain plans are reliable or not.

That shouldn't be too surprising. The financial system has been geared to greater and greater complexity over the last little while, and a lot of that complexity hasn't really been touched on by most media sources.

I'm far from being all that knowledgeable about finances, but I'll try to summarize the three points in that video:
1. Everyone must list their assets, and give instructions as to how they valued those assets.
2. Everyone must make contracts based on what they own.
3. All leveraging is capped at a 12:1 ratio.

None of these problems have anything to do with mortgages per se. Instead, they mostly address what financial institutions further do with the mortgages in order to make more money.

Originally Posted by Reckoner

I can't understand very much from the solution video and neither can average American folks I would bet as well. As far as the average American knows, the banks gave out loans they shouldn't of to people who were not capable of paying them off. Now the financial institutions got bit in the ass and the whole public suffers for their greed.

That's sort of the basics of what the problem was, but it's far from the whole thing. The main issue with subprime mortgages was that the larger banks wouldn't touch them, so it was confined to a smaller segment of risk-taking companies. However, the mortgages were then listed as assets and sold into the financial industry at large. At a time when most other investments had relatively poor returns, it was a lot of these mortgage-based securities that seemed to be good money-making investments. As a result, they became more and more popular, mutual funds started to buy into them, and the whole industry was tied up with risky investments that most major institutions shouldn't have touched. Everything is fine as long as the mortgage-based securities kept rising in value, but the bubble burst a bit over a year ago, and we're seeing the second phase of the consequences of the collapse today.

Originally Posted by Reckoner

Yeah, it is not diffcult to understand the very basics of the situation, but even then the problem is a lot more complicated and can be traced down to may different roots. However, the big problem is that a majority of people do not have the knowledge to know how to fix it. People are going to go into a 2008 election not knowing anything about our economy really and then are going to end up voting for the person they trust more on the economy (Which more often than not depends on how much a person bull shits the public about our situation with statements like "I'll get the money back into the taxpayers hands with this plan I just pulled out of my ass!"

It bothers me how naive and ignorant the masses in America are with our current situation. The government kept us so much in the dark, even spouting out how the banks were sound weeks before this crises, to the point that a lot of people did not see this coming (My family knew it was coming since a year and a half ago). Now the public is still in the dark regarding what is actually the best solution for this and how bad our situation really is.

Just one of the flaws with our half-assed democracy in this country, there is not equal access to information that is very important to us. Same reason we got in the Iraq war, the same reason this crap is happening under many people's noses.

You've hit upon the crux of one of the major weaknesses of American democracy: most people do not and cannot understand the complexities of the situations they're in, or the ramifications of their vote. Even worse, a great many don't even make the effort to understand more, and make decisions based on the sound bite, tribalism, or even worse - "common sense". It really doesn't help when most politicians don't make the effort to educate people, and instead try to pass on easily repeated low-information slogans. I'm not sure that I can blame them in general since the voters seem to prefer that kind of message, but I can certainly blame the more egregious forms of this when I see it.