Saturday, May 22, 2010

Andrew Klavan - Financial Crisis 101

Video embedded below.

Posted by Andrew Berman at 5/22/2010 12:46:00 PM
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1 comment:

  1. Ian Spencer Dubrowsky5/22/2010 2:15 PM

    Sorry I havn't been around lately to slap you around- Beijing is having internet issues. I feel bad because it seems the longer I am away the more arcane, strange and unhinged your social and political interests become: Miss America a symbol of seeping "liberalism"? "jihadism?" "a Hezbollah supporter"? the MSA is actually an anti-semitic front? The only racism issue you recognize is when "anti-racism" is impacting the lives of white people? MLK, an outspoken opponent of the Vietnam War, economic inequality- and influenced by Marx- is a "conservative"? A law criminalizing undocumented immigrants passes in Arizona, and your biggest concern about it is whether other politicians (who complain about it for political reasons- that's what a politician does) have actually read the print or not?

    sigh.. anyway, this video is particularly rich. Figures you would go to a beach read novelist for an explanation on how the crash happened. He actually critisizes Democratic politicians from the left (there ties with large financial institutions) and in the same breath pretends that the Republican Party was just standing by whislteing dixie while the Democratic party on its own brought the whole show down. That's pretty dumb.

    For Andrew Klaven, it's easy to blame poor people defaulting on homes of which they were offered purposely enticing rates by the government because that certaintly is a Democratic party issue- but at the center what caused the crash, not at all. Do you actually think that it was a few tiny homeowner defaults that sank gigantic companies like AIG and Lehman and Bear Stearns? I'd like to hear Klacen explain to me how he thinks these default swaps work, Because what we're talking about here is the difference between one homeowner defaulting and forty, four hundred, four thousand traders betting back and forth on the viability of his loan. Tying in the debt in with people's pay rolls, pensions and the underwriting of other large institutions. Which do you think has a bigger effect on the economy? Klaven doesn't have a clue, and you mislead yourself and the people who read this if you pretend he does.

    a million homeowners can default on a home, what creates systemic risk is if these defaults are operating in something like say an unregulated credit default swap market that lets traders do these sorts of things for very very short term gain. Further the creation of an unregulated Credit Default Swap market is no accident- refer to "Phil Gramm's Commodities Future Modernization Act," specifically the 262-page amendment Gramm tacked on to that bill that deregulated the trade of credit default swaps. Bill Clinton, a right wing politician (he did enact these laws after all), has since said it was a mistake.

    If you don't remember, Phil Gramm is a former Republican Senator, and a top economic advisor to Jon McCain (not because Phill Gramm is smart, but because Phill Gramm represents the interests of credit default swap traders)

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