Political Toughts - Blame it on the People/Gov not Banks

It seems that lot of people have a real issues with banks. I see Banks here, Banks there; Banksters everywhere, conspiracy theories...

Subprime Crisis Cause?= Banks

National Debt Cause= Banks

Money Printing= Banks

There is not enough lending to businesses=Banks

There is too much lending to insolvent people=Banks

I am sorry but from where I stand, politicians were the ones who forced banks to lend to insolvent people so "everyone can own a house" this is the fault of irresponsible people who borrowed more than they could afford thinking that housing will always go up.
Public spending is the wrong allocation of money spoiled by Keynesian/socialist politicians themselves voted by the irresponsible,selfish and economically non-educated people seduced by the idea that the government can do a "stimulus" but the money is never back in other words more spending than income or even economical profit.
the whole inflation issue is caused by the same policies that put interest rates artificially low so everyone can get in deep debt.
People ask the banks to lend businesses and then they blame them because they lent to anyone. It's easy for the Media, politicians or anyone to blame it all on banks. But the truth is that stupid people and politicians are the real cause of this mess. Truth is Banks did what they where told to do.
So blame it on the government that pushed banks to lend to anybody without verifying solvency. Blame it on the banks who agreed to do so but there is also a share for the people who acted stupid living life they couldn't afford. But obviously the politicians won't go out to say: "Hey voters, it's your fault!"... I just found that video that resumes exactly what I think.

The fact and the matter is that Banks did not want to lend to insolvent people initially but then politicians forced them to lend, basically they told them: "Lend to anybody, I don't know how but do it" then banks who knew it was madness did not wanted to carry the risk so they asked the investment banks to securitize them so they did, mixed those bad loans with the good ones with financial engineering and asked the rating agencies to rate them AAA. Time elapsed and people started to speculate and bought houses they couldn't afford and were seduced by housing sell forces... The market began a mess and rating agencies saw the average loans get more and more speculative but instead of downgrading them they review their notations so a AAA would have been a BBB years later and so on until AAA really equals FFF (joke) but they had pressure because if they would have rated the mortgages as they should have done, the whole market would collapse so they didn't... Now investment banks could sell back those bad loans (made by the people) to the people but also to other countries in Asia and Europe, and everybody was happy as long as the housing prices were going up, but suddenly the house of cards collapsed.

Now nobody wants to admit it was their fault and certainly not congress, neither the people nor the financial institutions. Not only the USA ruined themselves but their ruined other investors in EU and Asia by selling them those high yield toxic papers.

Look we all know the system is unfair and yes corporations rule the world but hey it is what it is and I can't see how we can change it. All you can do is acknowledge and protect yourself.

I wish there was a fair system with high social mobility, I wish the developed countries did not take advantage of the emerging countries. Because if you want fairness then wealth should be transferred to the exploited emerging countries. In order to get equilibrium developed countries would need to review their standard of living to the downside (wages...) and it may actually happen but look at Greece, I don't think they are willing to do so. So as long as there is an unfair system I will rather sit back and watch.


I don't think Anarchy promoted by conspiracy theorist is a better solution. Change should be made but with an order and peace, the problem is that if the UK overtax the banks and corporations, they will move to a less regulated place and indeed create a worse situation (Unemployment...), people should understand that. I am not saying I agree with that, I am just saying that is how it works.

See:Davos- Welcome to the Real Financial Paradise

What we need is a world regulation for finance but a regulation that applies everywhere, because if not, then the money will go where it is not regulated, for now each country is sovereign so you can't force them to regulate their market so in a way a world gov/regulation is what could save developed countries to keep their wealth.

Concerning the Greek problem:

Briefly in numbers:

  • Greek government workers received what are called "13th- and 14th-month salaries."
  • retire with pensions at 53!
  • Government spending like stupid is not even addressed in the article
What is the result of those charming socialist/populist politician policies?

  • Government spending accounted for 50 percent of GDP!
  • Greece's deficit-to-GDP ratio from 8.1 percent
  • Income was only 37 percent of Greek GDP
  • Greece is in a recession and inflation is already high
Now, don't tell me "poor greeks" I am not saying that all became lazy and unproductive , there is certainly honourable Greeks but I feel ashamed for them because they will have to pay for their pairs and the previous irresponsible generations.
I wonder how Germans feel, because they have been working hard (retirement age at 67 and debating  to 69)and being  responsible and now they are going to ask them to work more for Greeks. And They are the bad guys! For god sake!
Sometimes I feel the world is upside down.

I would like to hear from Germans what they would say if I tell them that they don't have to worry about their tax money, in few years politicians in Greece will continue their Keynesian measures. Who do you think they will listen to? the debt holders or the streets?

The crisis is not the problem, the crisis is the solution of this mess, by trying to retain the monetary/gov debt collapse they are just pushing it further and making it bigger, the problem is that the ones who are ending paying it are the honest people who worked hard (in this case the Germans) for the lazy ones, that's the whole problem about socialism and human nature.

This is the typical example of a person that earns 1,000$/month go to the bank and ask for a million dollar home to the bank, the bank refuse and then a politician shows up and says "vote for me and I will force the bank to lend you and I will issue government debt to give you the money" (but he don't tell that they will have to pay one day, if not them, their children), the person vote for the politician and gets his loan part from the bank, part from government....

It's the story of the irresponsible guy that got loan after loan living above his means and then refuse to pay and say: "It's the banks fault because they lent me the money!" Now somebody have to pay and they will ask his neighbour to do it. I personally think it's the irresponsible guy who should be blamed because he is stupid as F***. and I feel angry for the guy who has to pay. The banks are just intermediaries and try to take advantage of the situation so it's pretty smart even if not very moral to take advantage of the stupidity of the majority, but you can't prevent people from acting stupid.

About Money Supply

"Money supply needs to increase to cover interest; money supply should only grow at the rate of the economy to avoid boom/bust and inflation"- Theory

Absolutely, but here once again the problem lies in human nature and speculation. In practice we cannot increase the money supply properly because we don't know at which exact rate the economy will grow. Also, some other metrics make economist think that "it's always better to supply more than not enough money, because an increase in money supply can stimulate growth".

I personally believe that since accurate financial planning is hard to obtain the best solution could be to simply let investors carry the risk, even if that is precisely what causes bubbles, the difference here is that I would let the bubble burst and not try to retain it so the risk taker gets busted (ai. insolvent or risky investor) hoping that:
1- in the process Wealth created remains ex: infrastructure, tangible materials etc.
2- Prices readjust
3- Some kind of Creative Destruction emerge

I am not saying it is the utopic solution, I think is the more realistic/ feasible one, in my humble opinion.
The main problem are:
1- There will be sharp periods of rise and fall, (but normally the system would improve each time)
2- People who cannot adapt are left behind, in some kind of economic Darwinism,.
3- The ones with the money who anticipated the crash but also the prudent that didn't speculate, are left with an advantage.
4- Wealth could be extremely volatile and mobile.

The 4th point involves a possibility of the developed countries to be owned if they speculate too much and so the not leveraged countries could own after a crash.

By the way this is exactly what is going to happen, bad debt leveraged countries= countries with high debt and low growth= Developed countries (USA,UK,Spain...EU) will collapse if they continue to increase their debt making the problem bigger instead of "deleveraging", and then not-so-leveraged countries= Emerging, China, would own. In a way it's just and fair because they have been exploited and couldn't profit for a long time. But in the short term I doubt it will happen, but probably the transfer would be progressive. In other words, leave the developed countries go to the new business friendly places (what companies are and will do). We can expect the new industries to develop directly whith new technoogy focusing in renewable energy already. So in a way, we have reasons to be optimist on the global economy but aparently many people should adapt and work rather than complaining.


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