Overdose: The Next Financial Crisis
When the world's financial bubble blew, the solution was to lower interest rates and pump trillions of dollars into the sick banking system. The solution is the problem, that's why we had a problem in the first place.
For Economics Nobel laureate Vernon Smith, the Catch 22 is self-evident. But interest rates have been at rock bottom for years, and governments are running out of fuel to feed the economy. The governments can save the banks, but who can save the governments? Forecasts predict all countries' debt will reach 100% of GDP by next year. Greece and Iceland have already crumbled, who will be next?
The storm that would rock the world, began brewing in the US when congress pushed the idea of home ownership for all, propping up those who couldn't make the down payments. The Market even coined a term, NINA loans: "No Income, No Assets, No Problem!" Enter FannieMae and FreddieMac, privately owned, government sponsored. Want that vacation? Wanna buy some new clothes? Use your house as a piggie bank! Why earn money to pay for your home when you can make money just living in it? With the government covering all losses, you'd have been a fool not to borrow.
The years of growth had been a continuous party. But when the punchbowl ran dry, instead of letting investors go home to nurse their hangovers as usual, the Federal Reserve just filled it up again with phoney money. For analyst Peter Schiff, the consequence of the spending binge was crystal clear: we're in so much trouble now because we got drunk on all that Fed alcohol. Yet along with other worried experts, he was mocked and derided during the boom.
Have you taken out a mortgage, invested capital or bought shares? If you have, likelihood is you lost out in the latest bust. Governments promised decisive action, the biggest financial stimulus packages in history, gargantuan bailouts: but what crazed logic is this, propping up debt with...more debt? This documentary brings an entirely fresh voice to the hottest topic of today.
Think positive. The system suffered with the collapse of Lehman Brothers due to toxic assets overload. But funds shifted to derivatives trading.
There was no capital flight. The system gained trust, but money supply got stuck in futures contracts. Thus, it was imperative for the host market to print money and replenish the funds locked in contracts.
It is like having all chips of the casino in one table. Unless more chips are made available, the other activities offered in that casino would stop.
But this awkward remedial measure is poorly thought by other countries as a signal to create money supply, and this weakened their domestic conditions instead. This is the real problem, but that is another story.
Pretty decent documentary but it still fails to point out or recognize the root of the problem. The financial crisis is an intrinsic and inherent defect of the monetary system itself. The system cannot fix itself, as it in itself is the problem. The most imortant detail to understand in this, is that the system is a ploy - currency is a FICTION, NOT REAL, FABRICATED. When money is printed to create bailouts and stimulus packages, it is not coming from any existing value. It's not like the institutions printing the money actually have this money as something they own. It is simply printed arbitrarily as needed. Meaning, the money we use to run the economy is really no different than the money used to play the Monopoly board game. And if you haven't realized it yet, that basically means we are all paying debts to people who loant us money that didn't have the money. Meaning we're all being scammed and haven't the slightest clue it's a scam. You and I are paying debts that aren't given to us by someone who had the money previously. They didn't give us THEIR money, they printed new money into existence. So if it wasn't their money before, what makes it their money now? It seems we owe our debts to the money Gods because as far as I know Gods are the only things that can create. And since money has been created, out of thin air so to speak, no person on this planet can be the true owner of that money - it didn't belong to anyone; it didn't exist.
So as for solutions... Well, it's pretty simple, although, getting everyone informed in order to be onboard is the difficult part. Since money is a fiction and the creation of money happens arbitrarily as needed, it is just as simple to place arbitrary parameters or policies to ensure stability. For instance, there was an ancient practice in Judaism and Christianity known as a Jubilee year in which all debt was erased every 50 years. That could solve a lot of problems but it's no real solution, because it assumes that this pardon will be needed in 50 years time. A real solution will create stability without the need for intervention. I recommend we as a democracy enforce the government take control of money printing and we start printing our own interest free money, effectively making the current note in use, useless. This means all debts will be erased automatically since the old note (which we use right now), wont be valued anymore as money. And that holds no weight against anybody, because as I've stated previously, the money we owe didnt belong to anyone before it was printed and given to us as a loan. That's the short version in a nutshell. More tasking and community changes should probably take place as well but that's a long discussion, so I'll save it for now.
Mark: "Ask not for whom the bell tolls. It tolls for thee."
why are the George bush spech extracts in black and white when we had colour when he was in power, and when these speeches were broadcast in colour ? Editors do this all the time and I hate it.
Every 80 odd yrs they is a depression we are over due thanks to money printing.
An excellent documentary, but..... several important items were missed, and here they are.
1) People were unable to pay for their homes, (sub prime mortgages) not only because they had lost jobs, but because their payments were not fixed. If your monthly mortgage payment goes from $600 to $2,000 a month after the fine print kicks in, you won't keep your home. This doesn't mean people were not lent money they couldn't afford, only that they were suckered for a short term money grab. (the new American dream) All the talk about keeping interest rates high in this documentary is a joke. Since the economic collapse of 1929, money is now based upon your own labor. (debt) Since no one is backing the currency with any 'real' investment, why would anyone pay interest on a loan to begin with? Interest is the ultimate inefficiency in economics, and reinforces the status quo for the elite. (Rothschild family - estimated value 500 trillion dollars)
2) The word 'derivatives' is entirely absent from this documentary. These 'puts', 'calls', hedge funds, etc are the black box(no paper trail) of the banking industry, and empowered the corporate world to make short term profits, at long term expense to those they had sold them to. (taxpayer investment) Ironic that taxpayer money is now used to bail out the very banks that robbed the people to begin with. Just ask how many billion dollars of bailout went to pay bonuses to executives who help plunder the people for their own greed.
3) 'greed' is the reason that capitalists resist the idea of regulations, because it might impede their level of insanity regarding what they want, from what they need.
Ultimately, capitalism will only lead to global slavery. This is why the corporate manufacturing moves to countries like China, India, and Mexico, where they will work for 10 cents an hour just to put rice on their table so their family doesn't starve. If capitalism is so great, how does 1st world countries expect to compete paying $30 an hour? Either China gets unionized, or North American, and Europeon people will take a major cut in wage. (take note of the destruction of unions already occuring in the U.S.)
In closing, anyone who truly studies the history of money soon learns that humanity must change our collective value from greed to enlightenment, (wisdom) and that a paradigm shift in thinking is needed, or humanity as a whole will continue to suffer the same mistakes repeatedly, because we are unwilling to learn from them! Live long and prosper everyone.
Scary .... but this is happening all over the world, who is responsible???? The corrupted politicians all over the world !!!
if this bubble bursts the whole world will go in to depression, let hope and pray it will not happen.
This is a decent film, a good introduction to the financial crisis and should give most people the impetus to start questioning the whole global system. Questioning the whole system is hard to do though because there is so much propoganda in the mainstream press and media
Personally I think we should apply the reganism and thatcherism that was so successful in busting up all the unions and apply it to the banking and finance industry, break them up and put them into public service where they belong.
10.000 billion dollars in bailouts - more than the US cost for the first world war, the second world war, the Korean war, the Vietnam war, the Marshall Plan, The New Deal AND the moonlandings..
The next time anyone says "Capitalism is the only thing that works!" - I'm going to tell them this and then punch them in the face.
It's really sad for me to see how much ignorance there is still around.
Please guys, take the time to educate yourselves in free market economics, philosophy, history and so on. It is hard, I know. And it's kind of embarrassing to go back and read your old comments once you have educated yourself and see how naive, puerile and plain wrong you were. But it's worth it.
I am not going to comment on the many idiocies I have read here so far.
That would take me a life time, which I can't spare, sorry.
Just one thing for the RBE guys. Hopefully you will learn about real life and individualism and recover your senses before you feel compelled to "dismantle" ( AKA known as mass murder ) "society" just because you feel it is too inflexible and in need of a change in paradigm ( forced by lunatics like you, of course ).
Sad, really sad.
all the answers tried - I have seen them in Argentina during the 90's. I have lived them. what happened there in the year 2000 is going to happen in a global scale - because it was tested and it was succesful. Argentina - a land with incredible quantities of inmigrants . a small europe from Buenos Aires to the south. - You still have to witness the reconvertion of debt to new believers. people that had to live in the streets for a few months or years and now is given the opportunity to RE-insert themselves into the system. the worst converses. and even if they had to eat **** for some time. they will believe it was because of ''bad luck'' not because they were manipulated and treated like **** without knowing.
2012: the year when power shifted from ****heads profiting on financial speculation to the REAL PEOPLE that do or perform REAL PRODUCTIVE WORK.
This is one of the few documentaries that expose the truth. The tragic thing is the facts are not some hidden conspiracy, they are the topics of nightly headlines. The government told us they were going to do this. We all knew the economy was sucking after 9/11 and that the government was boosting housing to 'stabilize' the economy.
What is tragic is that everyone would rather think it is some secret trick by a few bankers that has brought the world to it's knees. It's not a conspiracy, it's stupidity. That is the frightening thing. And all the people in the public who viciously attack this viewpoint in defense of their dear leaders who they have never dared question. Barney Frank is a predatory lender. And he was doing it on behalf of the public.
Now people are giving the government another free pass. They are saying that it doesn't matter what laws banks had to follow. It only matters what they did in response to those laws. No one is willing to question the effect of the government intervention in the market itself. And then... they ask for more government intervention to fix the problem that government intervention caused. The crisis is in our minds. That is what makes it so dangerous.
this looks like it was the project of some film student. One with an IQ of about 90, and a drug problem. If you want to see a good documentary about the debt crisis watch I.O.U.S.A ...its also on this site.
This is a white wash documentary....warning!
TECHNOLOGICAL UNEMPLOYMENT
Why does no one talk about this? Robotics and Computers AKA automation is replacing all our traditional AND service economies!!! The old jobs WILL NOT RETURN... they are now in CHINA. Besides, why would ANYONE want to be a robot in a manufacturing plant, when we have robots to do it ( This the automotive industry, remember all those robots building cars? Google ROBOTS on youtube and you will be BLOWN AWAY by how incredible automation have become.
You can throw money after unemployment, but the point is all those jobs are now AUTOMATED or in CHINA...
So, we can either start thinking about TECHNOLOGICAL UNEMPLOYMENT or ignore it and wonder why the world is falling apart.
I think automating everything BORING is a blessing not a curse !
But, there is still REAL work to be done... like Solar Panels, Wind and gardening and connecting with nature again. Humans act like ALIENS and think they are not part of nature... this is crazy!
I'm an under-educated pseudo-intellectual (which means I'm dangerously stupid instead of JUST stupid) but it seems to me that one of our most overblown fears could just as easily be a convenient solution to a baleful of current economic woes: Social Security & the Baby Boomers.
1. Repay what has been borrowed from SS.
2. Encourage retirement with the use of incentives (2 to 5 years of modest tax breaks) so the Baby Boomers on the cusp (those who still feel financially unable to retire) can retire NOW!
3. Millions can get back to work as a result of the newly created job vacancies and start paying taxes again.
Oh yeah, and legalize weed...
The comment feed below is wonderful! I encourage anyone (regardless of the above documentary that I haven't even watched yet because this dialogue was so engaging) to read/scroll through these comments. Many commenters are incredibly educated and what's most important - their differences in opinion are genuinely smart and well-thought out. Any reader will be allowed sort through not just one smart mind in regards to our economic situation, but many!
First, just because people are right once doesn't make them right for everything in future, that is the ridiculous fallacy underlying the argument of this film, appealing to the authority of the past and over generalizing based upon one anecdotal data point (BRING MORE DATA OR SHUT UP!)
The issue is that the bail outs have been so small in comparison to the kind of money it takes to create a bubble that the claim made by this video is pretty much just stupid; if the bailouts happened every year or more, then you'd have something, but they haven't. (Worth noting, the US military spending might easily be seen as the main bubble that has been driving the US economy for 50 years.)
To create a new bubble that would move the economy like the housing market did we're talking about several trillion dollars in one shot or a steady, as in yearly, boast of say a quarter of a trillion to a trillion dollars a year for a few years running; to move the world economy, maybe $5-10ish trillion a year.
The issue with the logic here is the misunderstanding of the scale of the economy. US GDP is about $13-15 trillion a year, to get it to notice something is going to take more than one or even two $700 billion bumps, one every year or two every year for a few years, now your talking about something, world GDP is like $60 trillion, btw.
The truth is that this video is a libertarian polemic against the debt. Which is fine, but it is dishonest about it and inaccurate.
Here's the problem with libertarian arguments about the debt: The argument is that national debt is a risk, it is a drain on the government (that is tax payer dollars) and must go away.
True enough.
The problem with that is that most of that debt is held in the US and is part of the economy. The loss of it would be like closing a bunch of factories. People would lose their jobs. Sure, I agree that is a pretty messed up thing, making taxpayer interest payments the source of profit for corporations -- but that is less than a half the debt, maybe around quarter actually, but it gets complicated, so let's stick with half. (Incidentally, less than 1/3rd of the debt is foreign owned, but that is also pretty messed up, no matter how much the amount, because US taxpayers, in paying interest, are paying it to foreign investors/governments: Not exactly cool.)
BUT, the majority of the debt is either retirement investments (so we are paying interest to retirees who invested in the US) or actually owned by the US government.
Yes, that's right. Read it again, it's true.
No one talks about this last part, but the Federal Reserve and other government entities own about half of the US debt.
Look it up, I'm not lying and I'm not wrong.
So, we're actually in debt to ourselves, like we're borrowing from our own accounts.
THIS IS WHY ALL THE HUB-BUB ABOUT THE DEBT IS A LITTLE BIT SILLY; we have more important things to worry about, sure we're 50% of our GDP in debt, but at this point we need to get the economy booming again, we need education, 1st class infrastructure, national optimism, etc. not a decade of paying back money. If the economy, and by that I mean the middle class, gets to cruising again, GDP will go back to raising $500 billion per year like it used to, and our debt problems will become much easier to deal with. So, to heck with the debt, we need a job, then we can pay off that credit card, until we get good work, we need to eat, take care of our health, our house, etc. To worry about the debt now is like worrying about the hospital bill while you're laying in the road dying.
Besides, no foreign government owns more than 20-25% of US debt, and remember we have like 11 nuclear aircraft carrier fleets, nobody else has more than 1, so no one is going to come knocking on our door trying to collect anytime soon.
Essentially, here is what is wrong with libertarian ideas in general:
This is not the 19th century and even in the 19th century when things were as unregulated as they want to make it there were problems.
These folks might point to earlier and earlier, the problem there is the economy of say the 17th century England is certainly less complex and less regulated (although, there were all sorts of regulator forces that I doubt any of these people know anything about--livery companies). However, the monarch had enough power to make the economy a state run economy. But also, those cultures were very very different. Lots of things do not match up, to say nothing of the fact that the scale of things don't map onto each other at all.
Also, you want to know about the last time conditions were like what the Libertarians are calling for, just before the Great Depression and before that it was the era of the Robber Barons in the last half of the 19th century. Both periods of great poverty for most and great wealth for a few, the funny thing is today, in some ways, things are WORSE.
Listen, the world is too complex. Going back is simply not an option.
The market DOES NOT WORK UNREGULATED. It does not work like Darwinism and we can't simply say that God will see to it that fair is fair.
If there is a God, he clearly isn't giving us what's fair but seeing if we'll produce it for ourselves out of what he gives us. And if there is no God, well same difference, we need to help each other out or when we ever need help we have nothing to say.
All a wide open, unregulated market will do is let the rich and powerful become more so. It will stifle creativity as monopolies form and destroy the middle class as most are forced into poverty and a few manage to escape into the wealthy nobility. It's like letting your cat have free reign over your fish tank or letting a lion lose in a roomful of children or letting a dumb, spoiled by privilege, greedy bully do whatever he wants.
Sorry, but I know some stuff, obviously, and Ron Paul is wrong, and worse, he has followers who don't know what they should know, but think that they do.
Study history.
Study politics.
AND study economics.
It is about what makes sense, not what we wish were real.
Stop oversimplifying in service of your ideology.
wow just watched this video .....and been folowing the latest on USA bailout s*** happening with Obama
ITS HAPPENING ALLOVER AGAIN BETTER GET YOUR MONEY OUT OF THE BANK INVEST IN SURVIVAL EQUIPMENT AND RUN TO THE HILLS TO WETHER THE STORM THE S*** WILL HIT THE FAN
I just finished watching this video and my personal opinion about it is that this video makes a lot of sense. It describes what we face up in todays days...recession coming mainly from Bush's actions and furtheron carried by Obama's actions. There are other parts not mentioned like the credit cards debt, the black money market and etc...but the things said in this documentary make sense. I also read some of yours posts and I respect all of yours opinion but theres no why offending some posts or similar to that; each person perceives things differently. As far as I saw, there was a post from a persona who was not familiar with economics studies but did a very good apolitical point. I would also say that this world would have to melt down before a new world would come. It is really sad to face up with the current situation happening in Greece, Portugal, Iceland, Spain and GB also. I live 30 min far from Greece and believe me, when I go to Thessaloniki, it doesnt look like these guys are in deep recession. It is just foolish... and I would stop here :)
Nella
I've watched a total of about 0 minutes and I think it's one of the most interesting Docs I've ever watched!!!!!1
This is obviously a Swedish documentary, hopefully it won't be as uncomfortably bias as other doc's on this site :s
The big problem with this information is the huge amount of information that is so conveniently left out.
It is not ONLY that we had a "housing bubble."
This film doesn't mention how in America, we had thirty years of "Reagan" -era trickle down. With Americans seeing that the best paying jobs went overseas. Even people with double Masters' degrees saw it happen, as research positions went over to Singapore and other Pac Rim countries.
Meanwhile we had massive immigration from people from the nations south of our border.
Americans were not seeing an uptick in wages, and they were faced with unemployment and living on the margins of their credit cards. And the things that someone as conservative as Eisenhower did back in the fifties, building the infra structure, building bridges, building community hospitals and community educational centers -that is now considered to be "socialistic." But in the Fall of 2008, our government was loaning nine to thirty trillion bucks to the Big Financial Firms - who have used worthless collateral to "pay it back."
I love all this financial crisis cos i got no money anyway so the only way is up biatch!
Not the best doc I've seen on this, or other related topics, with that said it's not bad either. It does not come to a nice conclusion, it's a bit choppy in the connections it makes.
Nick there is a lot there, but the last paragraph says it pretty good.