During a wide-ranging interview with DailyFinance at AOL
headquarters in New York City this week, Stiglitz, who served as
chief economist of the World Bank from 1997-2000 and is currently
University Professor at Columbia University, explained how the
availability of cheap money (thanks in large measure to former Fed
Chairman Alan Greenspan), combined with outright mortgage fraud
and deceptive and predatory lending practices put millions of people
into homes they couldn't afford and caused real estate prices to
skyrocket. That created a bubble that would inevitably pop.
My comment
Deceptive and predatory practices are also found in Singapore. They
have to be addressed by the authority.
This is indeed a failure of free markets & Capitalism when big business colludes with Capitol Hill. But the law of nature will yield punishment on those evil doers. Just a matter of time, like in Japan.
ReplyDeleteI think we have targeted the shrimps, ikan bilis, anchovies of the industry (eg. the insurance agents) for too long.
ReplyDeleteDo you think this strategy worked? I think it didn't. Cos the insurance corporations can replace agents faster than we can change underwear.
We need to put in place measures that targets the materminds behind these poor-yielding insurance schemes, ie the insurance companies. We need to make it more costly for them to replace agents (agents who are honest but bring low margin sales), reduce the over-saturation of agents, so that insurance commissions and costs can come down.
Hi Redstar, unfortunately many of us have been brainwashed by the corporate liberatians into thinking that free market is rewarding theft, collusion and zero regulation on their power or their size. Please read http://www.pcdf.org/corprule/betrayal.htm
ReplyDeleteand wiki on free market to understand that classical free market meant quoted from wiki:
"free of unnecessary charges" and a "market free from monopoly power, business fraud, political insider dealing and special privileges for vested interests". A "free market" particularly meant one free of foreign debt as discussed in The Wealth of Nations Alternatively, stated, it was a market freed from Feudalism and serfdom, or more formally, one free of economic rent, in the formulation by David Ricardo of the Law of Rent.
Another strategy is to target the ignorant consumers who give business to the financial sharks.
ReplyDeleteSpreading financial literacy is an area where Mr Tan truly earns my respect. I wonder how many friends he lost and enemies he made for his efforts to expose the predatory business practices of an industry that he worked all his life.
Till today, I still find it hard to understand why he is doing this.
Hi Jamesneo. Thanks for your valuable input.
ReplyDeleteThe free market model failed to work in the manner expected due to non-market forces eg government interventions and market manipulation by others. This creates market distortions in the short term but will unwind few years later.
It is dangerous when government:
- print money to create inflation to reflate asset prices
- keep interest rates artificially low for too long
- like Japan and Dubai, build artificial wealth with property bubbles, to win votes
QE or printing money is a crime and Ben Bernanke is stealing the wealth of those holding US dollars as the debased dollar loses purchasing power for all US citizens. It is a crime punishable by death in the early days of US constitution. The US economy is a goner with such unethical gimmicks.