A refreshing perspective from Phil Gramm. It's not just about the banks

On Bloomberg TV last month, former U.S. Senator Phil Gramm discussed the housing meltdown, as well as, his own work to deregulate the banks.

Phil Gramm, Wikipedia

During the course of the interview, Mr. Gramm highlights "concerted government action and pressure on banks" to make sub prime loans and destructive decisions in Washington "to force feed housing" ownership.

The Bloomberg interviewer insinuates that there were as many predatory lenders as predatory borrowers. So, exactly, what is a predatory lender? I believe many borrowers were unaware of the potential risks of their variable rate mortgages. That's fair.

However, were millions of people buying more home than they could afford, or sucking more equity out of their homes than they could afford to lose; all largely duped? I never believed so and still don't believe so.

Gramm asserted that for every subprime borrower who actually got swindled by lenders, there were "one hundred" that exploited the system, i.e., predatory borrowers. There's the debate, Mate.

That millions of borrowers bought properties they couldn't afford, recklessly used cash out financing, or shouldn't have been in variable rate notes in the first place, is clear. We will debate for years which players and policies enabled the whole sorry misuse of credit. Laying the entire mess at the hands of bankers is conveniently populist, but incorrect.

If you don't have time for the whole interview, consider moving the needle to the six-minute mark.

Economics 101 for the rest of us

W arren Buffet and Carl Icahn are famous investors but fewer people may know Ray Dalio. Mr. Dalio founded an investment firm 40 years ago called Bridgewater Associates. With $160 billion under management, Bridgewater runs one of the largest hedge funds in the world. Bridgewater founder Ray Dalio, Bridgewater website I recently discovered (among 3 million other people) a thirty minute YouTube video that Mr. Dalio produced to explain fundamentals of what he calls the economic machine . This video, which he narrates has been translated into several languages and viewed over 3,200,000 times. The content begins slowly with concepts that could be embraced by most eighth graders, but progresses to explain the primary levers that policy-makers use to manage and stimulate the economy. You can find it here . There are numerous lessons cleverly and clearly explained here. Example: I hadn't appreciated why economists seem obsessed wi...

Blessed with friends on the other side

Wikipedia image This post contains excerpts from an April 10 e-mail response to a dear friend of mine (edited for emphasis and anonymity). “Dear Mortimer, I’ll say hello to the guys for you and I’ll be thinking about you this evening. As for politics, yes, we tend to gravitate toward sources that share our views. However, I also read the New York Times Op-ed pages and watch MSNBC (as hard as those tasks are for me). I suppose you watch Fox on occasion and I know you read the WSJ – so good for both of us. We try. The state-sponsored education you cite that we both benefited from, came largely from our parents' (and many others) sweat equity – translated into tax dollars – that funded the University of Wisconsin system. True, my friend. But, I'm not arguing for zero taxation, or zero government involvement in our lives. When Progressives argue in favor of entitlement programs, they'll sometimes cite Social...

Because it's not theirs to change

Freepik image This week there was controversy stemming from a publisher's decision to edit versions of children's stories written by the late Roald Dahl . The edits, whether inspired by Netflix (who according to Forbes purchased the rights to Dahl's work) or the publisher Puffin Books , sparked a public outcry and PR nightmare. The publisher curated an alternative version to the original work from Dahl's Charlie and the Chocolate Factory, (a story later adapted to make the film, Willy Wonka and the Chocolate Factory ), ostensibly to remove insensitive terms. There are several reasons why this ill-conceived, if well-intentioned attempt at inclusiveness -- a term becoming increasingly elastic -- failed miserably. I'm not discussing the evils of censorship today. Altering original art work to appeal to others is ill advised for another reason.....it's not theirs to change (and doing so can backfire). One ...

john maddente | midwestern clarity

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