When government solutions become the problem, too much of a good thing is often the result. In Overdose: The Financial Collapse (2010), Nobel laureate economist, Vernon Smith, argues that in the current economic moment, the solution has become the problem. Has big government created more problems in the bailout of banks that were once categorized as TBTF (too big to fail)?
The collapse of the international financial system largely blamed on the issuance of U.S. mortgage backed securities, restates that investor confidence and behavior attributed to risky hedge funds and other high exposure speculative investment, was promoted if not promulgated by inadequate federal rules on market trade. Major banks and investment institutions tied to the collapse of the global markets in 2008, have been targeted as the culpable parties in financial market ruin. Yet, some analysts suggest that omissions in federal legislation actual the source of the problem.
Although debt offers a less risky solution to long-term liquidity, the truth is that mortgage loan securities offered to consumers at a low interest rate, turned the world financial markets upside down when loan recipients defaulted on installments. Was Congress errant in its decision to allocate more tax dollars to Fannie Mae and Freddie Mac programs designed to assist homebuyers in the purchase of real estate through subprime mortgage lending institutions?
Overdose: The Financial Collapse
- ISBN 978-1-61753-212-2
- Run Time (47 Minutes)
- Copyright 2010
- Closed Captioned (CC)