economy – Zombies Uncensored

Maybe Life is Obscene, But Profit is Not

Stossel Show – Lies, Myths and Stupidity! (Part 2/6)

http://www.youtube.com/watch?v=Kmc7MFcymXU

In this segment of the show, Michael Medved and John Stossell discuss the phrase “obscene profits.”

Michael Medved: “One of the things that I hate is this term ‘obscene profits.’ There are no obscene profits.”

The debate over the which transactions in our lives one can morally profit from has been going on for some time and is not likely to be settled any time soon. Just look at the history of morality in moneylending–it will still be debated thousands of years from now.

The term “obscene profits” is usually applied to oil and health insurance companies, or basically any business that supplies things necessary for survival. “Obscene” in these cases means they made a lot of money in an area some believe it immoral to seek profit.

Profit is one of those words that people have multiple definitions for and as a result, debates and discussions often become convoluted because people end up arguing about the morality of profit, without first clarifying what profit means to them.

Generally profit is viewed as experiencing a gain from a transaction. I know of no voluntary transaction between people that won’t result in at least some type of gain or profit for both sides. Even acts considered selfless result in a profit of well being, so simply profiting from an action isn’t inherently immoral.

I slightly disagree with Medved when he said there are no obscene profits. Theft is an obscene profit, when only one side gains from a violent transaction. Medved’s use of the word profit was meant in terms of a free and fair exchange for goods or services. There is no such thing as an obscene profit when it comes to non-coercive transactions between free people.

Non-coercive is the key word here. People that use that term “obscene profits” often believe profiting from selling goods or services necessary to survival is a form of coercion. Since life forces you to eat, you must buy food from those who sell food if you do not produce your own. The people offering their goods and services are then equated with being uncaring.

Business doesn’t determine the rules of life; nature does. Call life obscene if you want, but don’t blame the people that make life a lot more bearable.

UK Post Office Resurrecting Freddie and Fannie Debacle

Just keep piling it on until the entire edifice falls down.

http://www.youtube.com/watch?v=bs5mt5Bsvck&playnext_from=TL&videos=2If1BOIF2ds

The UK is working on creating its own version of a Freddie and Fannie debacle of low rate mortgages to increase home ownership. The interesting part is that in the UK the method of delivery is not a (GSE) government-sponsored enterprise, but the Post Office.

The Post Office plans to shake up the mortgage market in the UK

Despite the Bank of England base rate remaining unchanged at 0.5pc, Britain’s biggest high street financial services provider – with more branches than all the banks combined – has just cut its mortgage rates for the fourth month in a row. Better still, the new deals are fixed rates for up to five years and some are market-beaters.

This isn’t just good news for hard-pressed homebuyers but for many others too, particularly people in rural communities, because the company in question is the Post Office.

What? You didn’t know the place where you buy stamps also provides homeloans? Well, you do now.

So I looked at the UK Post Office web site to see for myself. Loans, very similar to the ones the US is still struggling with, are being touted as “Rate Designed For You” by the UK post office. At least the banks/Post Office are requiring 20 percent down, so it’s not as bad as some of the sub-prime mortgages were in the US.

2 year fixed rate

3.15% which is a fixed rate until 30/06/2012, then

3.49% variable, which is the Bank of England Base Rate plus 2.99% for the rest of the mortgage period

Government backed loans, low fixed rate to attract buyers, followed by variable interest rates–what could go wrong?

Back to the original article about the Post Office loans.

The new deals are part of the Post Office’s bid to reverse decades of decline – and its success could help revive commercial life in many villages, which might otherwise fade into dormitory suburbs.

It plans to follow up with a new current account and first-time buyer mortgages as part of its strategy to provide a viable alternative to the high street banks, whose reputations have been tarnished by charging borrowers too much and paying savers too little.

I had thought the lessons of government backed mortgages were clear by now. When governments back loans, it encourages risky behavior. The artificial demand for loans creates a bubble, the bubble eventually pops, and people are left upside-down in mortgages. I thought it would be at least a decade or two until this idea reared its ugly head again.

Thanks to The Modern Mystic for pointing this out.

Should I Slit My Wrists

I struggled for some time to understand what went wrong in the economic collapse.

I listened to a great deal of debate about who should be blamed.

The suspects for the collapse were speculators, mortgage bankers, the FED, Wall Street, Washington D.C., and borrowers.

It turns out the collapse was caused by all the above.

Here is Peter Schiff at the Mortgage Bankers Speech from 2006, with one of the best explanations for the crash before it happened.