[quote=CA renter][quote=eavesdropper] In truth, the financial institutions had shifted their focus completely, from making profits via sound financial management practices to making astronomical profits from the changing housing market. The guys who had the financial brains and education should have recognized the beginnings of the boom for what it was, but were instead blinded by the money to be had. At that point it became necessary to shed personnel who were skilled in fiscal management and replace them with those who could create new products when conditions that had created earlier boom markets became unsustainable (interest-only mortgages and negative amortization loans are two of them that come to mind) and those who could sell them.
There’s plenty of blame to go around in this mess. But the financial wizards are the ones that were supposed to know better. At least that’s what they told us for as long back as I can remember.[/quote]
Totally spot on, eavesdropper, UCGal, and BG.
As for the bolded part, I don’t think the financial wizards were blinded at all. They were making more money than they could ever have imagined just 10-20 years before. They were NOT going to stop that gravy train, and figured they would just plead ignorance when the SHTF. That’s why we have “The Crisis That Nobody Ever Saw Coming,” when in fact, we have plenty of evidence that LOTS of people saw it coming and were trying to sound the alarm many years ago. Think about it…why do you think they keep repeating the point that “nobody knew”? They are trying to get that message out to the sheeple so that we don’t go after them with pitchforks.
Problem is, if they acknowledged that they knew what was going on, they’d be in jail right now instead of sailing around on their yachts (and “doing God’s work”), courtesy of taxpayers’ money.[/quote]
CAR, I see your point, and agree with much of what you say. However, I recently saw a documentary (NOVA on PBS) that talked about mental beliefs and attitudes that could explain why at least some of the “smart guys” didn’t see this coming. It’s called “Mind Over Money”, and it’s available for instant viewing on the PBS website, or if you belong to Netflix. Here’s the description from the website:
“Mind Over Money investigates the shattering impact the recent global financial meltdown had on how economists think. Why did so few of the brightest minds in finance not only fail to predict the crash but also argue that it was impossible? With insights from experts and scientific experiments that highlight the hidden money drives in us all, NOVA explores a seismic shift in our efforts to understand the marketplace.”
I really enjoyed it, and found that it posed some plausible explanations. That being said, I do agree that the mortgage bankers themselves knew exactly what was going on, and wanted to exploit it. I was referring to being ethically and morally blinded by the money to be made by following that path. And it was too bad that the general public was still so trusting of their image of financial stewards (the wonders of advertising didn’t hurt there).
