Mil-observer,Oramzi and Col rouge
Have you seen the 'fora' dicussion I referred to in a general discussion topic including Arthur Stiglitz, Hernando de Soto discussing the sub prime/derivatives markets?
they answered most of your questions.
The derivatives weren't regulated because Greenspan thought that reputations would keep it in line.
Many economists including the two mentioned have said that the derivatives market was a free market(perhaps the only one ever). The problem is that there is allegedly contracts in the system of face value of 12X the world yearly GDP. There was no regulation ie there just isn't enough money in the world to satisfy these contracts. Watch the show very informative.

One of the worst article written, blaming Free market for the current credit crisis is someone living in a fairy land

The reason for the crisis is the Housing bubble in the US and europe. The fact that there was a "Bubble" (artificially inflated) means the free market was not at work.

So what caused this bubble
- Greedy people, some people are paid for the amount of loan they originate, and these people gets paid without getting the consequences of the loan, these people needs to be regulated. However, this is not a problem in Australia. The reason is the bank will only lend 75% or ask for the buyer to pay for mortgage insurance and there are low deflaut rate in Australia. So what is the problem
- government regulation, the US government wanted to restart the economy after WWII, then after Vietnam, then after 1987 crash and 9/11. But instead of spending their own money, they want the public to foot the tab. So they legislated the following
a. A bill which require bank to lend to minorities
b. require bank to lend without recourse, ie borrower can walk away anytime and leave the bank with the house and the loan

The facts are socialist caused these mess, by allowing loans to be make to people who cannot repay, and by removing the obligation for people to be liable for their bad decision, so eveyone tries to borrow as much as they can, which fueled the price rise, while not having to worry about any responsibilities.

Add these to the fact that some people are paid for whatever loan they write, means we are in this mess. and investors do not want to give the money freely now.

Free market is not to blame, Socialist reform program by the government is. Ownership of houses to drive price up is good, but it is only good if the borrower had through about it and is penalise if they cannot repay

Well dab-nab-it dovif2.
If the socialists caused this mess, what was the neo-con free market George Dubya doing these last 8 years?

Next you'll say it was all Clinton's doing, or the Oz Labor crew 12 years ago. I'll let you in on a secret, the real ones to blame for all this mess are those damn aliens from planet boo-haha - if I catch one I will demand all my money back, with interest.

Q&A

Why don't you bring some facts and logic

Why was property overvalued? Why was there a bubble

The market does not create a bubble, the banks don't like bubbles, if Housing market rises by 20% it does not benefits the banks, the bank still only get their interest rate

So what causes the bubble?
Socialist government intervention

FD Rosevelt after WWII Richard Nixon after Vietnam, Ronald Regan around 1989 and Bill Clinton and GW Bush around 1997

they created government policies to drive the economy (and increase people spending) by

a. giving little downside for people investing in property (non recourse loans)
b. forcing bank to lend to groups who might not be able to repay

This drives the economy and artificially increase demands for housing, which led to the Property bubble. These are facts on what happened, if you want to make any point, bring some facts.

Or you should not even post in this forum

dovif2

Unrestrained greed and rabid consumerism (no matter what ideology you subscribe to) are the cause.

People and institutions who say I want it and want it now are the problem (whether that 'it' is a house, plasma TV or an exaggerated profit or share dividend) - despite the fact most people can't afford it and despite the fact some institutions will lend to them.

Governments and their econometric policies can do something about it. However, it appears that the last 8 years or so of conservative policies have not done anything substantive (despite the warning signs) to soften the landing. You want to blame Socialism - I think that attitude is misguided.

If what I say disturbs you, so be it ... but please, who are you to deny me from posting on this forum?

Unfortunately, Q&A is absolutely right. Governments have done nothing to curb the greed and consumerism, All they want is growth, growth, growth. It is all coming to a screeching halt. Latest figures from China show that in only a few months, they have gone from an annual growth rate of sixteen percent to virtually zero growth. That is going to absolutely knock the socks off all our bloated resource companies and cause massive reduction in numbers employed in that sector alone. We are not just headed into a recession, we are staring into the face of a full blown depression. In the meantime, our beloved PM and his henchmen are busy squandering the surplus that was carefully built up by Howard and Co and counselling the needy and the greedy to spend the $1400 handout as quickly as they can.

The sooner we get rid of this mob of incompetents, the better.

David