Bronwyn,

The Democrats started it with offering loans to people that couldn't afford them, and the people that took the loans shouldn't have as they couldn't afford it. Then bankers sold these dud loans to other banks around the world and it all folded in.

There is probably more to it but that is the basic as I know it, nothing to do with the conservative decade.

Still we all just want it better... Mr Rudd and Mr Obama are not nearly experienced enough for this...

“We need smaller Govt and less regulation.”

Arjay and Col, how do you figure that?

Surely we need better regulation, with the necessary government muscle to enforce it. Whether that actually means a smaller or larger government and more or less overall regulation is beside the point.

Surely the most important thing is to devise the right sort of regulation and enforcement regime that keeps the potentially dishonest honest!

This is MUCH more important that cutting down the size of the bureaucracy.

Hasbeen

"What twaddle Bronwin, the financial problems are based on a US lefty government, encouraging banks to extend housing loans to people who were likely to be unable to repay those loans unless their economy kept booming along."

'Twaddle'? Well, glad to see it's got you digging so deep, Hasbeen.

To start with, your 'lefty' government description is incorrect. The government policies you're referring to were based on neoliberal philosophies - embraced far more enthusiastically by right leaning than by left leaning governments.

Poor US Government policy, particularly its extreme deregulation of the finance industry, has definitely contributed to the current meltdown, but is not in itself the cause of the collapse. It was the financial industry's predatory lending, and the rebundling and deceitful offloading of the resultant high-risk mortgages, that precipitated the unravelling.

It's very convenient to blame the victim. Those with vested interests in maintaining the status quo have made sure the finger has been pointed to those at the bottom of the heap. And people like you fall for that line and perpetuate the lie instead of looking for the truth behind what really happened.

Many loan recipients were conned with the promise they could sell their home and make a profit before the loans reset to unaffordable rates a few years down the track. Many others weren't even told that the loans would automatically reset to rates they would have no way of paying. Either way, they were deliberately lured into the housing market and conned into believing rising house prices would deliver for them.

The banks knew these loans would come unstuck. Why else would they go to all the trouble of rebundling and onselling them? We can all say these people were gullible. Of course they were, but the lending institutions in question knowingly preyed on that naivety, as greed and misplaced faith in their out-of-control risk taking completely clouded their better judgement.

Hasbeen (cont.)

Ludwig is correct, we need better regulation to ensure that these and other dodgy lending practices are never again allowed to flourish and end up bringing the system down. The extent to which these suspect mortgages have infiltrated the Australian financial system is still coming to light and no one really knows yet how badly our economy will suffer.

Returning to more of the same neoliberal financial free-for-all is not the answer, nor is relying on the mining industry to dig us out of this mess. Government money needs to be pumped into creating renewable, non-polluting and job rich resource bases. We have an abundance of solar energy, more than enough to meet all our energy needs, and the government is still allowing investment and expertise in this area to drift offshore. If the Howard Government had shown the foresight to act on this, as it should have when it first came to power, we would be in a much better position to weather both the financial and the climate change storms we're now facing.

As I said before, we need new thinking, not more of what got us into this mess.

Perhaps you could enlighten us with your ideas, Hasbeen, seeing as you’ve dismissed mine as ‘twaddle’. So far, all you’ve managed is a thinly disguised racist rant against unskilled immigrants. Not only is this sort of ‘scapegoating’ divisive and unhelpful, in this case it’s plain wrong. The vast bulk of the current immigration stream is ‘skilled’ migration, and many too from the far smaller humanitarian intake are well educated and have professional and trade qualifications. The problem with high immigration, as pointed out by Ludwig, is not that it’s unskilled, but that it adds to resource pressure more generally and to competition more specifically for what is currently a diminishing job pool.

Like Ludwig, I’d already stated that immigration needed winding back, so really, Has been, what have you got to add to the debate?

My dear Bronwyn, your selective memory is showing.

The whole system of low start loans was a darling of the left. Clinton pushed it very hard, in the US, & no lesser icon of our left, Tom Burns, introduced it in Queensland.

Now I don't think old Tom could be accused of being a neoliberal. He was roundly criticised, when some of the less prudent late starters, in these schemes got into trouble, quite unfairly I thought. He helped many more than were hurt.

These schemes have helped tens of thousands into home ownership, & are not at all bad, at times of rapid growth, & high inflation. It all starts to become a worry, when the governments, who are using inflation, in this way, then start to make war on inflation.

So now perhaps Brobwyn, you see why I accused you of talking twaddle. This particular problem was brought on us by entirely different policies than our mate Costello would, & did advocate. You can't blame the Howard government for all things bad. Well, come to think of it, you can, & do, but you are wrong, just as wrong as KRudds handling of the "financial crisis" so far.

I agree with Ludwig that there is a real danger of "make work" infrastructure projects being built in areas with displaced mining workers, rather than really needed work in different parts of the state. The last thing we need is Yes Minister type hospitals, where no recurring budges is available.

I do agree with you that there are many failings in the US financial system, & that these have driven a bad government policy into a worse result than was necessary, but the blame goes back to Clinton, not Costello.

Ludwig ,I view the economy like sport.You have a set of rules and a good referee to implement them.Too many rules and regulations destroys the excitement and the spectacle.Let the game flow freely and penalise heavily those who infringe the rules.

No such penalities have happened with our world game of economics.The rules are not even defined.World economics is in a state of chaos.There are no rules of fairness let alone a referee to adjudicate them.

In NSW we have never had more regulation and rules which limit our freedoms,yet we are more impotent,disorganised,violent than ever before in our recent history.

We need simple fair rules and people with the courage,wisdom and will to make it happen.This includes people at every level of society.In an ideal world Barack and Kevin are just figure heads waiting for the people to clarify what is really important.

The reality is that the central banks and large corporates determine policy.No amount of regulation will change that.We need a change of rules which make the interaction of capital and labour fairer.The first step is to rid ourselves of the international central banking system.This includes the IMF,World Bank,Bank of England,US Fed Res,etc.It is they who have set the debt trap and brought the planet to it's knees.