GFC - Blame for Toxic Mortgages

I've heard a lot of people bagging consumers for their choice in crappy mortgages as the prime reason for the GFC and whilst they have some blame to share, it's been clear that the banks hold a responsibility - and this piece in the Economist with Robert Reich sumed it up perfectly:

DIA: In America, there's a lot of anger aimed at corporate executives, especially in the finance industry. But by buying houses they couldn't afford, weren't American consumers complicit in fomenting this crisis?

Mr Reich: Yes. But the important question to ask, in terms of avoiding a repeat of this fiasco in the future, is which of these parties -- financial executives and mortgage lenders, or american consumers who took out over-sized loans -- were in the best position to know the risks involved and to avoid them. Many consumers had no idea what they were getting into. Mortgage lenders and the financial industry behind them had every reason to know.

One has to wonder how much impact the trend to on-sell mortgages had in this problem as many of the retail banks no longer maintained an on-going interest in the mortgages they granted. In fact, there's some talk that banks ONLY interest in the mortgage was for the $800-odd in fees levied at the start of the loan - everything after that was on-sold to a third (or as we've discovered, 3rd, 4th, 5th, 6th ...) party.

Thoughts - Higher Ed

A recent thread on LP discussed Andrew Morton's critique of Universities Australia's economic argument RE: the benefit of a University Education. The basic line was that Uni's are good because of the economic benefit they bring so we need more funding.

Of course, such a narrow focus for establishing credibility was always going to bring about a pile of criticism and as one LP commenter noted:

Education is also about intellectual enlightenment and personal empowerment.

which leads me to my gripe, namely the problem with our faux University system.

Since the late 80's when all the CAE's were converted to Universities, we've seen a gradually watering down of the role of our uni's from leaders in academia to churn factories for voc. ed. and in doing so, the old 2 year diploma's have been converted into watered down, 3 year degrees. In the process, the cost of education has gone up impacting on both Uni's and thus students.

Isn't about time we acknowledged that the majority of our uni's are no longer focused on academia and are instead producing viable fodder for industry? If we did that, then surely we'd be better returning to the CAE model where students wishing to gain pure employment could simply study a 2 year diploma - focused on their area of expertise - which would cost less to provide and thus burden the student less in the long run?

This would leave a small number of institutions to return their focus to what they did best - research (or prepare students for a life in academia). Yes, a lot of these students will go on to lead productive life in business, but unless the focus remains preparing students for research instead of preparing them for a job then, alas, I think we're all doomed (or at least, the quality of our education system and the future of pure science is).

Thoughts: A Time for Infrastructure

At a time of growing unemployment, resources prices falling and interest rates at near record lows, it beggars belief that anyone wouldn't agree with MASSIVE infrastructure spending ... NOW.

Cheap labour costs, affordable materials and a return on investment second to none - why haven't we seen/heard calls for substantial, nation building infrastructure projects? Some obvious suggestions:

• Stand Gauge Rail ACROSS Australia
• High Speed Rail between Capitals
• Massive Solar/Renewable Energy Generation Projects
• Hydro Plant on Burdekin Dam

These need to be on a grand scale with a 20-30 year payback on them but in doing so, not only would they instil confidence in business and ensure future productivity, but they'd also fill most with a sense of national pride (a la Snowy Mountains Scheme) which would further lift us out of the doldrums.

Thoughts: Internet's Impact on Newspapers

There's been a lot of commentary recently about how newspapers across the US are being forced to close down due to a lack of revenue. The most likely culprit they see for this is the internet.

Now, whilst I do agree that the internet WILL steal some revenue potential, it's the lack in readership that's the biggest cause and, I'd argue, that's got NOTHING to do with the Internet. No, I'd offer that it has been the media's obsession with faux news, gossip mongering and news by media release that has led to their demise. You see, there's only so much of this shite that you can take so what do people do to find real news about real events that hasn't been spun by someone.

You guessed it, the Internet.

If the media dropped this guise that they're presenting news rather than selling it, then perhaps they'd see the real problem here. Get rid of the Today Tonights, A Current Affair, Fox News, "The Sun" - shit, even 60 minutes is full of tripe these days - and return to proper journalism then we'd all be the better for it.

Problem is, I suspect they've all probably too late - we've found a better medium and getting us back will be near to impossible.

UPDATE: A great article posted by ex-ABC journo, Chris Masters, argues a similar case to mine - that only NEWS done properly will solve the financial problems of the trade.