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The financial crisis was caused by....
Economics

dkturner
Oct 01, 2009
9 votes
5 debaters


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Capitalism


brivapor
Oct 01, 2009
0 convinced
Rebuttal
grrr tiger

 
frankiej4189
Oct 01, 2009
0 convinced
Rebuttal
Which financial crisis? Not to be nitpicky but aren't many of the 1st world nations currently going through financial crisis? Is this debate focusing on an individual nation or the world as a whole?

If we're debating the US Financial crisis then it was caused by (so i've been told)....

-Greazy housing markets giving out flexible mortgage rates

-Dumb people believing a flexible mortgage rate was a good idea

-A plethora of bad investment ideas

-The destruction of the US Dollar due to horrendous overspending by the Bush administration

 
vague
Oct 08, 2009
0 convinced
Rebuttal
I love this financial crisis talk.

Everyone is freaking out about the Economy...then getting into their car and driving to work..

Give me a break people. If you really think its bad now...just wait a few years..maybe something truly bad will happen.

We need to wake up and realize that instead of crying about everything..maybe..just maybe...doing something about it would be the more productive approach.

I realize that there are places around the world getting affected by a downturn in economic production. This is a trend that happens...go look at history....oh and by the way this wont be the last time you see economic troubles. That is the nature of an economy...it fluctuates.

 
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Investor irrationality


dkturner
Oct 01, 2009
0 convinced
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Not arguing the case (yet), but here are some instances of investor irrationality. Copied from an email exchange I had.

1. The belief that one can make money in derivatives. Derivatives are a zero-sum game. They have their uses in risk transfer, but as an investment tool? Dangerous at best.

2. The belief that gold and to a lesser extent silver are worth something. These are actually two of the most worthless minerals on earth.

3. The capital market theory. A straightforward analysis of the basic equation, r = r_f + beta(r_m - r_f) + alpha, will reveal that it is based on two contradictory assumptions. I won't go into detail, but you can work it out by noticing that risk equals probability of default over probability of payment.


 
dkturner
Oct 01, 2009
0 convinced
Rebuttal
Rebuttal to: frankiej4189 Show

I certainly don't think investor irrationality is restricted to the US, if that's what you're asking. If anything, Britain's investors are less rational than the US's, and they're paying a correspondingly higher price.

All the contributing factors you list are valid, but I think the most significant chunk of them could be said to stem from investor irrationality.

 
dkturner
Oct 01, 2009
0 convinced
Rebuttal
Rebuttal to: obviouschild Show

1) Derivatives are always zero-sum. That means that for every gain, someone has lost proportionally. Expected return on investment? Zero. The only sensible use of derivatives is to convert a floating rate into a fixed one and vice versa.

2) Gold is far less useful than copper. It's over-valued for aesthetic reasons. We think it looks pretty. That's a pretty poor reason to pay $1,000 per fine ounce.


 


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