Monday's 4 Corners program: Next on Four Corners "Overdose" - the story of the greatest financial crisis you will ever see, the one that is on its way. Have you maxed out your credit card? Bought shares with borrowed money? Taken out a large home loan believing that prices always go up? Then you may be living on borrowed time. Filmmaker Martin Borgs takes a provocative look at the events leading up the Global Financial Crisis and asks if the attempts to avoid a ruinous collapse of banks and other major finance houses may set the world on the path to an even bigger meltdown. When the world's financial bubble blew, the solution was to lower interest rates and pump trillions of dollars into the sick banking system. On the face of it this seemed the only way to deal with impending disaster, but was it? "The solution is the problem, that's why we had a problem in the first place ," Economics Nobel laureate Vernon Smith says. For him, the Catch 22 is self-evident. Interest rates have been at rock bottom for years, and governments are running out of fuel to feed the economy. He asks: "The governments can save the banks, but who can save the governments?" Forecasts predict many countries will see their debt reach 100 per cent of their Gross Domestic Product in the near future. Greece and Iceland have already crumbled, who will be next? The storm that would rock the world began in the United States when congress pushed the idea of home ownership for all, propping up those who couldn't make the mortgage down payments. The market even coined the term NINA loans, meaning "No Income, No Assets, No Problem!" Enter FannieMae and FreddieMac, privately owned, government sponsored mortgage houses. "Want that vacation? Wanna buy some new clothes? Use your house as a piggie bank!" People began to ask: "why earn money to pay for your home when you can make money just living in it?" With the government covering all losses, you'd have been a fool not to borrow. The years of growth had been a continuous party. But when the punchbowl ran dry, instead of letting investors go home to nurse their hangovers as usual, the Federal Reserve just filled it up again with phoney money. For analyst Peter Schiff, the consequence of the spending binge was crystal clear: "We're in so much trouble now because we got drunk on all that Federal Government alcohol ." If he and other experts are right, then the worst is yet to come as governments struggle to pay the debt they now owe as a result of their bank bailouts and bad investment decisions. "Overdose" goes to air on 23rd August at 8.30pm on ABC1. It is repeated on 24th August at 11.35pm . It can also be seen in the same week at 10.15pm Friday and 1.15pm Saturday on ABC News 24. Available on ABC iView for two weeks only. Oh dear. To all those who have been saying that it doesn't matter how much debt the current government has racked up, it's at least lower than other peoples', think again. And finally, the truth is getting out - the mess the world's financial system is in isn't primarily due to unrestrained capitalism and lack of government regulation. Quite the opposite. It's because governments decided they knew better than markets and fiddled with the banking and financial systems to pursue "social" policy ends. There would have been no sub prime crisis in America if American Democrats (read Labor Party in Australia) hadn't moved to force banks to lend to people who had no hope of ever repaying a mortgage. And why? Because they decided that because so many of those with no jobs and no incomes were black and Latino, then the "obvious" reason why banks wouldn't lend to them wasn't because they could never repay the loan, it was because the banks were racist. Thus the critical amendments to the Community Reinvestment Act were passed by the Democrat controlled Congress and signed into law by Bill Clinton in 1995. These required banks to prove that they had made sufficient mortgages available to mandated zip codes that covered poor and disadvantaged communities. The rest is sad (if fucking predictable) history. Kevin Rudd, you arrogant and stupid fuck, it wasn't neoliberalism that caused the problem. It was politicians like you who thought they knew better than anybody else and who thought they could intervene in the market without perverse and unintended consequences. Fuck you. Fuck Labor. | 
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