“But is greed really a human constant?
If by greed, the critics of markets mean an irrational, overweening desire for gain, then competitive markets weed this kind of behaviour out over time.
You are unlikely to stay in business for long if you can’t acknowledge real risks because all you can see are big dollar signs.”

However, one *can8 remain in business long enough to cause very, very big problem. What the elites did was to run the system into the ground, because they didn’t want to stop, because it got them very large piles of money.

Greed is what made the bankers knowingly lie to their risk-management software systems. Greed is what made rating agencies slap AAA ratings on garbage, rather than standing up to the customers requesting this and turning down the fees. Greed is what made bankers give half million dollar mortgages to people who couldn’t get that kind of money from people who break legs.

The global pool of money doubled rapidly in this decade, due largely to improved economies in the developed world, oil, etc. Money managers wanted safe investments that gave a decent return. Mortgage backed securities were promotes as a safe investment with a good return. There was huge huge huge demand. American bankers and the real estate industry served that demand by generating millions of garbage mortgages.

It had nothing to do with poor folks. The game was to generate as many mortgages as possible, as quickly as possible, and rapidly bundle them and pass them on to the giant institutional investors. Short term profit, pass the risk on to other people.

The mortgages were cheap to drive volume, not to serve the needs of poor folks.

Shows like “Flip That House” didn’t arise due to demand from poor folks.

You’re smarter than that.

Maybe unfettered capitalism doesn’t create a particularly stable environment after all, huh?

Maybe not, but it sure would be interesting to find out. The current system of highly fettered corporatism clearly doesn’t seem to work very well, so maybe it’s time to try a separation of economy and state.

I don’t mind minor libertarian leanings, but to act like greed isn’t an element here is kind of naive.

You have misunderstood Julian’s original post. The question is not if greed is “an element”, for of course it always is. The question is if greed is an explanatory element; that is, if greed can work as an explanation distinguishing this situation from others. It cannot. Since greed is always in the background of human behavior, some other explanatory factor must be used to distinguish the causes of this crisis from cases of non-crisis. People didn’t suddenly become more greedy overnight; something else must be at work here.

Nice try, though. Maybe unfettered capitalism doesn’t create a particularly stable environment after all, huh? I don’t mind minor libertarian leanings, but to act like greed isn’t an element here is kind of naive.

The greed explanation does indeed track the way many people responded, but didn’t have to respond. But from a system wide perspective, this still seems pretty empty; there will always be smart greedy people. As long as a system consistently offers people the opportunity to profit excessively at others’ expense, I expect people to take this opportunity. If some kind hearted people turn down these opportunities, less morally virtuous people will be there to take their place. The solution does not lie in pointing the finger at the immoral, but in structuring a system where the immoral do not profit excessively at others’ expense.

I take pursuit self-interest not as a virtue or a vice, but as a given; surely this can be modulated through character, but the less work society has to do through moral suasion, and the more that is done by wisely structured systems of material incentives, the better.

Duh!