The Subprime Mortgage Crisis: A Perfect Example of the Potential Benefits of Open-Source Governance in the Real World
The article: The Nature and Origin of the Subprime Mortgage Crisis, (San Jose State University Department of Economics) says,”The guilt for the subprime mortgage financial crisis lies both with the lenders who knowingly put borrowers into booby trapped mortgages and the management of Fannie Mae and Freddie Mac for making a market for such booby trapped mortgages thus giving the lenders the incentive for writing them.”
The article goes on to say, “It seems that everyone but the dimwits running Fannie Mae (into the ground) understood intuitively that a poor risk for a mortgage cannot be made a better risk by charging a higher interest rate.”
Of course its a complex problem, with many parties to blame (the article goes on to say). But if Fannie Mae and Freddie Mac had been required to post their data online where the general public could access it, some citizen would have seen the mortgage crisis coming. And if there had been an open-source forum where they could drawn attention to the problem, and an open-source vehicle for proposing a solution, or at least writing up some kind of formal complaint to the government, then the disaster might have been averted before it grew so immense.
The subprime mortgage crisis was the seismic event that set off the resulting global economic tsunami that is still in motion and still gaining mass.
Everyone knows that the top-down system of government in America is slow as molasses. And in this case secrecy and the momentum of the fomenting disaster were like a freight train increasing in mass as it moved along the track. The increasing mass was the exponentially increasing magnitude of the problem, and the tracks are a metaphor for the inability of the government to change course quickly enough to avert a disaster. The result was a financial train wreck of unprecedented proportions.
And open-source could have prevented it.
I think we should all start applying open source to existing, real life problems and disasters, and show specifically how open source could have worked in the real world to solve these problems and avert these disasters. This is the key to getting the general public to understand open source and its great untapped potential.
Open source will never become a reality unless the general public understands it. I could write a more detailed article about exactly how open source could have prevented disaster in this case. And these are the kinds of articles we should all be writing. They should be posted somewhere that people can access them as a way of promoting the value of open source to the general public.
The Nature and Origin of the Subprime Mortgage Crisis
P.S. In fact this may be a good topic for a short book: illustrating in specific and detailed concrete terms how open source could have prevented the subprime mortgage meltdown. it may be the best possible medium for explaining the value of open source.
Phi Beta Iota: Numerous individuals warned the US Government about the sub-prime mortgage crisis, including Warren Buffet, Ralph Nader, and key people within the banking industry. The Clinton Administration — egged on by the Secretary of the Treasury and enabled by really terrible judgment on the part of all regulatory agencies — not only allowed this to happen, they made it worse. However, it merits comments in the 1980’s Mark Lewis wrote Liar’s Poker and others blew the whistle on corruption across all elements of Wall Street. The US Government refuses to act with integrity because it was being paid, at the political level, to act contrary to the public interest across all fronts.