The Argentine Debt Crisis Explained

Dennis Small on the Argentine Debt Crisis .EIR's Dennis Small sits down with Jason Ross of the LaRouchePAC science team to discuss the global implications of the Argentine Debt Crisis.







Obviously, in the bigger picture, the majority of people are still stuck in believing the current system will correct itself. While there was clearly wrongdoing by banks during the recession of 2008, few words were spoken that consumers took the loans of their own volition. Well, that's not entirely true. Many loans were packaged as such to convince borrowers they were within guidelines of affordability. Now with nearly all that behind us, and the new laws in place, mortgages are very much more difficult to obtain. Why? On top of the higher qualifying standards, the Fed is incentivizing bankers to keep excessive reserves above a set threshold. The Federal Reserve has been paying banks 25 basis points or ¼ of one percent on these excess reserves. The government paid out over $4 billion to banks in 2012 under this program. If rates go up these payments could raise to a level many times this amount. Is this a subsidy for banks and a disincentive to lend? Are banks right in back in the business of high stakes leveraging and casino risk taking?