Inside the Meltdown
I was recently talking to some friends of mine about health care reform. They had read an overview of some of the things the health care bill would do and they did not understand why people would be opposed to it. I briefly explained that people are opposed to it because it interferes with the free market. One of their responses was to point out that free market health care has failed and the government needs to step in, just like how free market financial institutions failed and the government had to step in. The Bush administration had pushed for more and more deregulation of the financial market. They said these people just couldn’t handle the freedom and nearly destroyed the economy, so the government had to intervene to save us all. That’s what’s happening in health care right now.
Now that some of the dust has settled after the meltdown, this seems to be the standard explanation people have been left with. Well it’s wrong, very wrong, and I’ve been trying to find some helpful resources for people who care about understanding these things, but just don’t have time to really dig into it. Video is perhaps the most efficient means of communicating information (though not always the best), so I’ve been trying to find videos that do a good job of explaining what really happened. It’s not easy.
Frontline: Inside the Meltdown
One of the videos I watched was the first in a series on Frontline by producer Michael Kirk called “Inside the Meltdown.” It’s an interesting video and it does a decent job of at least introducing you to the characters and giving you a sense of the layout of things and how they went down. However, in the producer’s own words, the series is primarily character driven narrative, so it doesn’t necessarily go to extra lengths to explain everything – only enough to make the drama make sense.
It’s worth watching, but do so discerningly. Why? Well, one reason is Peter Schiff. After I watched Inside the Meltdown, I watched a short “making of” video where the producer talks about the process of making the show. I was very surprised to see footage of the producer interviewing Peter Schiff – surprised because Schiff didn’t show up anywhere in the finished show. Here’s the short “making of”:
Who is Peter Schiff?
Peter Schiff is a stock broker (president of Euro Pacific Capital) and financial analyst. He has appeared on all the finance news shows. He wrote a book that was published in February 2007 called Crash Proof: How to Profit From the Coming Economic Collapse. He wrote that book before anything went down and everyone laughed at him because he said things like “The U.S. economy is headed for a crash because of growth, particularly over the last 7-8 years has been phony…” (see video here http://www.amazon.com/gp/mpd/permalink/m9NA2D6ADKBP0 )
Every time he was on the finance news shows warning people of the coming collapse he was laughed at, literally. There was a great video called “Peter Schiff Was Right” on Youtube that showed clips of Schiff making these warnings and getting laughed at from as early as 2002 – but that video has been removed from Youtube.
Schiff is a great person to interview for the Frontline shows on the meltdown. Here is someone who not only knew precisely what was going to happen, and why (at a time when no one else had a clue) – but he put his money where his mouth was. Such a perspective would be incredibly valuable on such a show, which I’m sure is what producer Michael Kirk thought too. In the “making of” clip above you can hear Schiff say things like:
All the geniuses with Nobel Prizes [didn’t see this coming]… The very same investment bankers who brought us all the dot.coms… But they created this problem [who?]
As a viewer, isn’t that exactly the kind of thing you’d want to hear more of?
So why was Schiff cut from the show? (Well, he wasn’t entirely cut. If you read the transcript you can see he has too lines in the show, but both are off camera and the show never credits the words to Schiff on screen). Here’s an email PBS received:
Great, great program.What ever happened to the Peter Schiff interview that was on “The making of Inside the Meltdown” video?
FRONTLINE’s editors respond:
Unfortunately , due to the time constraints of a one hour report, we are unable to include everyone who was interviewed.
and here’s another:
Hear they left Peter Schiff out, even after they promoted the program with his quotes. All they needed was thirty minutes with Schiff, and maybe Lew Rockwell and they would have had the full story.
These Austrian Schoolers understood what was going on long before it hit the fan (back in 2003). As it stands, they put the people on who were blind and largely caused the bubbles, the same people who are going to create the next and bring system down. I’ll pass on actually watching the video.
FRONTLINE’s editors respond:Schiff, a well known investment adviser and economic commentator, was one of many interviewed by producer Michael Kirk for this report. Unfortunately, due to the time constraints of a one-hour program, not all those interviewed could appear in the final film. The writer is referring to clips of Kirk interviewing Schiff that did appear in a video piece we produced about the report, called “The Making Of…” You can view thathere.
I can understand that. The focus of this first video “Inside the Meltdown” wasn’t necessarily to try to explain why things happened so much as it was to simply describe what happened from the inside, and so you have to make important editorial decisions to meet your time limit. But then what are we to make of all the extra footage that Frontline included on their website that they didn’t have time to include in the 1 hour program? http://www.pbs.org/wgbh/pages/frontline/meltdown/etc/sitemap.html, none of which includes Schiff’s interview?
But if the first video in Kirk’s series didn’t have room for Schiff, surely the last in the series “The Warning” did. That whole show is about how one lone woman in government saw the dangers of what was happening and tried to warn people but no one listened, and some tried to shut her up. This would be a perfect place to hear about Schiff’s attempt to warn people. But he was nowhere to be found.
Why? Well because, again using Kirk’s own words, he’s telling a “character driven narrative.” The narrative of “The Warning” was that this lone woman, Brooksley Born, a pro-regulation head of the CFTC, who worked her way up the ladder despite sexist discrimination, tried to challenge the free market libertarian Alan Greenspan to get him to regulate the derivatives market before the impending doom. So you have this great setup between man and woman and between two opposing ideologies: regulation/deregulation – and the drama ensues.
So what would happen if you threw Schiff into the mix, a true free market libertarian (unlike Greenspan) who also saw this coming? Well, you would destroy that narrative because it would become obvious that Greenspan was not really the libertarian Frontline goes to great effort to paint him as. And furthermore, it makes you doubt that Born’s analysis was right. That doesn’t make as great of a story.
So Schiff is cut.
Why the Meltdown Should Have Surprised No One
I’m not trying to paint any vast conspiracy here. I’m just trying to get you to see, at the very least, that there is more to the story than you are hearing in the common media. Grab a sandwich and something to drink and please, sit down and listen to this explanation of the meltdown by Peter Schiff:
You can read a transcript of the above video here http://mises.org/daily/3493 – and you can also download an mp3 there if you want to listen on the road.