Stiglitz explains how financial “innovations” caused the fall of Lehman Bros.

Nobel Laureate Joseph Stiglitz explains in this 6-minute video the ongoing financial system meltdown that buried Lehman Brothers 2 days ago. There have been huge gobs of money available at low interest rates, but it wasn't being invested in the real economy where it would have increased middle class incomes and led to sustainable growth. Instead, it was invested in financial "innovations" that were nothing more or less than evasions of prudential lending standards and controls. Highly dubious mortgage loans were transformed, the financial industry claimed, into investment grade securities and sold on the rationale that "there's another fool born every minute." Housing and other asset prices were bid up to unsustainable levels.

I had previously exposed the ugly truth about "financial innovation" here and how manic activity in the financial economy pulled investment away from the real economy here.