A lot of people blame the financial crisis on the financial system being loosely regulated, which led to banks and other financial institutions taking on too much risk that they couldn’t afford. However, that couldn’t be further from the truth. What really happened was that the US government created a set of policies that encouraged financial institutions to lend to homebuyers who were in no position to pay back what they borrowed. Financial institutions, with maximizing profit as their goal, didn’t really want to enter the sub-prime mortgage market until the Federal Reserve lowered the interest rates to an artificially low level in 2001. The low interest rate environment created the housing boom, which propelled the subprime mortgage market to grow rapidly. We all know what happened after.

Then why do so many people believe that it’s the free market that caused this crisis, especially in the early stage of this recession?

Right after subprime crisis began to have a sensible impact on the economy, the government and some news media initiated a hidden marketing scheme that directed people’s attention to the flaws of a free market economy and made people believe that more regulations are necessary. By imposing more financial regulations, the government can effectively increase its role in the economy, so people who favor Big Government would definitely support this. They wrote blogs and op-eds, uploaded relevant videos supporting their claim, and advocated publicly for more government intervention. They put their arguments in a logically coherent manner, leaving out the important facts, thereby misleading the general public.

An example: Origins of the Crisis, Fake and Real by Paul Krugman

A blog post by the Canadian Marketing Association (CMA), titled Mobile Ads in Video and Entertainment Solutions, points out several advantages of advertising on mobile phones and encourages businesses to advertise on mobile platforms. CMA believes that mobile advertising will be the reigning promoting tool in the future because of its flexibility and the growing popularity of the use of mobile phone. The graph below shows the upward trend in people choosing mobile phones to watch online videos. And that number is growing fast; mobile share of online video time watched, as shown below, almost doubled in the second quarter of 2012. Indeed, mobile advertising presents a formidable potential for marketers to promote their products as well as for companies, such as Facebook and Google, to generate revenue.

The effectiveness of mobile advertising can be illustrated through an example in this article:

“Scott Nordby, president of Innovative Real Estate Group in Colorado, said he pays online-real estate company Zillow Inc. about $340 a month to ensure his thumbnail photo and contact information show up on 10,000 Zillow-powered home listings in a single Denver Zip code. With a few taps on the smartphone screen, a would-be home buyer can call or email Mr. Nordby and his team. Mr. Nordby said he receives about 150 to 180 inquiries a month—or more than half his total referrals—from would-be home buyers who found him on Zillow. Roughly one in 10 referrals from Zillow come through calls from would-be buyers’ smartphones. He adds he’s “thrilled” with the results. Zillow Chief Executive Spencer Rascoff said people who use Zillow on mobile devices are three times more likely to contact agents like Mr. Nordby than people who surf Zillow on a traditional computer.”

Sometimes it’s easy for people to ignore the mobile ads since smartphone screens are typically small, but the average cost of mobile ads is only about 3-5% of advertising in a national newspaper, making mobile advertising still a very attractive opportunity.

Between September 1999 and February 2000, when Jonathan Lebed was 15 years old, he used the internet to promote stocks by creating numerous accounts and posting hundreds of recommendations on different forums to encourage people to buy the stocks he had already owned. And as a result, on the next day, the trading volume of those stocks surged and their prices jumped, but subsequently, their prices fell since the fundamentals of the companies couldn’t support their prices. In this period, Jonathan made hundreds of thousands of dollars and became the first and only minor in history to be prosecuted by the SEC. Many regards what Jonathan did as unethical. Not only did Jonathan post fallacious statements regarding the growth prospects of the companies he was recommending, but also he profited from his trades at the expense of the investors who made decisions based on his recommendations.

Currently, Jonathan was working at Lebed.biz, a company founded by himself. He sent out a newsletter on a daily basis recommending a stock. The newsletter typically looks like this:

On the company’s website, it documents the successes of its past recommendations but leaves out the failures, creating an illusion that Lebed’s predictions are accurate and reliable. His marketing tactics are therefore deceptive and target especially the gullible investors.

Here’s an interview with Jonathan Lebed:

Jonathan Lebed