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Who is to blame the most for the recession?
The world has not seen such a global recession in a long time. It seems to have been around for ages without an end in sight. But how did we come to be in such an economic hole? And, as far as America is concerned, who should shoulder most of the responsibility for the slide in fortunes?
Could it have been avoided and, if you were in charge, what ONE thing would you have done that might have made a difference to the situation.
Constructive and helpful comments are always welcomed.
Fire away!
For me I believe it is mainly the banks and the huge profits they began to make at the expense of the rest of the economy, but one could include businesses as a whole.
Keep it sensible, folks. :o)
Yeah it was a toss up between them and the Global Financiers...I went GF...because to me, they included the Banks and Bankers...
I lost the distinction between banks and global financiers.
The idea that an American President has the power to throw the entire world into a financial recession is so arrogant that I want to grab anyone who thinks it's true by the shoulders and shake them until some sense sifts into their brain. The USA is a powerful nation--it's true. But our elected President honestly doesn't have the power to throw the entire planet into a financial recession any more than that office has the power to single-handedly end a recession.
I voted everyone. The problem is debt. All of us in first world nations spent ourselves into a very deep hole. Then we all pretended to be surprised when the bill came due. For goodness sake, enough with the scape-goating.
I think it is possible to trace this back to certain issues, but there are a number of them. A lot of people contributed to it. I think the harshest thing you can reasonably say about Bush is that he failed address the problem which had already been developing when he took office.
The real estate bubble has been developing for at least twenty years, and when a bubble that big pops it's going to hurt a lot of people. More then that, we've developed an unhealthy fixation with credit. Whereas banks and lending institutions once simply made money off of interest, lately laws put together during Reagan, Bush senior, and Clinton's presidency deregulating financial institutions allowed them to make money in a different way.
Essentially, instead of loaning only to people who could reasonably cover their loans, they would deliberately loan to people who couldn't and make more money off of fining them. Instead of defending their investment by loaning to people who they believed would made good, they relied on the law to force people into financial destitution. They would make more money off either monthly penalties, or they would collect payments for a few years and then seize the house anyway. That's a pretty big profit.
What this meant was is that a lot of the time, lending institutions were also collecting a lot of money from our government in the US who would become involved in covering their losses one way or another.
I'm being very vague and sketching this in broad terms. There are a lot of other reasons this happened, but I think a bad attitude towards credit and excessive financial deregulation has a lot to do with it.
One other thing that has to be said frankly, is that if you like you can say Obama hasn't done a great job of cleanup, but that's all you can possibly say. He inherited a mess many other people made.
If I were in charge... I would have held congress to the fire on balancing the budget. Not allowed them to tap into SS or any other program. If we do not raise the money first, then we cant have it. "Pay as you go" I would ask for term limits and tap into more local representation at the state level.
It is everyone's responsibility for the mess that we're in. Because we allowed congress to remove checks and balances, and allowed (by no real enforcement) wall street and banks to leverage 40 to 1. Of course the greed effect would be the underlying culprit to higher costs, and less service. At my work place we here this one statement all of the time...Do more for less and with less. ( Tiiiiiiiiiiiiiiiiiiiiiight and stressful)
I voted that Bush was the cause as he is an elected extension of global finance that was give priority over actual human beings beginning with Reaganomics.
Really, in a sense, Reagan should be on the list.
The recapitulation of his policies, by subsequent Republican administrations, has led to the deregulated mayhem that we see today.
Everybody was in on this. From the banks making the risky loans to the consumers taking out the risky loans. We seem to leave the consumer out of this because that means pointing the finger at ourselves.
We bought more home than we could afford with loans we could barely pay back in good times. We used our home equity lines of credit as ATM machines and maxed out our credit cards as well on stuff. We stopped saving for a rainy day. And we forgot that the markets can go down.
The banks and the government played their part by pushing cheap money/credit into peoples hands, but we were willing credit junkies as consumers.
I would say the American people. for not keeping a close enough eye on our supposed employees, the political class. " When the boss is away ...."
its not that simple. While the policies of the Bush adminsitration contributed to the final straw that broke the camel's back, it had been in the making for quite some time--at least since Reagan.
the real culprit was greed and the advancement of a lawless financial environment that rewarded short term gains over long term stability.
I blame bush and the Greed Over People party, who, once again, ignored and poo pooed the experts who warned them about the war, the deficits, allowed reverse red-lining for the mortgage meltdown, unregulated trade deficits, deregulated the hell out of the banks, ignored repeat whistleblowing for Bernie Maddof's ponzi scheme, ignored warnings of an attack on our country which was perpetrated to disrupt our financial system, told us it was our patriotic duty to stfu and go out and charge big discretionay items, including hummers.
I also blame us for falling for and allowing all that BS while our health care system went to the corporate middlemen, our infrastructure crumbles, we are still dependant on mideast oil even though we had a "crisis" 30 years ago, and it most certainly endangers our national security now. I am old enough to remember our last attempt to wean ourselves off mideast oil- late 70s- Carter - solar, wind- then Reagan and the "moral majority" came in - canned all that and made us 10X more dependent on saudi oil. Now an oil war is bankrupting us.
In short, Bush and the GOP made one of our worst cold war enemies a prophet... Nikita Kruschev- who said America would be destroyed by greed. Reagan started that with his trickle down economics. Bush took it to the extreme.
The Congress for foisting "sub prime" loans on the lenders. The lenders for doing them.
Far too much credit or blame is placed on anyone in the Office of the President. The president does not MAKE law. The job of the President is to interpret them and enforce them. The SCOTUS acts when there is doubt about that interpretation.
People spent far more than they earned. Many of my friends borrowed against their overtime. When things started to recede they had no reserves to make it over the decline. Greed and avarice led to them overbuying to keep up with the rest of the people when they simply could not afford to pay the credit bills.
I would have to say (in order of how responsible people were for it) it was the banks and financiers who orchestrated the collapse, the deregulation which allowed them to do it, homebuyers who bought what they couldn't afford, and Bush who encouraged them to do it. So quite a few people and groups, but far from everyone.
The question "who is to be blamed for the current recession?" assumes that there is "blame" to be assigned. This reveals a lack of understanding by the author (Ms. Cyprah BTW you are in very good company ... I'd say 99% of Americans) of the functioning of a capitalist economy.
An examination of history reveals that booms (like 1982 through 2000) and busts (such as that of today) are normal phenomena of a capitalist economy. Similarly, the sun rises in the morning and gives us light to see by, but one cannot "blame" it for setting in the evening. Banks, businesses, free markets, and governments are merely the agents of change, but not the motive forces behind it.
The only school of thought I'm aware of that explains the relationships between social mood, stock market behavior, and economic conditions is socionomics, a relatively recently developed set of theories and hypotheses.
I beleive a combination of corporate american greed turnd loose to pilage the world. Turned loose of course by the U.S government aka. The corportae government of America. Over the past decade or so all restriction and all regulation was removed from the banking ans stock industries... All it took after that was normal ole greed and corruption. Ofcourse only the "little people" have been hurt. corporate america just stuck out the filthy hand,thus the greasy hand of government filled it,again
The President guides policy. There is very little President Bush wanted that he was not granted. He did not go after regulation and instead promoted more deregulation. He had almost 8 years to see it was going off course and implement corrective action. Instead, he cut taxes, spent like crazy but on things that did nothing to improve the economy or infrastructure or quality of life of American citizens and did nothing to oversee the financial industry but promote "free-market".
Many factors are to blame including a tendency of citizens to spend above their means, of companies to send jobs out of the country for increased profits, politicians for giving them tax breaks to do it and crazy investment and mortgage strategies by the banks and financial companies. But it is the President's job to make sure his administration is looking after the economic health of the country and he dropped the ball in a major way.
I blame blame. If you want to change the world for the better, don't blame anyone. Do something about it.
I always love the "corporate greed" argument. But think about it. Most corporations to which the geed label are attached are publicly owned/traded. If you, or your retirement plan, are invested in one of these publicly owned/traded companies, don't you want them to maximize profits, which maximizes the value of the shares that you own?
That is the crux of the situation! 401K's and Roth IRA's are all associated with this. How can the common person get ahead when the playing field is against them?
Smiling Jack in #1.4 has part of it.
Rickace in 1.14 completely missed the boat.
The principal cause, if you want to assign a SINGLE precipitating event, would be when Bill Clintoon signed the repeal of Glass-Steagall in 1999. This allowed the growth of the banks into mega-banks and allowed them to merge depository banks with investment banks so the investment banks could risk the depositor's money on various schemes.
Because of this one act, the banks were able to come up with the securitization of mortgage backed securities, then securitize the securities ending up with a 25:1 leverage ratio, then insure the whole mess against default with AIG, KNOWING they would default. It was like a big sign was posted saying "FREE MONEY! (You CAN'T lose!)"
My mortgage and your mortgage isn't that big a deal, but when you securtize $2 Tn of them, then do it again at 25:1 you end up with a risk exposure of $50 Tn. The entire US annual economy only generates $15 Tn. And that is how the bankers in NYC were able to throw the entire world into financial chaos.
Now - to be fair - I don't think Clinton had a choice - IIRC the vote was overwhelming to repeal, and so the Congress would probably have over-ridden a veto, and IIRC President Clinton DID warn Congress that this probably was NOT a good idea... but who listens to Presidents anyway, eh? What do they know?
Feeding into the problem, you had Alan Greenspaz who, with his cheap money policy was pumping up the Dot Com bubble (that burst at the start of Bush43's first term), and then he did it again with the Housing bubble (that burst toward the end of GW's second term). Greenspaz was probably the WORST Fed chief in the history of the world. He was either gutless (in not tightening the money supply) or a crook - I'll let you decide.
Also contributing heavily was when Greenspaz and Rubin and Summers (yes - Larry Summers - Obama's economic adviser) succeeded in blocking the US Government when the regulators wanted to regulate derivatives.
There was one part of the whole CDO Swap mess that required assistance from abroad. As I currently understand it, AIG wasn't able to do part of the deal under US Regs in place, so they ran that part of it from their British office.
Fast forward to today - One of the problems with the whole clean-up is that Bungling Ben Bernanke and Tax Cheat Timmy, et al, are acting as if this is an economic recession - ie a business cycle downturn. If that were the case, government spending should have turned it around by now. It hasn't - and it hasn't because it's NOT an economic recession. It's a FINANCIAL recession - caused principly NOT be the business cycle, but by faults and flaws in the financial system's regulatory framework.
Throwing money at an improperly regulated financial system will do nothing but increase the money supply and cause inflation/hyper-inflation. The proper response to a financial recession is to fix the regulatory system - you know - the part that's broke. It just needs a little tweaking to right it... things like restore Glass-Steagall (repeal Graham/Leach/Bliley) to separate the investment banks from the depository banks. (China thought this was such a good idea, they incorporated into their banking system.) And they could restore the rules that kept banks from operating in more than one State - this would prevent the "Too Big To Fail" scenario we now find with the Big Four Banks.
(The total combined assets of the Big Four equal approximately half of the US's Economy for a year - ie $7.5 Tn.) Which wouldn't be a BAD thing if they weren't insolvent... which they are.
And given that nothing seems to be getting done towards effecting a solution to the mess - it's just sitting there, my call is no recovery this year, and probably not next year either. (My original call was for recovery beginning mid 2010). I'm hoping for mid-2011 or 2012.
Finally - obviously - I voted "other." ;-D
"The few who understand the system, will either be so interested in its profits, or so dependent on its favors that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantages...will bear its burden without complaint, and perhaps without suspecting that the system is inimical to their best interests."
: - Rothschild Brothers' of London communiqué to associates in New York June 25, 1863
Infamous Quote from Mayer Amschel Rothschild "Give me control of a nation's moneyand I care not who makes the laws."
Baron Nathan Mayer Rothschild quotes:
I care not what puppet is placed on the throne of England to rule the Empire, ...The man that controls Britain's money supply controls the British Empire. And I control the money supply.
The more things change the more they stay the same....follow the elitist money trail.
The Rothschild connection to both Lincoln AND Kennedy's deaths:
http://www.scribd.com/doc/7851420/Two-President-Who-Died-Defying-the-Rothschilds
It's a FINANCIAL recession - caused principly NOT be the business cycle, but by faults and flaws in the financial system's regulatory framework.
Absolutely, precisely; especially repeal of Glass-Steagle. Graham - what a guy. You might enjoy reading/viewing Dr. Michael Greenberger's extensive commentary on all this. http://www.michaelgreenberger.com/media.html Great post, thanks for writing.
Ms. Cyprah, I'm going to keep it simple. Congress is responsible. They got us into this mess, and now they don't know how to get us out.
Congress was all too quick to point the finger at Wall Street/Major Financial Institutions/Banks, but at the end of the day, Congress made the laws that allowed the corruption and greed. I hold Congress fully responsible.
We must vote all incumbents out of office, and start fresh.
The rating firms such as Standard & Poors, were raking in huge profits by not fully disclosing their clients risk to investors.
Investors trusted these firms and used them as their "Lazy Mans Guide to Safe Investments".
You can blame Bush, Obama, the banks, the homebuyers, the milkman or anyone else you can think of but........
The real blame trophy goes to... drum roll please............... THE GREEDY LAZY INVESTORS for not doing their homework.......
I think the banks and credit companies usurious policies killing free flow of cash and also the rise of the "Day Trader". They provided an aspect of instability that the markets couldn't keep up with. When you're playing catch up, you never win.
Oh come now, Ms.C , you and I know the answer, YOU! no one else want to take the blame so I think it is your turn to fall on the sword!
Congress for setting this greed grab in motion. They passed the laws to allow quasi government loans to people who could not afford to pay them back. Like drug dealers they dangled candy in front of those oh so willing to enjoy a quick fix. As long as real estate kept increasing in value and no one challenged the sense of these loans they could say look I got you a piece of the pie and you can just keeping living off the increasing equity of your house you bought with no money down, no income verification, government backed loan. Once that fairy tale was realized for what it was the cards all fell down and they blamed everyone but themselves. The banks for not using their own professional sense to say no this can't possibly be right. The financiers who cut up these bad loans, bundled them up and sold them off like securities and safe investments to those who should have known better than to buy them. Those who took those loans knowing the risk were also to blame. Bush and Obama administrations that think they can fix a wrong idea gone bad by more wrong ideas and more debt. Our government is just doing what all those greedy people did in the first place, they borrowed more than we can ever hope to pay back. The American dream is now the world's nightmare.
For me, I think it was caused by the slow, but progressive elimination of regulations, including consumer protections. I can't think of another country that allows its financial institutions to:
* deceive customers into taking on homes they could not afford,
* for the sole purpose of combining pieces of these mortgages into bundles to sell to other banks,
* in spite of the fact that they knew the vast majority of mortgagees would default.
Although most of the deregulation took place under Bush the Son, the philosophy that started it off came in with Reagan and his "Supply Side Economics". The actual deregulation started under Carter, and every president since played a role, including Bill Clinton.
The recession has been harder on Americans because the US has few consumer protection laws, almost no social support system, punitive foreclosure laws, unforgiving bankruptcy laws, and an expensive and harsh health care system, among other issues.
In most countries, citizens are protected against fraudulent business practices. In the US, businesses are encouraged to trample over the citizens.
The only good thing about this situation at this time is the possibility that Americans will take back their power from the corporations -- especially Agribusiness, Big Pharma, Wall Street, the banks and the insurance companies.
Clinton. The Iraqi war. Obama's idiotic plan to spend our way out of debt. His deficit forecast was $7T and now it came in at $9T. Healthcare reform will cost $2T upfront and he has know idea what the total cost or savings will be. Why would we allow anyone to invest our children's future security without knowing the ROI? Only the Democrats. Big Government/Big spending.
By the way...did anyone here vote for any of the Czars that are actually doing basketball boy's job?
well the fall of fanny and freddie and the housing bubble started all this, so if thats the case then you must blame the big hearted Dems because they forced the banks to make loans to every tom dik and harry. but you can also attribute it to people living above their paygrade !!
I said "other". I think it was the politicians in Congress and the Senate and the White House/Bush.
After reading the posts, I also believe it was the banks .
Dr Know - The president does not MAKE law.
This is true. However, the President can take the teeth out of agencies which are supposed to be paying attention to abuses in our beloved Capitalist system. President Bush made it clear that Reaganomics was back and his economic policy would not tolerate government interference in the private sector. This was also true for foreign policy, environmental policy and everything else.
This economic policy was partially a response to the business downturn after 911, but it is a core value of the GOP. The fat cats of the Ruling Class can screw the rest of us until our economy collapses. Then they blame it on someone (ANYONE, EVERYONE) else.
There is no personal responsibility being demonstrated by the Republican Party. That is supposed to be another of their core values, but it only applies to everyone else...not them.
Who caused our current economic disaster? President Reagan, President H W Bush and President G W Bush let the Werewolves watch the chicken house.
They try to make it sound complex, but it is not really that hard to understand.
Bush did not personally cause the recession, as the nations CEO he did allow it, through shoddy oversight and regulation. Through a remarkably poor fiscal strategy that cut taxes and increaed spending to ridiculous levels. Through an irresponsible position that large corporations and banks would behave responsibly with regard to national interests instead of pursuing profit to th point of ruin. When things did begin to go south, he failed to act and further exacerbated the problem by ignoring it and telling others to ignore it.
Bush? Heaven knows he managed to screw some things up but blaming a world recession on one person who can only draft policy for one country is a pretty hard stretch of the imagination. We live in a global economy and the people that affect economies aren't elected by nations but by shareholders.
#2 - Sat Aug 22, 2009 12:04 PM EDTBut the war in Iraq cost us nothing? Actually, the senseless war in Iraq.
But the war in Iraq cost us nothing? Actually, the senseless war in Iraq.
Actually, last I checked we already spent or committed more this year alone than all of Iraq. There's plenty of senseless spending going on. We're talking about actual causes of a financial downturn here, what we spend in Iraq has nothing to do with say, the losses experiences by the Russian economy, or the French, Greek, New Zealand, or any of the rest of the world really. The problem is global, not local.
I voted "other" because I believe there were TWO equally destructive causes: Laws that stopped oversight and allowing companies to get "too big to fail"
#3 - Sat Aug 22, 2009 12:07 PM EDTWhen the waning finances of one company can effect economies in several countries its definitely too big for anyone's own good.
If a company is "too big to fail" then it should be too big to be controlled by a bunch of money hungry crooks ... I mean CEOs and BoDs.
Some of you folks are giving George W. Bush a hell of lot of credit. I din't think he was that diabolical or genius.
It is far easier to ascribe a monumental failure to abject incompetence than to a wildly complicated conspiracy.
Some of you folks are giving George W. Bush a hell of lot of credit. I din't think he was that diabolical or genius.
And why not? The people over at Fox News (LMAO every time I type or say that) want to give him props for anything positive that happened right after he left office.
Only one flaw in the blame Bush scenario - he was on vacation for 8 years. Couldn't have been him.
Do we have to call Uncle Dick directly to get on the 8 year vacation plan, or does he have to call you?
you all cry over fox news... how many media outlets dont give any critism to Barry? he gets away with thievery and they dont report at all and if one of their employees happen to ask an important question then its bye bye !!! this is how dictators are made !!!
Well, anyhoo, now that GW is out in Crawford Texas walking his dog and picking up doodoo as a private citizen it is time for the New Leader of the FreeWorld to begin taking some responsibility for the direction of the country.
I have yet to observe a pathological narcissist who will not boast and take credit for positives and place blame for negatives on everyone else. This has been demonstrated quite well by President Obama. Hopefully for our sake, this economy improves. Virtually every narcissistic world leader that has passed through world history has become dangerous when plagued by failure.
I have yet to observe a pathological narcissist who will not boast and take credit for positives and place blame for negatives on everyone else.
That describes Bush to a tee. Wasn't absolutely everything bad that happened during his reign Clinton's fault?
Republican or Democrat? Whose motto seems to be,"Give to the rich and, rob from the poor"?
When did all this start? Who were the BIG oil men, in power at the time?
I voted, (Bush) and his war. Let's face it, the Iraq war was all about oil. Greed.
#4 - Sat Aug 22, 2009 1:06 PM EDTStill waiting to see all of that oil pumped out of iraq and brought to the us
http://www.nationmaster.com/graph/ene_oil_pro-energy-oil-production
as of 2007 Iraq was ranked 16th
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2173rank.html
the cia has them ranked 13th as of 2008
seems to me if it was all about oil we could of just invaded mexico why they are 6th on the list.
meanwhile back on the farm......
Mav
Imo, it wasn't so much the war, but the combination of tax cuts for the rich and the war. I mean, if you obligated yourself to a hefty mortgage, would you deliberately cut your income?
It is extremely naive to think you can put the blame for something as complex and dynamic as a national recession on any one person or even a small group of individuals. Many factors, decisions, and events contributed to the economic downturn.
However, I do believe in the philosophy of Harry Truman...the buck stops here, which means responsibility for the onset of the recession lies with GW Bush, and the recovery is the responsibility of Obama.
#5 - Sat Aug 22, 2009 1:24 PM EDTthe speculators on wall street mainly, but no one group or person could have been this colossally greedy and stupid alone. IMO
#7 - Sat Aug 22, 2009 1:36 PM EDTDid the speculators do something wrong? If so, why aren't they in jail?
The speculators on Wall Street were doing what speculators are supposed to do, finding new ways to make money. That's their job and we do not hold them to any moral obligation to do so in a rational or sustainable way. We could argue this last point, but the bottom line is that speculators are encouraged to act in a greedy, rather than altruistic, fashion.
We rely on the government to regulate the industry and not allow the natural, and many would argue beneficial, greed of speculators to unbalance the market. But after thirty years of a governance philosophy of deregulation and worshiping at the alter of the free market without understanding it, we had removed those restrictions that would have slowed or prevented the meltdown.
Bush & his war..... everything was "normal" before... I mean, no recession....
#8 - Sat Aug 22, 2009 2:14 PM EDTYou might make a case for that if it were only the US economy that went into the downturn, every nation in the world is effected. Americans need to look beyond our own borders and notice the rest of the world now and then.
Only the true Bush haters can blame him for a global financial recession. The whole subject is so much more complicated than that. I tend to agree with Nofluer's comment above #1.20, only I think the beginnings go back even farther in history, at least the last 70 years in the making. I also believe there are cycles, and many of things that were done to help will only make recovery slower. I agree that congress has a hand in helping to make this mess, and one more place I would like to lay some blame is with the Media, but that is just me.
And YES we the people, whom want it all and we want it now. Many spent and spent, others helped to allow this by voting for the same people in grongress over and over, and our congress is corrupt, and in it for their own personal gain.
lisa lu,
I am definitely not a Bush hater. I like him and voted for him twice.
It takes one drop of water to start a flood. Bush had help with the people of power he surrounded himself with. Cheney? Rove?
#9 - Sat Aug 22, 2009 2:20 PM EDTYour poll doesn't include the REAL cause-- Congress.
People seem to forget that Presidential administrations don't pass budgets, don't pass spending bills, and don't create the laws and regulations. Well, the Executive branch does make some regulations, but only when Congress lets them do so. But, nearly everything that has gone wrong was all congress' end of the stick.
It's Congress' fault. And, it doesn't even seem to matter these days whether its a Democrat majority or a Republican one.
#10 - Sat Aug 22, 2009 2:26 PM EDTCongress is the one that forced the "subprime" loans. That was the poison in the well.
I agree...it was definitely CON-gress. The President has two job functions: Enforce the Law(doesn't make law) and declare war. The dolts in CON-gress hold all the cards and create all the other creations.
Michael #10
If you're going to blame Congress - and they look pretty good for it, then you have to take the blame on up the chain of command - to the American People who kept voting the clowns back into office. Ultimately, we the people are their bosses and so ultimately, WE are responsible. Bush's Iraq war? Why did we return both Bush AND CONGRESS (who gave him the authority) to office in 2004???
So - of Bush/Congress did it, WE'RE responsible.
dont forget our president was beating the streets forceing banks to make loans to people that had no earthly means of paying them back !!!
Congress is the one that forced the "subprime" loans.
Could you provide a source for this statement please.
A combination of 1) laissez-faire Republican government that didn't provide adequate oversight of the industry, and 2) a suspension of good credit judgement on the part of lenders too eager to make phantom profits at the expense of responsible growth.
#11 - Sat Aug 22, 2009 3:04 PM EDTIt was the government threatening lenders to make unsound loans based on racial quotas, just as the government is currently threatening advertisers on Glenn Beck.
Raven - Right
George - Sorry, no
CRA was passed decades ago, but the banks really didn't pay any attention to it until after 1999. After all, when did the government really have any power over the banks? Even after TARP funds were distributed, the banks didn't use the funds to clean up their books of the TAs (Toxic Assets) needing the RP (relief program).
What happened in 1999? Gramm Leach Bliley...written by the republicans, endorsed by Greenspan, and signed by President Clinton. What did GLB allow? Banks could now be brokerage firms and insurance companies...the walls between these types of entities were torn down, and everything went crazy, as follows:
1. Lenders could loan money to anyone...and did so
2. Lenders sold the loan obligations to brokerage houses...or sent them from one department to another if they were a CitiBank/Smith Barney model
3. Brokerage Houses bundled the obligations into what were rated as AAA investments and subsequently sold to investors
4. Insurance companies like AIG insured the products against client defaults
5. Senior management and traders at these firms made billions of dollars...and then some
6. The housing market bubble was one result of all this money floating around. Lenders were willing to lend anything (125% mortgages, for example) because the debt obligation wasn't on them, it was on investors and insurance companies
7. There was too much supply (real estate) because of the created demand, and empty houses in new developments started to sit idle...prices dropped, and the cash machine ran out
8. Bundled debt obligations started losing value...well, they became valueless...the brokerage firms started writing down the losses, the CEOs who made billions walked away with millions, AIG had to pay for what they insured, brokerage firms went bankrupt, brokerage firms and banks merged, etc.
9. Alan Greenspan said that he thought that the banks would self-regulate...and he admitted he was wrong
Of course there were many more factors, but to me this is the primary reason. Oh, by the way, who spent millions of dollars lobbying for Gramm Leach Bliley? Well, the whole brokerage industry, but primarily CitiGroup. You see, they had already violated regulations when they acquired Smith Barney and Travelers, but they got a reprieve until GLB was passed...then they were in compliance.
You see, folks, there's a reason why banks were not allowed to be brokerage firms (and vice versa) or insurance companies (and vice versa). The problem I have now is that none of this is even on the table for change...and it is a change I would like to see happen...and I work for a brokerage firm - well, now we're a bank.
Pete #11.2
Yep. Additional - #9 is one way to express pure Friedman Monetarism (originated in the U of Chicago - read "The Shock Doctrine - The Rise of Disaster Capitalism" by Naomi Klein). My econ prof was one of Milton's students.
Re Citi - SEE my thread -
http://nofluer.newsvine.com/_news/2009/07/12/3020027-gm-citi-bank-and-the-rope-a-dope
Nofluer
I just read your post (#1.20) above as well, and we're on the same page. Heading to your thread right now...
It was 30 years of letting the Banks have power over the government. The banks told the government to jump and the government asked how high. This all was accellerated because of Bush's antitrist banking laws that allowed banks to become "too big to fail" like Wells Fargo and BoA but it's not Bush's fault alone.
#12 - Sat Aug 22, 2009 3:27 PM EDTIt's the fault of all of us.
These corporations and banks may be the ones who damaged our economies, but no one forces us to do business with them.
No one forces us to buy imported goods at big-box stores putting the small businesses under.
No one forces us to invest in companies that outsource our jobs.
No one forces us to live on credit and spend outside our means. Or buy homes we cant afford.
No one forces us to be co-dependant on others.
I've learned my lesson, and made the corrections.
#13 - Sat Aug 22, 2009 3:40 PM EDTIt must be nice to have the money, and resources, to make your corrections.
Ludwig is 100% on point here. Anyone who spends more than 2x their combined gross annual salary on a house should be in foreclosure.
I've just described about 95% of the people who bought since 2002. Indeed, 2009 is no time to buy as prices are still way too high.
2x gross annual salary for a house, no more.
I place a lot of the blame on 'corporations' that have worked with the 'government' to dilute workers rights, (thank RR for that) and the lowering of the pay scale (yes we make less now compared to those in the 70's)...its been glossed over because we were sold a bill of goods with 'credit' to purchase things (when our cash obviously fell short) that blinded us to that income disparity....
Also, under RR was the rewriting of the 'stats' that make things like unemployment look better than it is...(if using the old standards our unemployment picture would be closer to 16-20%...)
The people I know haven't lived above their means. Haven't gone credit card crazy....THEY DON"T HAVE JOBS ANYMORE!
Mary-268849 The people I know haven't lived above their means. Haven't gone credit card crazy....THEY DON"T HAVE JOBS ANYMORE!
I know, there are people who simply got screwed over though no fault of their own. It's the "yuppie lifestyle" that's killed our economy in my opinion. We simply consume more than we produce. I'm not going to say I'm innocent; but your right, I shouldn't make generalizations about everyone.
I got screwed too, and I learned my lesson.
I'm paying in cash and going out of my way to buy from small businesses from now on. Going out of my way to buy American products only when I can. I refuse to do business with any company getting government assistance or outsourcing our jobs. Hopefully, some of these unemployed people can start their own small shops and businesses. If they do, I for one will go out of my way to support their efforts.
It must be nice to have the money, and resources, to make your corrections.
I didn't make corrections by spending more money, I simplified and downgraded. I spend far less now, but when I do I spend it in the proper direction.
oh ludwig you did what most people should be doing living within your means. Imagine that.
I have one last bill my jeep payment last one is in Jan then I am debt free
all from living within my means and not spending on stuff i don't need i don't own one credit card.
Mav
If everyone (at least those who still have jobs) would follow your example we would be out of this mess in no time. If everyone would have followed your example before this happened we would never have been in this mess to begin with. Please spread this complicated philosophy since it seems not to have been taught in our schools. Instead I think the lesson we are allowing to be taught is that personal responsibility is for someone else and if anything goes wrong, blame the President and ask the government to fix it.
The US Congress. Deregulation gave the opportunity to banking/financing gluttony.
#15 - Sat Aug 22, 2009 4:13 PM EDTAlthough I voted "everyone including me" I would like to point out the really it is people that bought insurance policies on investments they didn't own (CDS). That would only pay if the investment went south. That gave them a vested interest to ensure that the investment did in fact fail. I believe there were several large players in this market that bought huge amounts of insurance and then started to spread rumors about the market crashing and the bubble bursting and guess what it did. "They" made billions of dollars from the insurance they held. The funny part is you can't get the names of the winners. Only that "some" people made a lot of money that way. Maybe because they are the ones actually responsible for the mess we are in right now and their lives would be in jeopardy.
#16 - Sat Aug 22, 2009 4:24 PM EDTI voted other for the reasons you'll see below.
What makes any one think that its any one politician,any one political party, or any one industry such as banking or the auto industries fault. All of the problems we are seeing now are due to failures in our political system.
Propagator
This is an appeal to all American citizens to propagate the ideals originally set forth in the constitution of the United States of America. “We the People of the United States, In order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for its common defense, promote the general Welfare, and secure blessings of Liberty, to ourselves and our prosperity, do ordain and establish this Constitution of the United States of America.”
Isn’t the reason the United States exist today is because the people of the original 13 colonies didn’t feel they were being fairly represent in England? That the Colonists were being unfairly taxed, Taxation without representation? That the colonists were being subjugated and unfairly treated even though they were under British rule and should be treated as all Britain’s should be treated?
So dissention and unrest grew in the colonies. A movement took root to ask the British kingdom and King George the Second for fair representation. A letter was written and sent to the King of England. A Letter we now call the Declaration of Independence. Of course it was rejected by the King and led to the Historical event we call the American Revolution and the reason the United States of America exists today.
The Forefathers of this Great Country risked their wealth, their freedom, and their lives and many gave their lives in the hope of creating a nation unlike any other. They risked everything to create a Nation that allows religious freedom, free speech, the right to own and bear arms. Our Forefathers wanted a nation in which the government was empowered by the people and answerable to the people. They wanted to create a nation in which the people chose its leaders and the leaders are responsible for representing the people.
I ask you now to continue reading this message and if you believe in this message to stand up and support it. To have the courage to make your voice heard. Force our government to represent the people and stand by the ideals and principals on which this country was founded. I ask you to foreword this message to your friends and family and co-workers. Post it on all the forums you can. Post it on your websites and link it into your comments. Print it out and send it to your elected leaders. Do whatever you can to get this message to every Citizen of the United States and to all of our elected leaders. I ‘m asking you to become a Propagator.
I’m disheartened at what I see going on in America and what it’s becoming. Our elected officials are supposed to be representing the people that elected them. We, the People of the United States, give them the power to govern over us and it’s our interests that they should be representing not the interests of PAC’s and special interest groups, the banking, auto, or health industries. The politicians make campaign speeches about instigating real change and reform to get elected. They tell us what we want to hear to get elected but once they are elected they don’t follow through.
I believe as long as there is big money to be made and favors to be won in Politics that nothing will ever change. Only when our elected leaders are representing the people and not the special interests and big business will we be properly represented. I believe true political reform will never happen as long as we leave it up to the politicians to enact the reform their constantly promising. That is why we need to stand up and force the government to change. We need to force our politicians to hear our voices. We need to have the courage to stand up for something we believe in, to be united together, just as our forefathers did. That is what this message is about, that is what Propagator is about.
Political Responsibility Overhaul as called for by the People to Act and Guarantee To be Objective in their Representation.
Is this not a Country of the people, by the people, and for the people? Is this not your Country?
I’m not a political activist or an expert on how to get political change started. I don’t know how to get grass roots movements started or how to get new propositions onto ballots. But I’m sure there are plenty of people out there that do. We just need to let the politicians know what we want to say and change and how we expect to be represented. Have a united message. Speak with a united voice that cannot be dismissed or ignored. If they don’t listen and make the changes we ask for then we force them too. We vote them out and start our own initiatives to make change.
The root cause of all the problems going on now with the economy, Medicare, social security, Immigration is a failure of our politicians to act in the interests of the people. To serve the people and not the special interests groups. The only way to do that is to remove the money from politics so our politicians are answerable to the people not the highest donator to their campaign. These are my ideas of changes that need to be made in our political system if this is to ever truly be a country of the People.
I believe our elected officials are not elites and are not separate from us. They are not above us. They are citizens of the United States just as we are, and should be governed by the Constitution and the same laws that we all live by. They should not be allowed nor deserve special treatment or be above the Constitution or the law they write.
If their proud of the legislation they write then they should be proud to live by it.
#1. Elected leaders pay taxes just like every citizen of the United States. Are elected leaders not citizens of the United States? So why should they be exempt from paying taxes.
#2. No separate Health care plan for Politicians. Politicians health care should be Medicare. They write the legislation that controls Medicare so they should be proud to be using it. How can our elected officials represent the people if their benefits are not the same as ours and their not affected the same as we are. What affects us doesn’t’ affect them? If they think they can reform healthcare and write good legislation to overhaul the healthcare system then they should be proud of it and be the first ones to be covered by it. Let them stand by what they legislate.
#3. Politicians retirement Plan should be Social Security. If it’s good enough for the rest of the citizens of the United States then why isn’t it good enough for them? Let them pay into social security and get taxed for it just like we do and let them get out of it what they put into it just like we do. How can you write legislation in the interests of the people when you’re not affected by it?
#4. Politicians are not allowed to own stock or have any vested interest in any company or private industry in which they could have power to enact legislation or vote on pending legislation. As far as I’m concerned this is a conflict of interest. How can a Politician objectively represent the people when they have a vested interest in perpetuating their own self interests? If a politician believes there is a conflict of interest or even suspects there might be then they should remove themselves from the vote and the issue.
#5. No more automatic pay raises for politicians. They are elected by the people to perform a job for the people. It should be the people that decide whether they deserve a pay raise not themselves. Does your boss allow you to decide if you get a raise or not and how much?
#6. All campaign funding is to be provided by the City, State, province, etc.. for which the office is being campaigned for and each candidate is to receive the same amount of resources, air time, media time, transportation etc. Campaign donations from pacs, special interest groups, and private citizens will be illegal. Hosting fund raisers for politicians will be illegal. We are the Ones electing them to the office, they should be answerable to the people that elect them and no one else. Special interest groups will no longer be able to buy support or expect favors in their interest.
#7. No more private meetings with special interest groups or secret meetings. They are government employees answerable to us and we have the right to know what they’re doing when their doing government work. All issues that come up for Legislation will be debated in an open forum in which each side is to make their case for and against. Each side gets a certain amount of time, or resources, and then the other side gets their time. Then the People will decide how our representative is to vote on the issue. Their job is to represent the majority and to vote as the Majority decides.
I’m sure there are lots of viewpoints other than the ones I’ve presented here. I don’t know if you will be for or against them. You may have some ideas of your own as to the changes that need to be made. Proposals that could be added modified or dropped.
What I do know is if we do nothing, if all we do is stand back and hope someone else will do something, nothing will ever get done or change. If we don’t stand together and become united, continue to remain fractioned and unable to speak in one voice, we will continue to get ignored and misrepresented. The next time you go to a rally or town hall meeting try speaking in one voice with one message. It’s easy to ignore a thousand voices when all the voices are yelling different messages, but a thousand voices all saying the same message cannot be ignored. If you need a chant for your next rally then try chanting Propagator, Propagator, and Propagator.
#17 - Sat Aug 22, 2009 5:26 PM EDTDavid,
I couldn't agree with you more. You are in the right direction. Follow the link below to help you see even more clearly.
http://www.lookingglassnews.org/viewcommentary.php?storyid=121
GOP
* President Bush 34%
Get rid of Insurance companies, they are worthless.
#18 - Sat Aug 22, 2009 5:57 PM EDTWho is to blame? The American people with our want for instant gratification. To me, as long as Americans are heartfelt in remaining greedy and said greed is being satisfied, it appears no one is left to watch the power brokers.
#19 - Sat Aug 22, 2009 6:00 PM EDTI blame the Bush administration primarily, closely followed by "me and everyone else," but to a much lesser degree. These are the folks that sought after several factors that created the current economic meltdown. Continued deregulation of industry, unprovoked war, tax cuts for the wealthy, antiunion and pro-poverty policies, all contributed to this mess. Bush and company did exactly the same thing to Texas when he was governor of that state, and the state of Texas has still not fully recovered.
What would I change, if I had been in charge?
No invasion of Iraq, to start with, saving billions and billions of dollars wasted on death and destruction. Elimination of tax cuts for the wealthy and a revamp of tax codes to reward those who save and plan for their futures, providing incentives to save rather than exhorting people to "go shopping." Establishing national education standards. Finally, Federal level regulation of the insurance industry, eliminating the 50-state fiasco and employer-linked health care, and encouraging competition between public and private plans.
Done.
#20 - Sat Aug 22, 2009 6:14 PM EDTThe big factors I've observed were:
1) Banks taking advantage of the weak regulation of their industry.
2) Foolish borrowers who not only racked up huge credit card and other debts trying to "keep up with the Joneses" with status symbol BS, but also got into variable-rate mortgages when rates were low with the foolish optimism that the rates wouldn't really go up while they were still paying off the debt so it had to be a better bargain than any fixed-rate loan. This encouraged the living beyond one's means that is waaay too common in our culture.
3) Would-be real estate entrepreneurs who also used these variable-rate loans and had barely stable flows of income at lower rates that fell completely apart when the rates went up.
4) Businesses who focused on expansion at the expense of stability. Here I mainly refer to those who relied too much on loans to get inventory and get together funds for payroll. When the access to credit was cut off, these businesses' contributions to unemployment and economic losses to bankruptcies made a bad situation worse.
5) The economic domino effect of preemptive war in Iraq. During the buildup to the war, there were concerns about OPEC nations making their disapproval unknown by lowering production and causing the price of oil to go up. Pessimistic projections I remember from the time suggested oil going up to about $30 a barrel. When oil prices went even higher ( partly due to the damage to our oil industry infrastructure caused by Katrina ), it became a huge factor in the economic downward spiral.
People who were already barely coping with other debts were adding to their credit card debt at the gas pump in the hopes that they could get the cards paid off later when gas prices dropped again. This hit worst with people who considered the status of unnecessary SUV ownership to be all-important and didn't even consider trading in for more fuel-efficient vehicles. Gas prices stayed high longer than expected and people started defaulting on the credit cards used for feeding their gas-guzzlers, interest rates on cards went up for everyone and everyone's rates went higher in all areas as the recession really started hitting in late 2007 and throughout 2008. The problem kept compounding with unemployment from businesses shutting down and people unable to make mortgage and other loan payments ( the "big bargain now" of variable-rate loans became "bend over" when interest rates went up and payments doubled for many people ) when they had to pay $80 or more per week just to drive to what jobs were still around, etc, etc.
While better bank regulation or avoiding the war in Iraq wouldn't have prevented the recession, their influences seem to have formed a "perfect storm" of recession. Anyone who chose to take part in the factors I mentioned above shares blame.
#21 - Sat Aug 22, 2009 6:44 PM EDTThe poll does not even include the main culprit of the problem so I can make no selection.
Congress is my choice. They are tasked with making the laws. They failed to put in place sufficient regulations to prevent a crisis and instead promoted policies that made it worse (pushing jome ownership for those that could not afford it).
If I had been in charge, mortgage law would have prevented the creation of such products as interest only loans and 'innovative' financial products designed to manage risk (which only ended up magnifying it) would have been better regulated.
#22 - Sat Aug 22, 2009 6:48 PM EDTOf course, this would absolve those consumers who chose these questionable financial products to begin with. If people had bothered reading the fine print and had been more reasonable in their headlong rush to borrow money to support their egos, the effects of these products in the recession would have been lower as well.
If the demand isn't there because of people practicing a little common sense, the supply would be gone on its own.
No argument from this quarter. My point was that Congress is tasked with regulating the markets and completely failed in that area.
The current recession is due to a variety of reasons and the majority point right at Congress.
1) Wild pork-barrel spending sprees mainly on pet projects for each different Congressman and Senator.
2) Failure to keep the Line-Item Veto to prevent 1.
3) Failure to investigate the use of derivatives in the finacial markets and properly regulating them. (President can only enforce laws not make them)
4) Failure to properly target the Stimulus and Bank bailouts or really the purchase of bad mortgages. The Stimulus should have been mostly temporary or permanent suspension of taxes that are applied to consumers, instead of giving money directly to companies. The money in TARP should have gone towards helping those about to lose their mortgages instead of going directly to banks.
5) Allowing Cap and Trade and Healthcare to be brought up in the middle of a terrible recession bordering on a second Great Depression. These should only be worked on when the government can actually afford to do what has been proposed in each bill.
6) Not reading the freaking bills sitting in front of them! This is the PRIMARY job of Congress!
#23 - Sat Aug 22, 2009 7:02 PM EDTThanks tom , Some people have very little knowledge on how the government works. And try to blame everything on Bush and the war. And ignore the facts.
And why did we leave out congress in the poll?
Could it be because the demo's had a major hand in changing the rules and guide line put in place to control this from happening? Including Obama..
The sad part is that the Line-Item veto rests squarely on the heads of the Republicans, who decided to let it lapse when it came time for it to expire due to the Sunshine Law.
I will buy that Tom !
Which goes back to congress is being bought out and looking at their own agenda and not what's best for the people they represent. They have forgotten who they work for. And we have let them get this way. We need professional people in office who have to tackle the real world and not professional politicians!!!And party lines should not be an issue..
But the line item veto was only one regulation that was tampered with.
Tim #3.1 thats a joke,right?? The government of this country drafts policy for the entire planet. Where you been?? Some civilzations resist...lokk what takes place
#24 - Sat Aug 22, 2009 7:57 PM EDTYou're in Easy Mode. If you prefer, you can use XHTML Mode instead. |
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