A Few Dumb Myths About The Economic Crisis
We don’t live in a fact-based society anymore. In our ridiculous “agree to disagree” culture everything is reduced to mere opinion.
For example, here is a true statement:
George W Bush did not cause the economic crisis.
Your friend might say “well I just don’t agree with that”.
And that will be that.
Laissez-Faire Government
One rather pervasive and pernicious myth is that the crisis was caused by a Laissez-Faire government system that allowed businesses and citizens to run amok, not be properly babysat or told how to spend their money.
After all 40% of the nations wealth (produced by the people) will pass through the government’s hands and then be redistributed by any of the alphabet soup agencies:
(IRS, the FRB and FDIC, the FBI and CIA, the EPA, FDA, SEC, CFTC, NLRB, FTC, FCC, FERC, FEMA, FAA, CAA, INS, OHSA, CPSC, NHTSA, EEOC, BATF, DEA, NIH etc etc).
What this means is that for every $100 the government gets their mitts on $40 and then decides what to do with it. Clearly, they are not controlling enough of our money. We need to let them control 60% because they have such a great track record of creating and saving wealth.In fact, the government has never produced a dime and if you do some research you’ll see they do a pretty shitty job of reselling expensive toys that we bought for them. (Fighter planes, etc).
Banks Run Amok
Sure many banks made some bad, um, choices. But put this into perspective:
You are a financial institution. You sell financial products to help your customers make more from their money, thus making you a cut of their money.
You can buy US-based mortgages which have a very low historic default rate (rate at which people don’t pay them).
People pay their mortgages. (Historically at least).
You know that the housing market is going a little crazy but if you don’t buy these futures your competitor will. Your customers will be angry for not buying these futures. You buy these futures.
I think all banks knew that this market would level out, or dip, but everyone always thinks they know exactly when to get out. Many convicted drug dealers and bank robbers can attest to that.
But in reality, the only bank that ran amok is a little bank in Washington DC called the Federal Reserve. What the federal reserve did through its bewildering dearth of economic sense is reward banks for loaning money to those who couldn’t afford a house by traditional means (earning and saving).
What this meant essentially is that those banks could loan their money out and keep it too.
You’ve heard the figure of speech “have your cake and eat it too” (which is better understood as “eat your cake and have it too”), this most people know is something that cannot be done. Well everyone except for those guys in DC.
Other Countries
In a sense it is everyone’s fault (many other countries had a housing boom like we did) but the blame can be placed squarely on our own shoulders. Most of the world markets follow the US market (and are deeply invested in the US market) and the US culture, which for many years was a culture of unchecked consumerism.
Many other countries were invested in our own mortgage market: it seemed like a good investment: people pay their mortgages (historically).
Republicans
Sure the war may be a collosal waste of money (though many people are being employed because of it) but when you look at how and why the economic crisis happened, you don’t see many Republican names.
Many experts agree that the root cause of the housing bubble was the rise in subprime loans— loans that would not likely be paid back unless housing prices continued to rise in perpetuity.
While the issuance of subprime loans would become self-perpetuated (you make a loan, you and your company earns more money: make more loans), it was caused initially by the Community Reinvestment Act, which not only encouraged these kinds of loans but legally reinforced them.
A lawyer named Barack Obama used to sue banks that refused to make these loans.
A guy named George W Bush suggested during the peak of the housing boom that CRA could cause a housing crash. He was of course overruled by the Democratswho claimed he just didn’t want poor people to own homes.
Another interesting connection about all of this messy credit is the fact that Vice President Joe Biden has been the Senator of Delaware since 1970, a state that has fought tooth and nail to allow credit card companies to charge up to 30% interest… a prime reason why so many credit card companies are based in Delaware.
Watch this video, it’s a bit junk food-ish (in the style of Loose Change, etc) but all the facts here are correct:
Burning Down The House: What Caused The Economic Crisis?
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Tagged with burning down the house, bush, CRA, economic crisis, joe biden, myths, obama
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Don’t worry, Obama now says the economy isn’t as bad off as we think it is. He’s spent the first 50 days of his administration saying the word crisis as many times as possible and now decides he was wrong that whole time. (Although he’ll never admit he was wrong and that he was simply fear mongering to get his agenda going.) I feel real bad that the American people will pull this country out of the recession, but Obama and his teleprompter will take full credit for the turnaround with the $1,000,000,000,000.00 he’s spent so far. I need a beer.
Burning down the house was bound to make an appearance in this one. I’ll take my economic lessons from that web-documentary about as soon as I consult Michael Moore for which Health Insurance plan to enroll in.
A good source for the economic crisis is David M. Smick, The World is Curved