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Two major areas hit the economy hard... 1) Housing crash prompted by mortgage issues, 2) oil run up. Although national leaders could have reduced the impact of these items (we see now in hindsight) it took decades of mismanagement and political infighting to set up the situation.
If we had better political leaders in Washington would we have a better economy? Or is the current state of the economy the fault of the business cycle?
The reason I am asking is the various Presidential Candidates say they can make the economy better once they are President, can they? Or is the current recession outside the control of the federal government (Federal Reserve, Congress, Commerce Department, President, etc.)
There are both cyclical and structural factors that explain the current economic situation.
To sum it up, the US invested too many resources, much of those resources borrowed, in relatively energy-inefficient housing and motor vehicles at the very time that energy prices were rising world wide. The policy tool for this mis-allocation of resources has been too loose monetary policy.
Neither presidential candidate has a clue, neither is talking about monetary policy reform.
Obviously it is more complicated than that, but in an econometric equation I would point to cockamamie monetary policy as the single factor with the plurality of weight.
You may interpret for yourself the social, political, and psychological meaning of a prolonged period of too loose monetary policy.
The bad economy is the result of greed, pure and simple and from all sides and all people. We've now run out of our ability to use more debt to keep this monster going.
You may interpret for yourself the social, political, and psychological meaning of a prolonged period of too loose monetary policy.
Quote:
Originally Posted by HappyTexan View Post
The bad economy is the result of greed, pure and simple and from all sides and all people. We've now run out of our ability to use more debt to keep this monster going.
The bad economy is the result of greed, pure and simple and from all sides and all people. We've now run out of our ability to use more debt to keep this monster going.
I agree.
Though elected officials, in theory, should be held to a higher code.
To do what is good for the nation, and not for their pockets.
Dropping import tariffs, was not done by voters. It was done by the politicians. And it encouraged business to leave.
Dumping billions of dollars into encouraging the import of food from South America, was done by politicians and not by the voters. It is not an American Farmer's fault that our grocery stores are filled with foreign produce.
Though elected officials, in theory, should be held to a higher code.
To do what is good for the nation, and not for their pockets.
Dropping import tariffs, was not done by voters. It was done by the politicians. And it encouraged business to leave.
Dumping billions of dollars into encouraging the import of food from South America, was done by politicians and not by the voters. It is not an American Farmer's fault that our grocery stores are filled with foreign produce.
I agree with this in theory but honestly. What can "we the people" do about all this damn corruption? Vote the person out? Then what, where is the accountability? When presidents, senators and the like break laws, and do all sorts of reckless things that put us in trouble we should be able to get them thrown in jail. Stop others from coming up behind them and doing it. But no one is going to do that. The system is a joke.
Oh, I think there's plenty of blame to go around here. Don't kid yourself and think anybody's Scot free here.
1) Banks and Mortgage Lenders. Ridiculously relaxed lending standards. After all, they were just going to sell the mortgage in 3-4 weeks to somebody else. Why worry about pesky things such as income or credit records?
2) Investors. Boy, HighRollers Bank sure is underwriting a bunch of mortgages. Yeah, we'll take their paper off their hands. What? Check their underwriting guidelines? Are you kidding? These are bankers, for God's sake! They'd NEVER fob bad paper on us.
3) Builders/Developers. Hey, we all knew there was a housing bubble. Yet these halfwits just kept on building, as if they were freaking robots.
4) Home Buyers. Let's see. The terms of your loan were explained to you in exhausting detail by the mortgage officer, reams of documentation, and the closing attorney. You knew that your mortgage payment would suck up way beyond a normal amount of your take home. But you just had to have the McMansion so you signed away.
5) The Federal Government. Okay, let's see. Mr. Banker. We notice that you're not lending enough to poor people and minorities. If you don't, we're going to start examining your records in excruciating detail. Oh, you'll start lending to marginal borrowers now? Thank goodness. Don't you feel better about helping your community now?
6) The Federal Reserve. Wow. You know, we never realized this when we dropped interest rates down to nearly zero and kept it there for years. People aren't buying houses based on the selling price. They're buying houses based on what their mortgage payment will be, even if it's a short term deal such as an ARM that will balloon up to a really whopping monthly payment in three years. Who woulda thunk it?
7) The Executive Branch. Gosh. People are just borrowing on the equity of their homes to buy vacations and big screen televisions. Oh, well, no worries. For house prices will keep ratcheting up forever. And even if it's a crash, I'll be out of office by then, giving speeches in Davos or Tokyo for 50 Large a pop.
8) The Republican Party. Hey, profit is profit. Don't you dare interfere with what the banks are doing.
9) The Democratic Party. Hey, all Americans deserve to own a home. So we are going to create these enormous government agencies that will completely detach themselves from the realities of the marketplace for the express purpose of putting people into homes who do not have the financial wherewithal to pay for them.
10) The Rest Of Us. Oooooooh. 4,000 square feet? Marble countertops? Big screen television in two rooms. A backyard pool? A sauna, a Viking range, a sub-zero refrigerator, and a wine cellar? Vacation to Europe? With a home equity loan? Sure thing, where do I sign up? After all, my home's value will keep going up forever.
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