Who is actually responsible for the economic meltdown?

[Acanthus]

The bubble was caused by the housing crisis.

The slow fall instead of the crash is because of the bailouts and monetary policy.

The unemployment is because of unpatriotic offshoring along with domestic employment tightening up because of the above 2 reasons.

The inflation is because of monetary policy of the fed, QE1 and QE2.

 

[Gigantopithecus]

Look in the mirror. It's you assholes who wanted to own your own home enabling the government and investors to make it easier which lead to the bubble.

Precisely. Americans are so fucking myopic and vacuous that most of us consider living in an apartment and driving an economy car to be "poor."

"Democracy is the theory that the common people know what they want, and deserve to get it good and hard."

 

[wuliheron]

Someone told me that there was a poll done years ago where Californians, by a vast majority, believed that housing prices would continue to rise by 20% for the next 10 years. With a $500,000 median price that meant they believed that houses would be worth over $3,000,000 in 10 years. I can't find that anywhere but I do recall something like this being the popular opinion back when housing was booming. Not the $3M but the 20% going on for years to come.

Bingo. The details changed, but the scenario is similar to what occurred during the great depression. People were allowed to leverage credit to the ridiculous point, the market was deregulated, and the whole ponzi scheme came crashing down under its own weight when there were no more new suckers willing to buy in and everyone aware of what was happening rushed to sell of their shares.

 

[Imp]

Precisely. Americans are so fucking myopic and vacuous that most of us consider living in an apartment and driving an economy car to be "poor."

"Democracy is the theory that the common people know what they want, and deserve to get it good and hard."

Don't forget the educated elites... We all "need" post-secondary degrees, no matter how useless, how expensive, and how much they over-saturate the market.

 

[cubby1223]

Jim DeMint caused the recession.

 

[HomerJS]

Underlying cause, deregulation.

Enough blame to go around but why does the GOP continue to fight tougher Wall Street regulations?

I'll you who is not to blame, poor people.

 

[boochi]

Democrats should get more of the blame. We had 4.5% unemployment when democrats took control of both houses of congress in 2006. Where is it now? NAFTA signed into law by Clinton and a Democrat controlled congress cost us almost a million jobs among other things. We have the 2nd highest corporate tax rate in the world. Where are the jobs going? These were Democrat initiatives. Why are we not drilling for all the oil we have? Democrats I guess. Democrat refusal to tackle entitlements, acting like children with no concept of what bankruptcy is or how likely it is to occur.
Wait, I made a mistake. Americans are to blame for electing these bozos. If we do it again, things are going to get much worse. Taxes will go up and job creation will be stifled. We will be looking at 12% unemployment.
Republicans have to be willing to cut defense spending by 25-30%. We can't keep trying to slash spending without touching this rail. If we limit trade with China or require a balance in trade, we would force them to cut back on their rapid military advancements. We can't keep sending money to our enemies.

 

[a777pilot]

I blame us.

I agree with that.

 

[rudder]

lenders being able to give out loans with little or no underwriting.. knowing ultimately they would not be at risk. Fannie and Freddie were buying 40% of all subprime mortgages and there was a big market for them... so why wouldn't greedy lenders take advantage.

You can argue regulation/deregulation.. but some regulations kept investment banks from having cash on hand... without that cash to ride a downturn.. they burned.

People who thought the sole purpose of home ownership was to live in a place 1-2 years... let the value appreciate 50%, then sell and move into something bigger... only being able to do so through interest only or other crazy mortgage schemes. And then there are the people who paid outrageous prices to those people living in homes 1-2 years then selling... because with the interest only loan,.. they too could get into the game and profit when home values rose. They did not realize that most markets could not sustain that much growth.

oh yeh.. cheap credit made available to everyone under the sun for everything. TVs, cars, etc.. allowing them to spend like the federal government.

 

[JeffreyLebowski]

Bush but Obama gets blamed

Another fool with no idea.
It harkens back to the true worst president of our times. Jimmy Carter. He signed http://en.wikipedia.org/wiki/Community_Reinvestment_Act
Which is what started the mess by forcing banks to lower their lending requirements so people that couldn't otherwise afford to buy a house could get a loan.

Everything else, either from the left or right is just icing on the cake.

 

[ProfJohn]

Who is actually responsible for the economic meltdown?
The government.

Rough chain of events:

1. Clinton starts and Bush continues a well meaning policy promoting home ownership
2. The bursting of the Tech bubble and 9/11 result in an economic slowdown to combat this the Fed keeps interest rates lower to spur growth.
3. Low interest rates + governmental policies makes home ownership very attractive which starts the housing bubble as the bubble grows owning a house becomes even more attractive.
4. Growth in Fannie and Freddie take risk out of the housing market which causes the bubble to grow even more
5. Greedy banks take advantage of 3+4 and start building a house of cards with leveraged investments assuming that these investments are low risk because they are based on government backed mortgages.
6. Interest rates start to rise and every thing falls apart.

I say the government is to blame because they interfered with the housing market and removed it from the normal risk vs reward market system and instead turned it into a low risk vs high reward market which caused things to go askew.

 

[Atreus21]

Another fool with no idea.
It harkens back to the true worst president of our times. Jimmy Carter. He signed http://en.wikipedia.org/wiki/Community_Reinvestment_Act
Which is what started the mess by forcing banks to lower their lending requirements so people that couldn't otherwise afford to buy a house could get a loan.

Everything else, either from the left or right is just icing on the cake.

The CRA Argument has been very nearly swept from the board. But it does beg the question.

Why would bankers, even unregulated, make risky loans if they were interested in staying in business?

 

[Zebo]

We went from a production based economy to a credit consumption based economy and that well is tapped. Federal Government is borrower of last resort , and student loans for jobs not there, and soon that will disappear too and they will print more destroying economy once and for all.


Govt today spends 7.5 trillion between state, local and Federal to keep up illusions - and half of that is done on debt. Without govt spending there is not much of an economy left. Wait until that ends, and it must end either investors balk or they print effectively destroying our money, same result, all hell will break loose. That's what FEMA camps are for in case you're wondering.

 

[BurnItDwn]

Ooooh point the finger, that's my favorite game!

I blame china and india for industrializing.
I blame womens lib for increasing the number of workers and essentially devaluing the worker
I blame Reagan for tax cuts on the upper income blocks
I blame OPEC for doing everything in their power to keep oil prices high
I blame investors for not investing in "sound" investments but instead trying to join the bandwagon on irresponsible "get rich quick" schemes.
I blame the SEC for failure to properly regulate "get rich quick" schemes
I blame Unions for biting the hand that feeds them
I blame the 'disposable' mentality of America
I blame the decreasing quality and longevity of consumer goods
I blame the decreasing family sizes which cause less growth of population contributing less growth to GNP
I blame the Neocons for being corrupt assholes
I blame the Democrats for being corrupt pussies
I blame wal mart for unfair anti competitive practices
I blame China for unfair trade agreements

The meltdown has been coming for many years now .... the deindustrialization of America has been a very bad thing.

 

[Craig234]

There are many, many causes dependant on each other, some with a bigger role than others.

I'm not inclined to try to summarize what books are written to cover in this post.

Suffice it to say, when you look at a core of people who did the damaging things, you get into the underlying setups of the system that increased the risk, from where you get into the lapses in regulation Wall Street lobbied for and won, and you get into the political corruption from things like our political funding system, not to mention all the well-intended people who just made mistakes - and all the people who played a smaller part doing what they were incented to (Wall Street wanted massive crap mortgages - and got them, people who could make money doing them doing so, buyers who could benefit doing so, and so on).

I'd say a basic issue was allowing money to have too large a role in our politics, limiting the oversight role government should have, allowing a lot of bag things.

If Wall Street could make a trillion dollars selling nukes to Qadafi, they would. While they did wrong, you can't look to them to say "oh, let's not make that money, it's wrong." The idea that you could look to them to do that was part of the spinoff of Randian ideology that said 'the rational market wouldn't cause a crash'. Wrong.

 

[BoberFett]

The meltdown is a culmination of bad decisions by everyone from politicians to CEOs to consumers for the past several decades.

 

[wuliheron]

Ooooh point the finger, that's my favorite game!

The meltdown has been coming for many years now .... the deindustrialization of America has been a very bad thing.

You forgot to blame the majority who kept voting in the politicians supporting the whole ponzi scheme and then went heavily into debt to maintain their lifestyle and leverage their assets.

 

[DougK62]

Maybe we should take the hint from Brewster's Millions and vote "None of the above"?

 

[rudder]

Why would bankers, even unregulated, make risky loans if they were interested in staying in business?

because if fannie or freddie picks up your risky subprime mortgage... the taxpayer is then on the hook... not the lender. The lender got their payday and transfers the risk. Fannie and Freddie bought a lot of subprimes making a lot of room in the market.

 

[senseamp]

It's a failure of trickle down economics and private-sector-knows-best deregulation mentality.

 

[soulcougher73]

If it had to be pinned on one thing only it would be deregulation. It is what allowed every other thing to happen. It is unfortunate people will do crappy things just to make a buck, but since we know this that is why strict regulations are needed especially when it comes to wall street, banks, and politicians.

 

[mchammer187]

Good weather, industry, resources and Hollywood. You're only living a half-life if you live anywhere else, California is a happenin' place.

How about the 2nd highest unemployment rate in the country. An incompetent state legislature, massive deficits and a policies that encourage illegal immigration and a place where fraud is rampant and a voting population that will not accept any cuts.

 

[Zebo]

The CRA Argument has been very nearly swept from the board. But it does beg the question.

Why would bankers, even unregulated, make risky loans if they were interested in staying in business?

Cause they could off load them by slapping aaa on the to pensions and investors and bet against them. Trifecta of profit and fraud (origination, selling and bet that loans they made were garbage)

 

[Zebo]

Banks themselves are basically in the business of asset stripping these days vs past building businesses for nominal returns. You saw it in dot com, housing, speculation and so forth.

 

[piasabird]

Actually that is a bit low we owe like 74 trillion.