Well below I will explain to folks here what dramatically contributed to the economic mess we found ourselves in over the last few years. Various
factors that each contributed to this mess and each had a major role that could be accounted for, and each were ignorantly pushed aside for years
before they began to take effect. Folks here spend all their time posting pointless fringe conspiracies, relying on assumptive information from
blogs instead of looking to the lessons of the past.
From what I see there can be three contributing factors that lead to this economic crises, those are the late 90s housing bubble which launched off
the sub-prime mortgage crises, the price of oil skyrocketing and lastly the dramatic increase in debt as the result of government spending.
There are two different theories to how the housing bubble started. Many on the right side of the ideological plain claimed it to be Clintons fault in
that his tax break legislation was made into law in 1997. By this in the new legislation owners selling their homes will need not pay capital-gains
taxes on profits up to $500,000. The aim which Clinton and many others, both conservative and liberal, claimed would assist with the middle class and
help more families settle into a home. It should be noted however that this legislation passed through the republican majority congress in 1997 with a
majority vote. In addition most economists actually disagree that it was that piece of law contributed any significance to the crises we face
Economists say the break didn’t cause the bubble, but creating tax-free windfalls alongside low interest rates and lax lending standards
cultivated an environment ripe for over-speculation—with one study finding the tax cut alone increased sales 17% from 1997-2007.
In my opinion the housing tax gains break did ignite the fire that started the housing crises, however, the majority republican congress at the time
backed the idea and both sides during the Clinton administration failed to act. In addition after multiple warnings the Bush administration instead
decided to further deregulate the market and allowed the legislation to go on. That was just the start of the housing boom.
On of the first warnings for the pending collapse of the housing bubble came from Federal Reserve governor Edward Gramlich who was appointed by
Clinton to the position in 1997. However when he first warned of the crises Greenspan and the majority in congress and the Bush administration at the
time scoffed at the claim. www.nytimes.com...
Mr. Greenspan and other Fed officials repeatedly dismissed warnings about a speculative bubble in housing prices. In December 2004, the New York
Fed issued a report bluntly declaring that “no bubble exists.” Mr. Greenspan predicted several times — incorrectly, it turned out — that
housing declines would be local but almost certainly not nationwide.
Evidently though within the first term of the Bush administration there was no intention of further regulating anything, in fact Bush and his cronies
decided to bring forth more deregulation to the marketings, starting with lifting restrictions, particularly those in the energy industry and further
took down certain laws they saw as politically pointless.
With the support of Federal Reserve Chairman Alan Greenspan, President Bush pushed through a tax cut designed to benefit the richest Americans but
not to lift the economy out of the recession that followed the collapse of the Internet bubble. Given that mistake, the Fed had little choice if it
was to fulfill its mandate to maintain growth and employment: It had to lower interest rates, which it did in an unprecedented way -- all the way down
to 1 percent.
…..and then came the energy crises that hit us following the Iraq war
With the sub prime mortgage crises beginning with its assault on the economy in 2006 the prices of oil began to hit record high during that period of
time. Not only were middle and working class Americans having to deal with the housing crises but what followed were dramatic rises in energy. But how
did it get so bad?
In mid- 2002, there were over six million barrels per day of excess production capacity and by mid 2003, this had dropped to below two
As if we could have learned from the past few decades regarding energy crises the Bush administration decided to go ahead an invade Iraq under false
pretenses which in turn over the few years following Iraq contributed significantly to the energy crises.
But it doesn’t end there, the oil crises was spurred on by speculators who were able to push prices up collectively to gain profits for themselves
and to make folks further suffer…. And you know what, the administration and the majority at the time of the oil crises took shake didn’t want to
hear any of it.
How did this issue start? Prior to and within the very early beginnings of the 2000’s the vast majority of oil contracts in the market were held by
various airlines, petroleum companies and the smaller machinery oil businesses. Following a massive lifting of regulation over the markets including
the dismantling on certain restrictions left by the Clinton administration speculators began to slowly take buy out those oil contracts. There were
60-70% of the oil contracts that were controlled by purely speculative entities who collectively worked together to rise the price of oil which in
turn contributed to the financial crises in conjunction to the housing bubble.
But there were attempts to reduce any further rises in energy by re-regulating the markets again. However the attempt of regulation was then met with
The Senate voted Wednesday to move forward on a bill meant to crack down on oil speculators.
Democrats say speculation in oil futures is a significant reason why oil prices have risen this year. But Republicans vowed to block the Senate from
taking up any other measure until the Democratic leadership agrees to vote on other energy-related issues.
Republicans want to offer up to 28 amendments to the bill on a wide range of energy topics, including increasing domestic oil production.
The Democrats want to limit them to two amendments
Experts have said lifting bans on drilling in the Arctic National Wildlife Refuge and offshore would not affect the oil market for several years, but
Republicans have argued that the psychological effect of opening more areas for oil exploration would bring prices down.
Instead of solving the crises to its core conservatives opted to rather put focus on Alaska, a state that possessed no more than 3% of the worlds oil
to solve a crises where by the consumption of these United states added to nearly 25% of the worlds oil, where by the crises was in part due to
deregulated markets and unjustified costly wars. It appeared the issue was right there in plain writing, however certain groups decided to play ball
with any attempt to bring prices down. While our pockets were being emptied by the increases in payments we had to also suffer from rising fuel
prices, which arised from core elements that could have been pushed back in their damage to non-wealthy Americans.
And this goes further than the neglect of the forces behind the housing bubble and the energy crises…. Lets look at the spending of the previous
Nearly $1 trillion spent of Bush tax cuts
In 2001 to 2003 the Bush tax cuts were implemented where by the wealthiest Americans received the largest benefits and the working class folk, such as
myself might I add, received the bottom bucket of the lot. The tax cuts were implemented during the last recession and the Bushies claimed it to be
the solution and way to economic growth, however no evidence was found of the tax cuts amounting to any improvement in the economy. Despite a war
waging on under false reasons that Bush himself state where everybody sacrificed, he decided to spend $1 trillion, on top of a $200 million dollar a
day war which has cost within the 100s of billions to this day.
$1 trillion gone, and you know what, things got worst, not better. We see the those wealthy get the best handouts from the tax cuts and yet a few
years later we have folks from sides screaming out about those “greedy wall streeters”.
What else contributed to this mess? $1 trillion in extra spending on the military as opposed to those spent in the 90’s. These United states
already spends over 40% of the total worlds military expenditures. The US alone spends more than triple the amount of that of China and Russia
combined, National defence already accounted for a third of total spending by government in prior administrations and this government took that
spending to nearly half. Here we have the prior administration going on about China and the terrorism and yet we find ourselves spending far beyond
the military spending of those entities. The extra trillion the Bush administration spent from 2001 to 2007 will account for what the combined
government military spending of China, Russia and the UK over the next 5years. Im only accounting for the extra funding the previous administration
spent on the military between 2001 and 2007 respectively.
….and then theres the Iraq war.. that accounts for over $600 billion, costing the tax payer $200 million a year, and has been for the past 6
years. While fringers and those alike were secretly parading the president around over the war and has no justification, was a complete lie, we kept
on loosing $200 million a day during a looming housing crises and private speculative entities taking advantage of a deregulated system and pushing
the barrel of oil up.
So I would assume the typical kind will be coming here and going on about the stimulus in this administration before they explain anything regarding
the above. Well first off this $800 billion stimulus package is a recovery plan as government spending is needed to keep the nation afloat during
times of low consumer spending and in addition to that the stimulus mostly invests in infustructure where we get $1.60 for every $1 spent on
american infrustructure, on america herself. Id also go further to ask any of the "typical kind" here to explain to me what difference their
demonization of all that is liberal would be if Obama did nothing?
This administration has not completed its term, no even a year, so nobody can talk about this crises regarding this administration. Id like to stay
focus on the above prior to when this crises hit in October of last year, so I would love to hear explanations, contributions.
What really led to the crisis is stupidity... thinking their house of card wouldn't come falling down and plain old grubby greed.
Add to that a failure to remember and/or learn from history...
(credit default swaps were outlawed in 1907 after their roll in another economic collapse... also the regulatory system was put into place to address
the abuses that led to the 29 collapse)
... and a fanatical ideology that insisted an unregulated market and unfettered capitalism was the path to permanent prosperity and the groundwork
was laid for the perfect economic storm.
My only real grip about Obama's plans is that he is putting the foxes (as in the sec. of treasury etc) in charge of the hen house...
... but then he is a politician with all that implies... still he's better and smarter than the idiot he replaced whose policy of gutting the
regulatory system, a failure to enforce what laws remained and stocking the oversight system with people from the instuitions that were supposed to be
regulated helped lead to this mess.
I must add while I am a Democrat... neither party is innocent in this mess... the Democrats and just as guilty as the Republicans... still the
ideology that led to this was/is Republican via movement conservatism and no matter how much they deny it or try and deflect it... its the truth.
You are right of course but the true believers on here will never accept it... and when they finally latch onto this thread they will do their best to
kill it... can't have the truth kicking around ya know...
... it would simply give lie to all their policies... can't have that.
It never ceases to amaze me... This thread which is self composed and very well presented
is a virtual ghost town. On the other hand you get a SOCIALISTISM BE A REAL
AMERICAN PATRIOTIC and the thread goes nutz...
The point on the gas gouging is very important SG - I pointed this out way back - look who voted to stifle investigation...
Nothing to add. Perfect summation of the issues. I would add that I believe consumer spending got out of hand also, but that's another story. As
SG pointed out, it wasn't just the housing bubble, it was all of those things combined:
-Rising Oil prices due to speculation
-Rising home costs due to the bubble
-The middle-class squeeze
-Irresponsible and unethical business practices
Capitalism has failed us again, and needs to be regulated further.
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