As an uneducated American, I suppose I represent "the" average citizen. Outside of the biased headlines, the experts on both sides of the aisle, and partisan politics, how could anyone figure out how we really get into this recession?
I have a few thoughts - hey, isn't that why you read my blog?
I don't think that anyone would disagree that the financial fireworks came in June of 2008 when gas prices topped $4 per gallon (SOURCE: Reuters). Certainly cutbacks in the labor force had already been taking place. G. W. Bush provided tax rebates which came a little too late, and in the face of skyrocketing fuel prices, were ineffective.
Fuel prices continue to be a contributing factor as recovery seems nearly stalled, while the national debt and the weak US dollar are not helping. There is an opposing view HERE.
The crudest explanation is that the price of gas is following the price of oil upward. Oil, like all commodities, has been rising, pushed higher by increased demand and a weak U.S. dollar.
(SOURCE: Washington Post)
But who is really to blame? I put the largest portion of the blame squarely on the US housing market, along with a very loose credit market. A lot of folks would like to blame Wall Street outright, however the inflated housing market has its roots much deeper than that. Wall Street simply responded to the demand - and you can't regulate greed. Lots of hard-working Americans with stable job situations got mortgages commensurate with their ability to pay.
"Over the past few months, we have become increasingly concerned that the US housing and credit market downturn would trigger not just a growth slowdown and substantial Fed easing -- our long-standing view -- but also an outright recession," Goldman Sachs said in a note to clients Wednesday. (SOURCE: CNBC)
That was the headline as we stood on the precipice of collapse. I think it goes back much further. Let's turn the time machine back to September of 1999.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. SOURCE: New York Times
The idea, that in a time of relative fiscal abundance, that we should let our guard down to make the American Dream more inclusive - more available, was the beginning of the end. My Democratic detractors will point to the Clinton surplus in the budget without mentioning the the dismantling of the Regan military machine, which was; for the most part, responsible for the end of the Cold War and the fall of the Iron Curtain.
Fannie Mae and Freddie Mac, both quasi-government agencies, became the "government guarantee" for mortgages and also paid out handsome dividends to investors. A very nice way of funneling tax funds to a "for profit" entity. Eventually "mortgage backed" securities, which relied on them failed, and Wall Street took the blame for plummeting investments. Honestly, who needs to be regulated, Wall Street or the Federal Government? For fun, let's take a look at who Fannie and Freddie support politically. Here's the top 12.
Dodd, Christopher J - Senate CT Democrat $165,400
Obama, Barack - Senate IL Democrat $126,349
Kerry, John - Senate MA Democrat $111,000
Bennett, Robert F - Senate UT Republican $107,999
Bachus, Spence - Republican House AL Republican $103,300
Blunt, Roy - House MO Republican $96,950
Kanjorski, Paul E - House PA Democrat $96,000
Bond, Christopher S 'Kit' - Senate MO Republican $95,400
Shelby, Richard C - Senate AL Republican $80,000
Reed, Jack - Senate RI Democrat $78,250
Reid, Harry - Senate NV Democrat $77,000
Clinton, Hillary - Senate NY Democrat $76,050
SOURCE: Open Secrets
To top off the government's insatiable appetite for deficit spending, Barny Frank (D-MA) has decided that instead of fixing the problem, we'll just over look it. Why not get rid of the problem and create a new agency that he and his party can claim political and financial success for while abandoning the one that will hurt their November campaigns?
House Financial Services Committee Chairman Barney Frank is calling for the abolition of Fannie Mae and Freddie Mac, the government-sponsored enterprises with a public mandate to boost home ownership, and which were taken into conservatorship during the 2008 financial crisis. (SOURCE: TPM)
Well, if you still want to blame George Bush, who certainly played a part by allowing this charade to go on, you are in the majority.
Former President George W. Bush gets more blame for the country’s economic troubles than his successor or the Democrats who control Congress, according to a Harris poll out Wednesday. SOURCE: Politico
Talk about uneducated!
All in all, it's looking bad for both the Democrats and even some of the Republican cronies in November. I hope that you'll consider voting for folks that can turn this around!
In the final analysis, this economic recession was years in the making. Quick political fixes for financial and political gain are at the root of the current recession; which has cost million of US jobs, and trillions of dollars in debt.
So, you don't believe David Johndrow? HERE are 15 reasons for the melt down given by the experts - but this time, I just happen to think I am right.
What do you say? Who's fault is it, and who is the best person to fix it? And please, spare me the name calling and partisan bigotry - I am looking for solutions.