This government has been blamed for many of peoples economic problems today, including high gas prices, the failing housing/credit market, and the multiple corporate failures in the past few years. However, it is imperitive that americans realize exactly how this crisis came about. For one, many americans were taking out loans they could not afford in the long term. They would buy an expensive house, sit on it for a few months, and then flip it, profiting from the difference in the sale and purchase price. Over time, this artificially inflated the housing market, raising the prices for something that cost quite a bit less. Also, adjustable rate mortgages were very popular, but suffered heavily when the housing bubble popped. This lead to a jump in ARM rates, causing many people who could not afford the new rates to default. Finally, many corporations such as Washington Mutual, Citigroup, and Wachovia bundled subprime, or failure prone, mortgages with low risk mortgages, and sold them as mortgage securities. When massive amounts of people began to default on their mortgages, they could simply not absorb the debt, and suffered a domino effect of falling stock prices, loan defaults, and lack of investor trust, until they were forced to file for bankruptcy and cease operations.
Current Economic Cris
By znasser - Posted on October 9th, 2008
All of this is true. People typicall prefer to pass blame. In actuality it is everyone's fault. Those who offer loans they know people can't afford and those who take the loans they know they can't pay for. It's been the American way of keeping up with the Jones'.
But it is also a little more than that. Federal debt is the leading cost to the failed economy. That debt is due to the war effort dragging on entirely too long. I served in Iraq during the initial ground invasion. We won back then, but somehow we felt it was our obligation to rebuild this country and provide for thier national defense spending nearly a trillion dollars that could have been reinvested in our own country. We did this to ourselves. Plus, don't get me started about the real focus should have been on Al Quida in Afghanistan.
So, gas prices are higher, everything is overinflated, companies are going under, jobs are being lost, people are getting more credit just to survive and pay for other bills, and the problem is only getting worse...