Who Caused the Economic Crisis?

[Matter-Eater Lad]

Who Caused the Economic Crisis?

 

There's plenty of blame to go around, and it doesn't fasten only on one party or even mainly on what Washington did or didn't do. As The Economist magazine noted recently, the problem is one of "layered irresponsibility ... with hard-working homeowners and billionaire villains each playing a role." Here's a partial list of those alleged to be at fault:

 

* The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.

 

* Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.

 

* Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.

 

* Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.

 

* The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.

 

* Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.

 

* Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.

 

* Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.

 

* The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.

 

* An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.

 

* Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.

 

The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) the crisis is just political grandstanding. We have no advice to offer on how best to solve the financial crisis. But these sorts of partisan caricatures can only make the task more difficult.

 

http://www.factcheck.org/elections-2008/who_caused_the_economic_crisis.html

 

We should hold everyone accountable for this mess. So far most do not want to, they just blame the opposite side for the whole mess.

[mc_squared]

In summary: Greedy b*stards everywhere.:angry:

[Matter-Eater Lad]

Yeap....in the private sector and in the government...and a flawed system to start with...a credit society does not work. Credit and loans are ok, but when you base so much of economy on it, it does not work as we can see now.

[mc_squared]

It's a chain of greed, working its way from top to bottom, fuelled by western society and the media.

People are desperate to have things they don't really need and can't afford, while those who have more money (and power) than they could ever need just keep amassing more and more, setting a bad example to those further down the money chain.

And nobody wants to work for anything any more - they just want to go on American Idol or (insert country here)'s Got Talent and get instant wealth and fame.:(

[bart]

Its the banks fault, pushing people to get loans !

[Black Rose]

The one thing which has reduced is the number of leaflets in magazines/junk mail promoting loans since the crisis started.

[Matter-Eater Lad]

Its the banks fault, pushing people to get loans !

 

The banks being forced by Congress who would give them heavy penalties if they did not loan out a certain amount. But not all the subprime loans were because of Congress's laws. A huge amount of them were done by banks not under the influence of the law. Its corruption and greed in the government and private sector that came together to take down our economies.

 

Fannie Mae and Freddie Mac need to be investigated because there is a lot of evidence of them breaking the law.

 

The one thing which has reduced is the number of leaflets in magazines/junk mail promoting loans since the crisis started.

 

But it's increased my credit card calling after me forgetting to pay it last month..

 

“Cut everything. Drop your cable package and TiVo. Say goodbye to Applebee's and Starbucks. Cancel the ski trip. Slash every single penny you possibly can from your household budgets and start building up cash. This is now a financial war: You versus the economy. And most Americans are badly prepared. They have far too little cash on hand to cope with a major downturn.” - Brett Arends, The Wall Street Journal, September 2008

[Black Rose]

I have also noticed on my credit card statements (which I always pay off in full :smug:) the time allowed between the statement date and date the payment is due is slowly decreasing.

 

Last year it was 21 days, the last statement I have to pay within 17 days

[Matter-Eater Lad]

those greedy bastards...I bet they raised everyones interest too.

[Black Rose]

Interest rates have been going up since the OFT put a limit on how much they could charge if you made a late payment etc to £12 (from ~ £30 they were charging)

[bart]

I still keep getting letters from my Bank offering me a 25 000 € loan !

[Black Rose]

Lucky you, spam like that for me has dried up

[Matter-Eater Lad]

I still keep getting letters from my Bank offering me a 25 000 € loan !

 

Enjoy it while you can, becuase Europe will have a similar problem to America's.

[Saffire]

The banks should all just go to those "payday loans" places we have littered across the southeastern US. Sure, the interest rates are 100%, but it's EASY MONEY! ;)