So wait, is it the democrats or the republicans fault?
If this is Clintons fault how come it took almost 2 full terms of the monkeys administration for it to happen?
Very little that a president does during his term/s with regard to the economy will have any impact until after he leaves office, some decisions take decades to have any impact. In fact, presidents have far less impact than most people realize which is why it is a red herring to think they can change much, exceptions being like the New Deal and the Savings and Loan bailout, both of which directly correlate to what is happening now, and both of which can be traced back directly to decisions made by presidents, Roosevelt in the '30's and Carter in the late '70's.
Roosevelt changed the way banks are regulated and began to systematically socialize programs thereby exacerbating and extending the Great Depression. Although it did put a lot of people back to work, it also created a welfare state that the U.S. has never really recovered from. Carter's 1977 Community Reinvestment Act (CRA) forced banks to loan money to low income borrowers in an attempt to boost home-ownership amongst this demographic, regardless of the financial risk involved and the forerunner of sub prime loans was born.
The direct result then was inflationary spending and 21% prime rates (I remember those days well). The long term effect was as deregulation continued under Clinton, the CRA was used to force mortgage lenders, "backed" by Fanny and Freddie, to increase the raw % of loans to borrowers who simply could not afford the house they were buying, the incentive being commercial and investment bankers were no longer separated by any wall of regulation, investment bankers began buying up paper like crazy, and encouraging the continuing lowering of lending standards.
Banks recognized the only way to do this and be profitable in the short term was to offer sub prime loans. For this to work they had to work in quantity, not quality, so Clinton pressured them to lower their lending standards even further, so virtually anyone who could walk qualified, anyone with half a brain could see where this was heading but with all the fraud and corruption going, too many people with their hands in the pie were making 10's of millions to say anything. Those that did, like McCain, were ignored as the bubble continued to swell, none of it BTW was tied to gold, but rather to property that was by now inflated anywhere from 25-40% depending on geographical location. No way no how was this sustainable (see dot com bubble) and so now property , which is far more valuable than the gold Rick loves to promote is in a free fall and guess what? Gold is not rising at anywhere near the rates predicted, because it backs nothing.
Realistically, this mess is fixable by natural market correction cycles, capitalism by design accomplishes this with no outside interference. Lehman fails, B of A buys their paper for pennies on the dollar, and a financial institution that was poorly run and greedy beyond comprehension disappears, as it should. Those that bought homes or cars THEY knew they couldn't afford, bought because some moron at Countrywide, sniffing that big commission and knowing full well Lehman would buy the paper so it wouldn't be is problem told them "Sure, you can afford this 5 bedroom house on a Taco Bell salary" loses said house as they should. YOU DON'T REWARD BAD DECISIONS BY THROWING MONEY AT THE PROBLEM!!!!!!!!!!!!!!!!!!
There is no such thing as a business too big to fail, in a capitalist economy, you win or you lose. If you win, it is because you conducted business within the parameters you knew would work and expanded as the market allowed. If you lose, it is because you had a poor business model, mismanaged, grew too fast, were unrealistic in your forecasts, or took big risks that didn't pay off, or a combination of any of these. Mortgage lenders took RIDICULOUS risks they KNEW would spell disaster down the road, they deserve to fail, those that were smart deserve to come in and buy up the paper they can and reap the profits as they clean it up. The people in this instant gratification society we live in who weren't satisfied with a starter home, they had to have the biggest and the best, deserve to lose their homes.
Remember, NINETY FIVE PERCENT of all mortgages are NOT in default, the foolish 5 need to lose their homes anyway, just to stabilize the housing market and streamline the financial market. The biggest mistake anyone can make is bail out these idiots and create a totally socialized banking system, when have you EVER, EVER, heard of a government agency that can do something better than the private sector?
? The governments hands are all over this mess so the proof is in the pudding, THEY CAN'T!
Deregulation, failure to enforce stringent lending practices, fraud, greedy consumers, and lastly, 2 presidents who were more socialist than capitalist led to this.
