Our Current Financial Crisis

@bestboy19 (5482)
United States
October 13, 2008 7:41am CST
We are told by House Speaker Nancy Pelosi that our current financial situation is a result of the failed policies of the Bush Administration. What are those failed policies that have caused the housing bubble to burst and how did they cause it?
1 person likes this
3 responses
@xfahctor (14128)
• Lancaster, New Hampshire
13 Oct 08
Depends who you ask. Ask a democrat and they'll say it was failed Bush policies. Ask a republican and they will tell you it was failed democrat's policies. Truth be told, it goes far deeper than that. BOTH parties are to blame in one way or another in equal portion. The current crisis (at least it's now a crisis) is far more than a simple housing bubble. The housing bust is just one aspect. The housing aspect, again, BOTH parties. The push by groups to get everyone in a home of their own, whether they could afford it or not, artificialy inflated housing values. As a result, homes were eventualy mortgaged at far over-valued prices. As defaults began to occur and housing began to again become more available, the values dropped like a brick and over valued mortgages in default became worthless assets. Through the climb, many mortgage companies, unrestrained, pushed and pushed loans, making huge amounts of money on them untill defaults started comming in. Now, with housing returning to pre-bubble, more realistic values, they did not support the ammount of money owed on them as liquidity and as assets became essentialy worthless, the same assets that were backed at the sales price of the home. However, this would not have been nearly the problem it was if our money actualy had solid value. What we call "currency" is actualy mis-named. What we have are reserve notes that are backed by promises instead of something of actual solid value. So as more goes in to cirdculation, the less it becomes worth. There are so many aspects to this whole situation that even some of the most brilliant economic minds in the nation are struggling to understand it's all about and are only hazarding educated guesses. There is the possibility of artificial manipulation of the markets by some as well. For some one to simply blame this entire mess or even the majority of it on "failed Bush policies" is nothing more than campaign catch-phrasing. It is both inacurate and incomplete.
@bestboy19 (5482)
• United States
13 Oct 08
Are you saying it would have been better if banks had kept their money rather than loaning it out? Or are we all to blame for not being careful with our borrowing, as in credit cards use?
@xfahctor (14128)
• Lancaster, New Hampshire
13 Oct 08
"Are you saying it would have been better if banks had kept their money rather than loaning it out?" In some cases, yes but again, the mortgage issue is only one aspect of all this.
@bestboy19 (5482)
• United States
13 Oct 08
Does George Bush have anything to do with mortgages or the other aspects of this crisis?
@irisheyes (4373)
• United States
13 Oct 08
The probelm is so enormous and complex that there is more than enough blame to go around. The housing crises although bad would have been containable were it not for other serious mistakes. Problem is that both sides are cherrypicking what suits their argument. Most members of congress come from the legislature and the military and don't have a sound background in economics which has made them sitting ducks for the lobbyists hired by the financial industry. There was a key FDR banking statute that was removed through deregulation partially in the early 1980's and completely in 1999 that is one of the causes of the current mess and that also was at the root of the S&L collapse in the 1980's. (Glass Steagall/ Banking act of 1935) It was removed through bipartisan effort because it was felt to be anachronistic and to be holding back the economy. Why did they feel that way? Because the lobbyists for the financial industry spent 25 years and over 330 million dollars working to get rid of that one statute so they would have more money to play around with.
@bestboy19 (5482)
• United States
13 Oct 08
It's not just the Congress that is lacking in economic knowledge. I'd say the majority of Americans could use lessons on finance and the economy. Years ago I was watching the news and they were doing a piece about college kids getting credit cards. They talked to this one girl who had maxed out her card. She said, "I didn't know you had to pay it back." I remember thinking, "and this our future." Of course you have to ask if the banks are to blame for making credit too easy to get. Even so, if she had know anything about finance, she should have known that with a credit card you are borrowing money and will have to pay it back.
1 person likes this
@bobmnu (8160)
• United States
13 Oct 08
The Wall Street Journal ran an article calling for an investigation of Senator Dodd and his relationship with Fanny Mae and Freddie Mac and Countrywide, when he was a member of the Senate Banking Committee and now as Chair of that Committee. Newsmax ran an article pointing out that Rep Barry Frank's live in friend (from 1991 to 1998)was an executive at Fannie Mae while Rep Frank was serving an a committee that had oversight responsibilities for Fannie and Freddie. He is also the one that told the nation on TV that F & F were sound and in good shape a few months before the crash. It is interesting that the problem was caused by the Failed Bush Policies and that Both parties were to blame. No Republicans have been named but the following Democrats have been linked to the crash. Senator Obama, receiving large campaign donations from Fanny and Freddie. He is also one of the lawyers that helped ACORN with their law Suit against CITI bank charging discrimination for using credit reports and property values in making loans. You have Chris Dodd Member and Chair of the Banking Committee, Rep Barry Frank Member and Chair of the oversight Committee of the Banking and Finance community. There is President Roosevelt who signed a law forbidding Banks from crossing State Lines to do business. When this caused a shortage in mortgage money he created Fannie Mae to buy and sell mortgages. President Johnson made Fannie Mae a Government Enterprise, President Clinton - through Attorney General Reno - told banks to expand their high risk loans to poor people. It seems that Fannie Mae is a Democrat creation and it is their problem that they will not admit any involvement.
@bestboy19 (5482)
• United States
13 Oct 08
Thanks for commenting. It doesn't answer the question, but I wonder if there is an answer to my question. I think the democrats say things like that knowing many will believe without checking it out. So many people are so down on George Bush that they will believe the worst without any proof. With that kind of attitude, it makes me fearful of this countries future.