Sun, 20 Nov 2011, 5:13pm PST
That's one way of looking at it, Troy, but what about politicians who blocked regulation on derivatives, or scrapped existing regulations? We did vote for them, true, but it's a bit much to expect the majority of the population to understand the intricacies of an economy as complex as ours well enough to predict when we will cross that threshold of 'too many bad loans'.
From the perspectives of individual buyers, they were buying a property to live in that seemed destined to appreciate in value. Yes, they were wrong, but history was on their side - inflation has been going on for a long, long time, and even with all those bad loans the global economy could have chugged along with a much more minor recession if there had not been panic in the markets. Keeping people employed would have kept our GDP and tax revenue up and with proper regulation we could have resolved the years-worth of bad loans without a huge global depression. We didn't, but how is someone who's job is managing a cafe, or cleaning phone booths, or driving a taxi supposed to know that we would cross some invisible threshold and trigger a panic that led to recession that led to them losing their job? It'd be nice if everyone was an economist but who would you call when you needed a cab? Would you clean those phonebooths yourself?
Yes, we (not me, but us as a society) took some bad loans. Some people really gamed the system - shame on that small minority of people who just outright lied about their income just to make an easy buck! None of it would have happened, however, with proper regulation, so let's blame ... the manager of the cafe you like to visit, whose years of solid if low income combined with a steadily rising market led him/her to believe that buying a house would be a wise long-term financial option. The underclass should know their place and not try to break out of it. We certainly shouldn't blame politicians for crappy regulations or the wealthy class in this country that jealously guards every last penny, paying the lowest wages possible, rather than sharing the profits of the underclasses hard labor. After all, everyone is just trying to look out for number 1 - politicians do what it takes to get campaign contributions and gifts and rich people are just trying to maximize their own profit so they can take more vacations on luxury cruises while their peons do the hard work.
If we had just raised taxes on the personal income of the super wealthy (not on businesses), wages would have risen, the gap would have shrunk, and all of this would be moot. If people are paid fairly then bad loans are less of a problem - in fact then we could end government house subsidies and let people buy in cash or with smaller loans. Higher taxes = more public jobs = more mobility for employees ... forcing employers in the private sector to pay better while simultaneously decreasing the incentive to pay them less (by taxing more of their income, the lost income due to giving raises to those who work hard would be less).
Instead we lowered taxes and reduced regulations. Please correct me if I'm wrong.
Mon, 21 Nov 2011, 6:24am PST
nd even with all those bad loans the global economy could have chugged along with a much more minor recession if there had not been panic in the markets. Keeping people employed
No, it was the bubble itself keeping people employed.
Few people even understand this for some bizarre reason, since it should be obvious.
but what % of this country has the intelligence to be able to understand that graph without any explanation?
The "panic of the markets" was the realization that the good-times bubble machine was broken.
If we had just raised taxes on the personal income of the super wealthy (not on businesses), wages would have risen,
No, those are completely orthogonal things.
Mon, 21 Nov 2011, 8:53am PST
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Here's how to reduce the deficit. Terminate the pay and retirement benefits of every living senator or congressman. They violated their fiduciary duty and put America in a black hole of debt. Why should they be rewarded for their colossal failure?
Congress = dumb, dumber and dumberer.