The most succinct explanation of the economic meltdown I have yet seen.

[Fumesucker]

I got this in my email yesterday, I know it isn't a perfect and complete explanation, but it's short, sweet and easy to follow.

Too much money chasing too few investments was one of the "benefits" of massive tax cuts for the upper brackets and on capital gains.

Instead of that money going to the government for use on infrastructure, R&D, health care, and war (2 wars cost a lot), the Republicans decided to run massive deficits and then let the money sit in the hands of the wealthy (I'm talking multi-millionaires). Since they didn't have any material needs (got several houses, cars, servants, etc. already, and more money just keeps rolling in), they looked for areas sutiable for "investment."

But the more acurate term is speculation. These are people who decided to play around in the real estate market and try to make more money as novice developers, or speculated with hedge funds and stocks to try and get more and more wealth. And the party was good while the bubbles were growing. But they, for the most part, did not "invest" by creating new, hard assets & structures that will bear utility to society for decades to come. Instead, they helped wall street focus on creating CDOs, default swaps, and mortgage backed securities.

So we managed to get the worst of both worlds with our money: no benefit to society (no assets, since the bubble burst and destroyed the wealth), and massive deficits. Huzzah!

So we can't fix things with a "volcker," since he tamed inflation by raising interest rates (and we're facing deflation with central bank rates of almost 0). You just have to invest in the tangible things that will last (roads, bridges, energy infrastructure, rail, our national parks) and intangibles that will benefit society in the future (education, R&D, new health care system).

[xchrom]

1. hmmm -- that is pretty interesting. nt

[Greyhound]

2. Yes, succinct and accurate. Left out the fact that this is the third or fourth

cycle of this deception. Destroyed and sold off manufacturing base generated capital flowed into S&L rip-off generated market crash fled into IT caused dot-com insanity moved into housing wrought false valuations brought on total collapse, and at each step the parasites were given/stole more.
:kick:

[Greyhound]

3. Nobody but us is interested in this? Kick. n/t

[HughBeaumont]

6. Surprised how many economic entries, no matter how good, go ignored like white collar crime.

This journal entry, par example, got NO responses. Yes, it's a bit lengthy and yes it's a little "preach to the choir", but COME on.

[Greyhound]

7. DU is very representative of America and most just don't want to deal with

it. I'm convinced that that is how we got in this mess in the first place, it is easier to just go to work, buy your medication of choice and tune out.

One more :kick:

[anigbrowl]

17. "I got this in my email yesterday..." generally means it's a chain letter.

[Mean_Barbie]

4. I do suspect the bushtapo did it on purpose.

I think it was designed to happen to the next administration; it simply fell apart a few months too soon. Consider shrubs intent to destroy Social Security. $850 Billion bail out given to the banks would have secured social security, now this opportunity was given to Republican voters. The same is true for the larger social welfare system. How much money for those programs in upcoming years?

Bush tried to fart and then sneak off the elevator so someone else would take the blame. He crapped in his pants instead and got busted. Nevertheless, he did poison the well and bankrupted the next administration before it even started.

Republican governors have been doing this to states for years.

[Fumesucker]

5. I definitely wouldn't put it past them..

But I have my doubts they are smart enough to pull it off.

[TheWraith]

9. I think that's like expecting a howler monkey to field strip a machine gun.

Waaaaay too complicated for the intellect involved.

[Mean_Barbie]

16. Don't forget GHW Shrub and the S&L "Scandal"

If you remember, this happened under his dad's watch and the familiar suspects were all present. In fact, the rodents brother was directly involved. If I remember correctly, that too was a mortgage meltdown for the same basic reasons. Maybe they had on-the-job training. Also don't forget the "bankruptcy bill" that passed in advance of this problem.

[SmileyRose]

11. My sister in law told me this is Bill Clinton's fault

OK, so she's a freeper She swears there's a 10 year lag between what a president does and what happens in the economy. I told her, if that's true and this crap is the end result of Clinton's surpluses then God help her in 10 years because the pile of shit GW left behind is going to put this country in the history books once and for all. She'd better make sure the grandkids learn Chinese.

[SammyWinstonJack]

13. Another MIHOP for bu$hco.

:grr: :mad: :argh:

[Hannah Bell]

8. "Too much money chasing too few investments" as a result of the funneling

of wealth to the top since Reagan - including Bush's tax cuts.

And also making it a classic Marxian financial crisis.

[leftstreet]

10. Capitalism is dying

The Ruling Class and its envoys will meet in Davos this month to figure out how to breathe life back into it, but it's toast.

Buh-bye!

[SmileyRose]

12. So the question is

what method will the predators use to exploit the masses next?

[SoCalDem]

14. Don't forget, too..

When Volker was raising interest rates to curb inflation, we still had a fairly robust manfacturing base, and people still had pensions & unions had not totally tanked yet....

The high interest rates had an "interesting" side effect too.. For people who had some savings, it was a very GOOD thing..(we had just cashed out a profit-sharing plan when my husband changed jobs, and the almost 14% interest paid on that $13,500.00 over the course of a year allowed us to have a decent down-payment on a house)... We had just crashed & burned on a house we PAID almost 16% interest on and had to sell 8 months later at a loss when we were transferred, but the money we made on the CD from the profitsharing, kept us from being totally out of homeownership after that loss..

The situation we find ourselves in right now, is very different.. The interest rates are not all that high, but lending itself has become nearly impossible...and people these days are carrying excessive amounts of debt that's been piling up for years, because wages have not kept pace..

The situation is very reminiscent of how drug dealers operate.. For a long time they are quite generous with the drug...until the "mark" is addicted, and then the price skyrockets...EZ-Credit was the hallmark of the 90's & early 00's, and anyone who has ever been IN debt knows, it piles on a whole lot faster than it "goes away"..

NO amount of stimulus at the "employer" level will affect that existing debt, and products left unsold on shelves will not need to be replaced...at any cost... until people are able to afford to spend again..

[JHB]

15. That's a good point all too often missing from these discussions...

...the inflation of the financial markets due to the extra (untaxed) money sloshing around, not due to new wealth created.