What caused the Economic recession/depression?

Discussion in 'Economy' started by Avatar4321, Jul 8, 2009.

  1. Avatar4321
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    Avatar4321 Diamond Member Gold Supporting Member

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    I am curious how many people can explain what the understand our current economic problems to be without a partisan stance.

    Here is what you need to do:

    1) Using your own words, tell us why we are in Economic decline.
    2) You cannot simply blame Bush, Obama, Democrats, Republicans or any other person. However, you can cite policies without specific reference to who authored them.

    Good luck.
     
  2. Sweet Willy
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    Sweet Willy BANNED

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    It's a bit of an over simplification but out of control lending was the problem.

    You can't lend what you don't have. Well, I guess we just proved that you can try to do that, but sooner or later, you have to balance the check book.
     
  3. midcan5
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    midcan5 liberal / progressive

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    There is obviously no single cause but a group of factors that combined to create the downturn. Probably number one is the lack of control or discipline of the individual, family, banking, investment, and corporate entities. Americans live on plastic and want too much.

    Our whole system is premised on growth, growth is only sustainable for so long, but knowing when to cut back is not a strong human trait.

    Financial institutions saw the housing bubble as an easy way to riches. Low interest rates and lots of extra cash caused by tax cuts made everyone want more - and allowed them for a while to do that.

    Loss of regulatory discipline and actual regulatory agencies for checking financial health created a atmosphere of they do it, I can do it.

    Self interest, so what if this is risky it is insured. So what if this is risky this is a big corporation, so what [add your own].... Profit as gawd and only goal.

    The American worker has nothing to do. Exaggeration, but technology and outsourcing have created a situation where American workers cannot compete and even a small decrease in demand has a big effect on employment. Corporations can make more profit in ???

    The idea that the system was strong and even though the bet was risky it would not fail. Change is never observed except from the future/present looking back at the past. No one looked very closely at all the junk investments flying around. Money is the root of all evil?

    The Internet bubble went up and when it crashed the impact was only a small recession, housing was more real thus it would never crash.

    Human greed, dishonestly, and self centeredness.



    "Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone." John Maynard Keynes

    "The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries." Winston Churchill

    "Under capitalism, man exploits man. Under communism, it's just the opposite." John Kenneth Galbraith
     
  4. aDrag
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    aDrag BANNED

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    I think of it like a snake outgrowing its skin: it has to shed a layer to let the shiny scales show. All this stimulus money being dumped into the system will (hopefully) keep the dull old scales shiny enough to keep slithering until they can fall off on their own.
     
  5. WillowTree
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    WillowTree Diamond Member

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    people broke the golden rule of finance! "If something looks too good to be true, it probably is."


    pressure from ACORN to makes loans available to the poor probably a good idea at heart but it went beyond the pale. People borrowed money they could never hope to pay back. loans went to people who had no jobs no income and no collateral even.. loans loans loans,, the huge housing bubble was born.. then all the loans from the banks were sold out to derivatives and hedge funds,, people were guaranteed 10% returns on their money,, course it evaporated cause it was too good to be true..the government in the form of fannie and freddie promised to make good on all these shoddy loans,,:eusa_whistle::eusa_whistle::eusa_whistle: so when the bubble burst who got hurt? investors, shareholders, and retirement funds.. gone whoosh over a trillion dollars gone up in smoke.. now no one wants to invest,, it's like pissing in the ocean.. the government now prints all the money they want or they borrow it from China.. big time inflation headed our way.. big time..
     
  6. Kevin_Kennedy
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    Kevin_Kennedy Defend Liberty

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    The policy of artificially low interest rates created the bubble that must inevitably bust. Had the market been allowed to set the interest rates then the bubble would not have occurred and it's unlikely that any of the other factors that added to our downturn would have been enough to force us into a recession.
     
  7. Sweet Willy
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    Sweet Willy BANNED

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    There is little risk in borrowing money. You have nothing, you have nothing to lose. There is a great risk in loaning money, at least if it's your money or if you expect to be held responsible. There was an atmosphere that took hold, somewhere along the line, that lending was risk free. That somehow, these people with nothing were the ones taking the risk and should be held responsible for taking money they couldn't repay. That's just fine if it makes you feel better but you're avoiding some very, very basic facts: THEY HAD NOTHING TO LOSE. You can try to place any amount of blame you want on these people but you FAIL on the face of a very evident and undeniable truth. They had nothing to lose. There was no risk for them. What did they risk?

    Any attempts to blame the borrowers is just bullshit. You don't have to loan anyone anything. If the rules weren't to your liking and you now claim that someone forced you to loan money, that's bullshit too. Anyone in the business of loaning money is free to get out of that business. If the rules were getting too risky for you, get the fuck out.

    Spreading around blame is one thing, if it somehow makes you feel better but the damn truth of the matter shouldn't be lost in this. If it is your money and you allow it to be loaned out, you are the sole bearer of the risk. Period. Don't want to lose it, don't loan it. It is physically impossible to transfer the risk of losing that money to anyone else. You can write it, legislate it, decree it, paint it on the water tower. At the end of the day, the people who started with nothing to lose, have lost nothing. The people who did, lost it. It is a fact that can not be veiled by any law except natural law.
     
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  8. Sweet Willy
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    Sweet Willy BANNED

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    I don't fully accept this.

    Lower rates means lower returns on your money which means the loans carried more risk, for less return. Yet lenders behaved as if there was less risk in such a market. They sent out more and more money, despite lower returns, risking more of their money in order to turn more profits. The rate doesn't change what ones perception of risk should be. Anytime you loan $20, you risk $20. Nothing will ever change that.
     
  9. pete
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    pete The food stamp president

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    "people" in/with power wanted MORE and the gamble didnt end in their favor. Its really that simple.
    Why do we bail them out? Try borrowing from the mob ... a marker in LasVegas ... a local bookie
    A friends brother in law is a mortgage lender with nice cars and a beach house etc ... hes struggling to make bills now simply because he didnt stay within means. Most if not all american are greedy and want ....
     
  10. WillowTree
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    WillowTree Diamond Member

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    you fail. bigtime.
     

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