What created the world economics prob?

[etilit]

Short answer…Banks

Long answer…tech stocks and the lack of banks to understand how to capitalize on it..so they loaned money without any collateral..imagine me as a small business man..and I could overdraft my bank acct for thousands of dollars and the bank would pay it…idiots!!! Now imagine a company or country and they did it for billions

what do you think?

 

[Tjerk12]

Greed, egoism and the possibility to earn money with money which raised it to power. In medieval times the Vatican forbade to ask interest for money. Now they have their own commercial bank.

 

[gb2000ie]

The shot answer is not banks - it's greed.

The greed of the banks could not have killed the economy without help - the greedy people who took on the sub-prime mortgages, and the greedy stock brokers who sold them on. Not to mention the greedy politicians who were bribed into tearing down regulation.

It would be nice to think that we're all innocent, and we can just blame the banks for everything, but that's childishly simplistic, there's so much more to it than that.

B.

 

[topdog]

It's complicated. (That's why this is the longest post I've ever written - and that's saying something!) And yet, it's not all that complicated. As gb2000ie said, we are all linked together in this. The consumers, the financial houses, and the institutions that have billions of dollars to save for the future.

The Background

Once upon a time (starting in the late 1990's) there began an exponential increase in the amount of money that big institutions all around the world were saving. Money from China, Russia, and India was pouring into the financial system for the first time. In a few years there was nearly twice as much money being saved and invested as in, say, the 1980's. This isn't your family savings - this is big institutional investors like pension funds, national banks, and insurance companies.

All this money needed to be invested safely (not in risky things like stocks), but money mangers still needed to get some return on their savings. That is what determined their professional reputation - getting a reasonable profit, without losing any of their clients money. The problem was, there was more money looking for a safe harbor than there were things to put the money in.

Traditionally the safest investment was US Treasury bonds - low interest, but very safe. But in the early 2000's Alan Greespan kept Treasury interest rates low; good for borrowers, but bad for investors. So, the money managers kept looking for something that would pay better than Treasuries. But the number of safe investments were limited, and there was more and more money trying to get into them.

The Bright Idea

Then someone in the financial industry was inspired. What investment is safer than home mortgages? The housing market was going up much faster than Treasuries, and the default rate was very low - so it was overall a reasonably secure market. But individual mortgages are tiny - much to small to be useful when you have a billion dollars to manage for a client.

Then came the "Aha!" moment. What if instead of dealing with individual homes, we were to bundle thousands of home mortgages together and sell them as a security? Investor clients would have all the advantages of the home market (fast rising value and low default rate) without the disadvantages of having to manage a bunch of monthly payments from homeowners! And thus was born the Mortgage Backed Security.

The financial firms put the deals together, called up home mortgage lenders and bought all the "paper", the ownership of the mortgage debt. They paid the home mortgage companies very well to take these loans off their hands. This was the ultimate win-win-win situation:

• Institutional investors jumped at the chance to get 5% - 6% return on their invested money. (Alan Greespan was only paying them 1%.)
• Financial houses had a new hot product to sell.
• Mortgage companies got cash now, instead of having to wait for the mortgage to be paid off in 30 years. Plus they no longer had the risk of default - that was passed on to the new owners.

Everyone was happy. Until around 2003. There are only so many mortgages to buy. The investors called the financiers: "We need more of these MBS investments. We'll even pay you more to put them together! The financiers called the mortgage brokers: "We need more mortgages. We'll even pay you more money for them!" The mortgage brokers called the real estate agencies: "We need more loans - we'll give your clients even better terms!". The real estate people told the prospective home buyers: "Now is the time to buy. The value of the house will only increase, and I can get you even better terms on a loan!"

"Yes!" said the homebuyers. "Yes!" said the loan companies. "Yes!" said the financiers. "More!" said the investors. Because more and more big investment money was coming into the system from new economies, the demand only got bigger.

The Turning Point

By 2005 pretty much everyone in the US who qualified for a loan was in a home. The new loans slowed down. But the demand up the food chain was only increasing. "Get us more mortgages! We'll pay you even more!" cried the financial houses to the loan companies.

What to do? The mortgage companies then made a calculation. Since the investment firms will pay us even more money, we can adjust our calculation for what qualifies as a risky loan. For the first time, it made financial sense to reduce the qualifications for a loan, since their money was now being made by selling loans to Wall Street, not in managing home mortgages for 30 years. And it was a calculation that really had no downside for the loan companies, since the paper was quickly sold off they no longer had any risk that they would be stuck with a bad loan. That was now someone else's problem.

So, it became easier and easier to qualify for a home loan. "Hurray!" said home buyers, real estate agents, loan companies, financial firms, and institutional investors. Every few months, some loan company would take the requirements even lower. Then the others would have to follow suit to stay competitive.

Meanwhile, in another part of the forest...

At the financial firms, in another part of the building, another group got a bright idea of a new product to sell. Risk makes everyone nervous - especially the big institutional investors (insurance companies, pension funds, etc.). They want to make money, but the one thing that they absolutely cannot do is lose money. So financial firms come up with a way to take away risk that comes from more profitiable investments. They will personally guarantee that investors can recover their money - for a monthly percentage of course. These guarantees are called collateralized debt obligations (CDOs). And what makes them even more safe is that they are backed by another investment house (for a fee, naturally).

This makes sense to the investors, because even with the fee, they are still making more money than in more stable securities. And they are risk-free, since the worst case scenario is that an investment goes bad + the financial firm fails - in which case the partner investment house would pay out the CDO.

The customer is happy and making money, and the CDO is essentially free income every month for the investment house partners. Once again it's win-win-win.

This catches on, and soon everyone is selling them and guaranteeing each other's transactions.

Asleep at the wheel?

What about regulators? The Federal Reserve, SEC, the FDIC, the rating agencies? The Fed was primarily concerned with containing inflation and recession. The .COM collapse and the 9/11 economic hits were their main focus, and they were trying to steer the economy out of that. The SEC regulates stocks, and the FDIC regulates banks.

These investment houses (Bear Stearns, Morgan Stanley, Goldman Sachs, Lehman Brothers, etc.) are not banks and their investments are not publicly traded. Any of these agencies could have claimed some jurisdiction if they wanted to push it - but certainly not in the pro-business Bush administration. (And not during the Clinton administration, either.)

And besides that, there was nothing wrong that anyone could see. As a matter of fact, business looked brisk and healthy.

The rating agencies, (Standard and Poors, Moody), rated the mortgage backed securities as AAA, their highest rating, equivalent to US Treasury Bonds. That was because all their spreadsheets that analyzed the history of mortgages said that the default rate was traditionally very low.

Of course, what they weren't taking into account was that the loan standards were falling by the month - and the "traditional" default rate was soon going to be irrelevant.

The other shoe drops

So as they financial engine roared ahead, everyone was making money and the smart people (i.e., everyone but the homeowners) were also hedging their bets, so profits were high and risk seemed low.

Then something happened. It was hardly unexpected - housing prices stopped rising in late 2006. Then housing prices started to fall in 2007. It's a simple matter of supply and demand. Even with rock-bottom loan qualifications there are only so many people that want to buy a house. "House flipping" had practically become a sport. (It did become several TV shows.) Speculators were building condos everywhere. Rows of McMansions were pushing into farm lands far outside cities. Supply finally exceeded demand.

Suddenly speculators with multiple properties were stuck with them. And they were counting a quick buck, not having to pay back months of payments on houses no one wanted anymore. They went broke. They defaulted (many walked away) from their mortgages.

Next hit were the homeowners that had signed on for baloon payments, based on the idea that they could refinance since the home would be worth more when the payment became due. Not only was the house not worth more - it was worth less. They owed more than the home was currently worth (they were "under water"). They defaulted.

This was just a sad local story until the aculated effect sapped the profits of the big institutional investors at the top of the food chain. Remember them? The people who absolutely could not risk losing money? Well, they were now losing money, and they wanted OUT. NOW.

No only that, they now invoked those investment guarantees. But the financial firms were highly leveraged themselves; they didn't keep that kind of cash on hand. This threatened to bring them down. They invoked the partner CDOs that they had with other firms. Who also were highly leveraged and didn't have the money. All of a sudden this invisible web of mutual guarantees and giant losses started moving through the industry all over the world.

Collapse

Bear Stearns had to face the collapse of it's mortgage backed hedge funds in the summer of 2007, and struggled for months to borrow, restructure and stay afloat, but sucbed in the spring of 2008. It was sold to JP Morgan Stanley for $10 a share. (Weeks earlier it was valued at $133/ share.) Lehman Brothers was next. US Fed officials tried to arrange a private bail out to prevent further collapse, but stopped short of using federal funds. They couldn't prevent it from going under - it was too easy to bet against the firms survival (short selling) and for speculators to make profits on its demise.

The dominoes were falling. Almost every financial institution, whether they were a bank, insurance company, pension fund, or investment firm either owned, or were on the hook for CDOs and Mortgage securities. No firm trusted anyone else because there was no way to know what "toxic assets" they had on their books. Everyone had their own crises to deal with, so no financial institution wanted to lend to an ailing firm.

The free market was about to strangle itself to death.

Government to the rescue

The only actor big enough to do a anything were the US and other governments. Emergency plans were made. There was no provision that allowed the US government to own or intervene in private firms. Legislation was quickly passed that gave the US Treasury some legal cover, learning the lesson from the failure of Lehman Brothers, they stepped in started buying up all the "toxic assets" in order to insure to investors that they could lend to financial firms without the risk of owning some unknown amount of bad debt.

European countries did what they could, but since the European Union does not have a unified financial system and most financial firms are global, there was not a lot they could individually do.

The US continued pumping money into financials as the Bush administration ended and the Obama administration began. Some were bought, but major meltdown was avoided.

Bankruptcy, Unemployment, Recession

Down at the bottom of the food chain, businesses found it impossible to get loans. Banks were risk-averse, and wanted to hold on to cash because there were so many unknown pitfalls. Since businesses couldn't expand, or in some cases even do day-to-day business, they failed or stagnated. This led to lay-offs. Which led to more mortgage defaults. Which led to even tighter credit. Which led to a drop in consumer spending. Which led to business stagnation - and the cycle continued over and over.

The economy ground to a halt.

The moral of the story

We are well into and out of the recession now, but the economy is still like molasses. In addition, we see now that the boom years covered up some trends that are now inescapable.

• The housing market as a whole is dead until all the bad loans and foreclosures are cleared out. We are still quite a way from that point.
• Manufacturing and unskilled labor has moved irrevocably out of the developed western countries. It's not coming back, no matter how many "Made in the USA" or "Buy British" campaigns are run. That means many blue collar workers currently out of work, will never work again.
• The self-regulating free market is a myth. There is no incentive to fix a system where one party makes the profit while another holds all the risk. Capitalism assumes that business will avoid unprofitable risk. But our systems have become too sophisticated for their own good.

I am sure there many other lessons can be drawn, and their are many views of the way to go forward. (Please share yours.)

But this (admittedly very long - congratulations for making it this far) story is how we got to where we are.

Place blame where you will.

 

[777]

The moral of the story

We are well into and out of the recession now, but the economy is still like molasses. In addition, we see now that the boom years covered up some trends that are now inescapable.

• The housing market as a whole is dead until all the bad loans and foreclosures are cleared out. We are still quite a way from that point.
• Manufacturing and unskilled labor has moved irrevocably out of the developed western countries. It's not coming back, no matter how many "Made in the USA" or "Buy British" campaigns are run. That means many blue collar workers currently out of work, will never work again.
• The self-regulating free market is a myth. There is no incentive to fix a system where one party makes the profit while another holds all the risk. Capitalism assumes that business will avoid unprofitable risk. But our systems have become too sophisticated for their own good.

I am sure there many other lessons can be drawn, and their are many views of the way to go forward. (Please share yours.)

But this (admittedly very long - congratulations for making it this far) story is how we got to where we are.

Place blame where you will.

Fantastic post, thank you!

Moral of the story - there is none it feels. Recession is part of the system and it's profitable for certain people.

The whole system would have to undergo changes, especially how money is made (in the banks) and to whom the risks fall, but there doesn't seem to be political will for anything like that. (Looking from the EU side of things.)

 

[gb2000ie]

Fantastic post topdog - it's good to step back and see the whole scene from 20,000ft like that.

From your reading what stands out is that everything in the US was built on top of the assumption that property prices will always go up. That is of course total bollox, so of course the whole system collapsed! Like road runner running off a cliff, the economy was fine, till someone looked down and say that it was all based on nothing, and with that realisation, the dominos fell!

The Irish story is very much the same, except we had a government that was earning record revenues off of taxing the construction industry, which did everything it could to incentive that industry, to keep the money coming. When the housing market collapsed, so did government revenue, and it soon became clear that there was not enough money coming in each year to run the country. This would have been fine had it not been for one fatal flaw, the government, in a desperate effort to stop the banks from collapsing, guaranteed all banks' debt. The theory was that this was just a liquidity crisis, so the guarantee would never be called for, as soon as the market saw that there was no risk in lending to Irish banks, things would sort them selves out.

Then, when the world looked down, it became clear that the balance sheets in our banks were all based on a fiction, inflated property prices. When the real value of the properties was used, our banks were MASSIVELY under-capitalised, and basically insolvent. Now that guarantee the people hand promised would never be called on, was called on, and a country with deficits became a country with deficits and MASSIVE debt. The markets got jittery, and interest rates for Irish sovereign debt shot up, heading well past the 'unimaginably high' 5%, and climbing steadily, off towards double-digit numbers. It was said that if it crossed 7% the debt burden would become so high that the country would have to default, 7% was crossed, and in came the IMF and the EU to offer Ireland a 'bail out', we could borrow money from them instead of the markets, but at a punitive interest rate to punish us for being bold. Our economy lurched and collapsed, so now the debt gets ever higher as tax revenues fall, and deficits spiral. Vicious cut follows vicious cut, but the cuts shrink the economy, and the shrinking economy shrinks revenues, so more cuts are needed and the cycle of grinding deflation continues. Last week the EU saw sense, and remove the punitive interest rate on the loans to Ireland, we'll now just pay the ECB standard rate, but, it may be too little too late. Time will tell.

Ultimately, you can only build an empire on a fiction for so long, eventually reality kicks in.

For me the core lesson is that unregulated capitalism is deeply flawed, as flawed as communism, but to the opposite extreme. It leads to chaos, big booms, followed by big busts. The kind if chaos we haven't seen since the great depression, and the reason for that is that the great depression gave us regulation. As that regulation was chipped away, the seeds for our downfall were being sown. Like a wild horse, the immense power of capitalism needs to be reigned in, to be controlled, so that we can harness it's power without being destroyed by it.

Ronald Regan set us on this path with his anti-government nonsense. When you remove government, you remove stability, bad government is bad, but no government is worse!

B.

 

[777]

Ultimately, you can only build an empire on a fiction for so long, eventually reality kicks in.

For me the core lesson is that unregulated capitalism is deeply flawed, as flawed as communism, but to the opposite extreme. It leads to chaos, big booms, followed by big busts. The kind if chaos we haven't seen since the great depression, and the reason for that is that the great depression gave us regulation. As that regulation was chipped away, the seeds for our downfall were being sown. Like a wild horse, the immense power of capitalism needs to be reigned in, to be controlled, so that we can harness it's power without being destroyed by it.

Ronald Regan set us on this path with his anti-government nonsense. When you remove government, you remove stability, bad government is bad, but no government is worse!

B.

Fantastic post from you too! I so agree with the the last paragraph... I'm afraid we're still moving towards the "less government involvement", UK leading the way, the rest of the Europe following sooner or later, even when it's clear that it doesn't work.

 

[lhardwick69]

i know alot of people around here blame obama for it but the damage was already done but obama got stuck trying to clean it up--i dont know what is causing it all but i do agree with what some say and that is greed-- i work for living so i need to drive to work--my drive to and from work and to do few errands on weekends would cost me 30 to 35 bucks a week in gas-- now to do same thing costes me 70 to 80 bucks a week in gas--with that happening this takes 80 bucks away from other things i need like clothes food shoes--and entertainment--like video game here and there a movie to watch and so on so less spending on stuff like that isnt good for the economy--now imagine thousands of people at 80 bucks a week or every two weeks and you have thousands up to millions of less money being poured back into the economy--
then soon as things began going down in businesses--alot of companies closed--movie gallery--blockbusters closed their doors and companies cut back on hours and all making it more difficult on the employees to run the stroes like walmart -dollar general store and so on so that puts less people in store to run them but these big head honchos saving themselves a few bucks is only costing them more in the long run because alot of people wont wait to be served--


if the government would cut money where it needs to be and quit taxing taxpayers making less than 40 thousand bucks a yr to death and make people that make over 50 thousand a year pay equal amount and quit giving taxcuts to them things would start going alot better--they say price of barrell of oil or whatever it is is at an all time low but yet gas is still 3.75 a gallon here --which if its that low it needs to be less than three bucks per gallon


some people say if you tax the rich they will pull up shop and leave the country--i say let them leave and then the country can rebuild from ground up and work on evening out the people instead of the rich getting richer and the poor getting poorer

 

[gb2000ie]

i know alot of people around here blame obama for it but the damage was already done but obama got stuck trying to clean it up--i dont know what is causing it all but i do agree with what some say and that is greed-- i work for living so i need to drive to work--my drive to and from work and to do few errands on weekends would cost me 30 to 35 bucks a week in gas-- now to do same thing costes me 70 to 80 bucks a week in gas--with that happening this takes 80 bucks away from other things i need like clothes food shoes--and entertainment--like video game here and there a movie to watch and so on so less spending on stuff like that isnt good for the economy--now imagine thousands of people at 80 bucks a week or every two weeks and you have thousands up to millions of less money being poured back into the economy--
then soon as things began going down in businesses--alot of companies closed--movie gallery--blockbusters closed their doors and companies cut back on hours and all making it more difficult on the employees to run the stroes like walmart -dollar general store and so on so that puts less people in store to run them but these big head honchos saving themselves a few bucks is only costing them more in the long run because alot of people wont wait to be served--


if the government would cut money where it needs to be and quit taxing taxpayers making less than 40 thousand bucks a yr to death and make people that make over 50 thousand a year pay equal amount and quit giving taxcuts to them things would start going alot better--they say price of barrell of oil or whatever it is is at an all time low but yet gas is still 3.75 a gallon here --which if its that low it needs to be less than three bucks per gallon


some people say if you tax the rich they will pull up shop and leave the country--i say let them leave and then the country can rebuild from ground up and work on evening out the people instead of the rich getting richer and the poor getting poorer

I find it interesting that oil companies are making record profits at the moment, yet they insist they can't lower prices, or do without government subsidies. If making more money than anyone else ever has in the history of civilisation isn't enough to get off the government teat, what is?

B.

 

[topdog]

...From your reading what stands out is that everything in the US was built on top of the assumption that property prices will always go up. That is of course total bollox, so of course the whole system collapsed!

Yes, they assumed property values would go up, but in their defense I have to say that during my entire lifetime, property values have never gone down in the US - they have only gone up (until the recent crises). Yes there were local booms and busts in California, Texas and Florida. But the worst that had happened nation-wide is that prices would plateau. So the idea that someone could buy a house in 2006 for $300,000 and in 2008 it would be worth less than $200, 000 was unimaginable.

...For me the core lesson is that unregulated capitalism is deeply flawed, as flawed as communism, but to the opposite extreme. It leads to chaos, big booms, followed by big busts. ...

Very true. However, I think that the conservatives are also correct when they say that government regulation stifles profits. It's a trade off, really. More regulation gives you a less volatile economy, but you are going to sacrifice some economic high points along the way. The free market gives you unfettered boom times, but you have to be willing to live with the busts.

The issue is even more pressing today. Do we remove regulation to spur the economy, or do we add regulation to address some of the excesses that got us into this mess to begin with?

... The Irish story is very much the same ... Our economy lurched and collapsed, so now the debt gets ever higher as tax revenues fall, and deficits spiral. Vicious cut follows vicious cut, but the cuts shrink the economy, and the shrinking economy shrinks revenues, so more cuts are needed and the cycle of grinding deflation continues. Last week the EU saw sense, and remove the punitive interest rate on the loans to Ireland, we'll now just pay the ECB standard rate, but, it may be too little too late. Time will tell...

Ireland has been hit very hard (maybe second only to Iceland). Thanks for this picture from the inside. I do think that it's a tribute to Irish resolve that despite the burden, they look smart and resourceful compared to fellow EU partners Greece, Italy, Spain and Portugal.

 

[777]

Very true. However, I think that the conservatives are also correct when they say that government regulation stifles profits. It's a trade off, really. More regulation gives you a less volatile economy, but you are going to sacrifice some economic high points along the way. The free market gives you unfettered boom times, but you have to be willing to live with the busts.

The issue is even more pressing today. Do we remove regulation to spur the economy, or do we add regulation to address some of the excesses that got us into this mess to begin with?

Government regulation may stifle profits, but it needs to be asked, what good does the profits earned this way do? The rich won't do anything for the country with it. They don't invest just to boost the economy, they don't even consume more than they already do! What use is more money for the rich? If you consider the US, only the top 5 % of the population can keep up with the inflation (it's some time since I saw the charts so forgive me any mistakes). Everyone else loses money constantly, and it hits the poor hardest, making it impossible to make a living with the wages that only profit the owners, and lack of government provided resources that would make it possible to live with the little money they earn, daycare and healtcare in the top of the list, doesn't help.

 

[topdog]

Government regulation may stifle profits, but it needs to be asked, what good does the profits earned this way do? ...

In the long view, I completely agree. A boom that benefits only the wealthy (which is what we have had for decades) is as socially destabilizing for the US and Europe as it was for the French and Russian aristocracy before their revolutions.

In the short term, however, these profits do have a positive influence. They stimulate the economy and push it forward with more consumer spending - which allows business to grow, hire, and innovate. In the US, the biggest economic obstacle is the flat consumer spending, which keeps business in a holding pattern waiting for customers.

That's why I think that there is a reasonable argument to be made that at this moment less business restriction makes sense. (What conservatives hate to admit however, is that the same argument can be made for temporary government spending and incentives to stimulate the economy.)

On the other hand, if we don't tighten our regulation now after a terrible disaster - when will we do that? No one wants to pull back the reigns during the boom times when everything is going fine (or so we think) and regulation will only "spoil the party".

 

[gb2000ie]

On the other hand, if we don't tighten our regulation now after a terrible disaster - when will we do that? No one wants to pull back the reigns during the boom times when everything is going fine (or so we think) and regulation will only "spoil the party".

This is the bit that I really worry about. After the great depression we got Glass-Stiegel, what have we gotten after the great recession? An consumer protection agency which congress is trying to defund before it even had a director!

What safeguards do we have in place today to prevent this all happening again once people have money again? From what I can seen, NOTHING!

B.

 

[iryhousen]

The real estate bubble that burst. Bill Clinton explained the whole problem in less than 20 minutes on David Letterman about three years ago. I can't find all the clips of that on YT, but here is one:

 

[gmanone]

The entire financial system is an illusion. Since money is no longer linked to gold or silver, the numbers do not actually mean anything. All they have to do is "lend" ever higher digits into circulation. The problem with this is, if they get carried away, and people figure out what is actually going on, then you have a situation like Zimbabwe, where the money becomes all but meaningless and prices double every single day.

So they make up fancy explanations instead, to keep the masses entertained. They always make it sound complex, so that people don't ask too many questions.

 

[Behrluvr]

No question, the liberal policies of high taxation, welfare state economics and deficit spending is causing the current economic disaster in the US and world wide. Also the liberal mindset of the "nanny state" where big government controls your life from cradle to grave does the most to kill human initiative .


Why work when you can go on welfare? Why work when you can retire in middle age in Europe or as a union member in the US? Why take charge of your own life when the socialist governments will do it for you? All you have to do is submit. Why take care of your own children or your elderly parents when the state will do it for you?

If the nanny state runs short of cash for entitlements, pensions, health care, education et al, well, just print more money or borrow more from China. Refinance the debt, push it into the future where someone else can deal with it. Indeed, why ever pay the national debts off at all? Just keep rolling it over....

 

[zortek]

The entire financial system is an illusion. Since money is no longer linked to gold or silver, the numbers do not actually mean anything.

my thoughts exactly.... it's all so abstract and such a game...

investing in speculation ??? wtf ???

economics are not my specialty, but this concept makes no logical sense to me at all.

i remember reading about a decade ago a report that estimated the total global debt exceeded the total global wealth (including known unexploited resources) by more than 20 times.
(i cannot remember who the report was by, so am willing to be dismissed as citing hearsay, but at the time it was credible to me)

my personal belief is that we need an effective degree of regulation on finance and the economy.
sure, we need business and profit, but the function of the sector is to make a profit, and this precludes it from acting in the interest of the 'bigger picture' for society overall.

 

[tiggertoo]

It's complicated. (That's why this is the longest post I've ever written

no diss intended to anyone here, but who really cares about the why....since it's too late to go back. more important is how can we fix it. yeah, I know that the usual reply is that we need to know how it went bad in order to make it good. I dont believe that, since laws keep changing and what was okay once is now against the law. so maybe the politicians need to have their feet held to the fire when laws that they pass fuck up the economy. no one takes responsibility for mistakes, and maybe thats why we have this economic mess.

 

[gb2000ie]

No question, the liberal policies of high taxation, welfare state economics and deficit spending is causing the current economic disaster in the US and world wide. Also the liberal mindset of the "nanny state" where big government controls your life from cradle to grave does the most to kill human initiative .


Why work when you can go on welfare? Why work when you can retire in middle age in Europe or as a union member in the US? Why take charge of your own life when the socialist governments will do it for you? All you have to do is submit. Why take care of your own children or your elderly parents when the state will do it for you?

If the nanny state runs short of cash for entitlements, pensions, health care, education et al, well, just print more money or borrow more from China. Refinance the debt, push it into the future where someone else can deal with it. Indeed, why ever pay the national debts off at all? Just keep rolling it over....

You've reach a new high in reality denial. Did you read a single word of this thread before inserting your fantasies?

Facts, give us some facts to back up your delusions please, for once, just give us something real to support the propaganda you mindlessly parrot.

The rest of this thread has been based in reality, detailed descriptions of the facts of the matter, your post stands out like a turd on a freshly made bed because of it's complete lack of grounding in reality.

B.

 

[gb2000ie]

The entire financial system is an illusion.

It's no more of an illusion than gold or sheep or cows or anything else we've ever used as currency. All economies are based on the idea that everyone agrees that something has value.

Money has value because we can exchange it for things that we need and want, as long as that's true, the economy is real.

B.