What or whom is responsible for the bad economy?

Greed is the culprit. People (corporations?) are grabbing whatever they can and not giving anything back. Plus, we depend on a “growing” economy, and we live in a closed system. Something will break in that setup.

@llewis That’s my take (to a degree). I wonder what all these employers and greedy lending institutions will do when most average people can’t afford to buy their products or afford loans/credit cards anymore because no one is working or making a fair living wage. I guess that will be the breaking point.

Deregulation of banks during Regan and Bush administrations has created a climate of unchecked greed-mongering. It used to be that credit was harder to get, and the bank’s interests and the customer’s interests were one and the same. Ussery laws were in place protect consumer interests. Home ownership was not viewed so much as an investment but as shelter. As a result, people purchased homes that they could afford on their income, not on speculation that they could purchase a home where they could only afford the interest, and turn around 3 years later to sell it for 20% profit, thus creating capital where there was none.

I also think NAFTA is in part to blame. We no longer make things, although that seems to be shifting back in the last two years. Our economic model ignores the fact that a large segment of the population is not knowledge workers, nor college material. We need better means of turning out service class and trade class citizens, with compensation that provides a tax base from those segments. Of those who are college material, the cost of an education can be daunting and overwhelming. We need a larger taxable base, not necessarily taxing the top brackets more, but by creating more opportunities for people to contribute to the economy. People who earn money are both taxed, and will spend.

For a fast-forward summary, that’s it in a nutshell. Of course, no one-page article can cover the whole of everything, and all the cause and effect chains – there are books and doctoral theses written about this sort of thing.

It has to be more than a coincidence that the distribution of wealth is more skewed than it has been at any time since the Depression. The poor are getting poorer, the middle class is getting squeezed and the rich are getting richer. Keynesian economics says that the poor spend a greater proportion of their income. When the rich have all the money, there is less demand and the economy tanks.

The only economist that I know of who is taking this position is Robert Reich

@LostInParadise – Generally – it’s really not that the poor are getting poorer – we have more wealth in the developing world than ever before, and the poor are better off than ever before (barring the most recent economic crisis, but I think you’re talking about overall trends). It’s really that the rich are getting super rich that accounts for the divide.

Creation of fake financial instruments based on the housing bubble created the seeds of the economic disaster.

What little regulation there was had been dismantled.

Obama’s stimulus package was a finger in the dike, but the ripples are still being felt.

@BarnicleBill, you failed to mention the Financial Services Modernization Act of 1999, which fell between Reagan and Bush. This bit of deregulation was largely to ‘blame’ for comingling of investment and commercial banking.

Perhaps the bad ecomony is just part of the cycle.

While politicians and corporations are often held responsible for the bad economy aren’t the citizens ultimately responsible? Just because you can steer your car with your feet, that doesn’t make it a good idea. Just because a bank is willing to give you a $400,000 mortgage doesn’t make it a good idea, and you, the consumer who signed for it is 100% responsible for your actions.

Blaming Republicans for the bad economy is the same as blaming McDonald’s for your fat ass and clogged arteries, and blaming Republicans without giving Democrats their fair share of the blame is equal to letting Burger King off the hook for the same fat ass.

Democrats and Republicans are the same. Tax, spend, deregulate, then say “They did it!” George W. Obama was replaced by Barack Bush. The parts are interchangable.

”...Every plant has closed down within a 30 mile radius”

They either can’t compete with foreign labor, or they sold out to foreign labor. Who is responsible? Americans are responsible. As long as we insist upon buying cheaper products from cheap labor in foreign countries, this trend will continue. Especially when we grow fat, lazy and decadent, thereby producing inferior products that can’t stand up to quality of Chinese, Japanese, Korean manufacturing.

Buy American, if you can, and pay more to get an inferior product. Formula for disaster. NAFTA only exacerbated the problem, bringing it to our doorstep quicker.

SOLUTION!
We must ensue upon a plan of investment in foreign manufacturing and specifically intend to raise the quality of life for foreign labor. As well, we must be willing to work for less ourselves, and not be so greedy as having such a high standard of living compared to our foreign competition. Americans must pursue education first and foremost, thereby increasing our intellectual footprint, creating new and profitable technologies that surpass the old work paradigm. It’s a brave new world, and we should all be helping one another increase their quality of life, especially the slave labor of third world countries, even at the expense of our own quality of life being lowered.

“Especially when we grow fat, lazy and decadent, thereby producing inferior products that can’t stand up to quality of Chinese, Japanese, Korean manufacturing.”

Yeah, that crap that I buy from WalMart (since it’s the only damn place that’s open when I get off work) that breaks the first time I use it is really setting the standards we can’t compete with.

The Federal Reserve.
“I believe that banking institutions are more
dangerous to our liberties than standing
armies . If the American people ever allow
private banks to control the issue of their
currency , first by inflation , then by deflation ,
the banks and corporations that will grow up
around [ the banks ] will deprive the people of
all property until their children wake – up
homeless on the continent their fathers
conquered . The issuing power should be taken
from the banks and restored to the people , to
whom it properly belongs.”
Thomas Jefferson

Everything in Walmart isn’t “crap” @hiphiphopflipflapflop. And they have one of the best return policies in the industry. Chances are, you wouldn’t have paid the price for American wages and bloated Unions to make the item, quality or not… Chances are, the item was funded by a cheapskate American entrepreneur, and designed/manufactured by the cheapest bidder, to maximize the highest profit for the ugly fat greedy American who is laughing all the way to the bank with your dollar in hand, which he wouldn’t dare trade for the crap he tricked you into buying.

It’s a big, ugly mess, but I’m pretty sure that the keystone was the sub-prime mortgage business.

Before I really answer this question, and I will, I would like to explain some simple truths that we seem to forget from time to time.

The United States (since I presume the question was directed toward the “US economy”) is still the world’s richest country. Whether you personally feel rich or not is immaterial. By most measures the US has more wealth per capita than any other country on Earth has now… or has ever had. We have the highest percentage of home ownership, the highest percentage of automobile ownership, we eat more on a per capita basis than anywhere else in the world (and exercise less, as evidenced by our growing obesity statistics), we consume a disproportionate amount of all of the planet’s resources, led by energy consumption, but followed by all of the other “stuff” that we import from around the world.

Forget about money for a minute. We have more of the “stuff that money buys” than anyone else in the world. You own a share of that, too. We also have the lion’s share of the world’s credit, to boot. This indicates that along with that credit, as a nation we have earned a high degree of trust from individuals, organizations and governments around the world to handle our credit somewhat responsibly and to pay it back.

So despite some current problems with your job or mine or a few plants closing down here and there, and despite all the news about foreclosures and bad mortgages and shady dealings—which are all true enough—we’re still the richest country the planet has ever seen, and we still have the trust of our creditors, even if that trust has been reduced somewhat. Ships still land at our ports daily and disgorge billions of dollars’ worth of goods and fuel, to be paid for per the terms of the contracts that bring them. There isn’t mass starvation or food riots in the streets, there isn’t an army of homeless people marching on state capitols or on Washington, and the vast majority of people who dress in rags pay higher costs than I do in order to achieve that “look”. Things aren’t so bad for the nation as a whole—and I’m not just talking about the plutocrats that so many (at least on this site) seem to think “run things” and “control us”.

My own town has been hit pretty hard by foreclosures, but I notice that the homes that go on the market are actually selling pretty well right now. On my three-mile drive to work in the past few months I’ve seen at least a half-dozen homes go on sale during the summer, and they’re now sold and being moved in to by the new owners. I still see a lot of “optional” driving, shopping, home decorating, eating out at restaurants, luxury items purchased at supermarkets where I shop, and generally full parking lots at shopping malls.

So here’s my take on what is wrong: not a whole lot.

We hit a bump in the road. Some people—a lot of them—made some bad decisions, thinking that because housing prices (for one thing) were going up “so high, so fast” that they could make a killing by “owning a house at any price” now and selling it later for “lots of money”. And some lenders were stupid enough to lend on that premise. (Maybe some were corrupt, too, but I don’t subscribe to the idea that this was a huge conspiracy.) Other people purchased those mortgages, thinking that they could get rich off the interest, and they didn’t know what they were doing, or how risky the mortgages were.

Added all up, it was a huge inflationary balloon, of the type that has happened with humans since credit economies began to proliferate (and will continue to happen) and a lot of bad investments were made. We’re working off the excess now. That is, those houses I mentioned earlier along my commute? They’re undoubtedly selling for less than they could have sold for three years ago, probably a lot less. But they’re selling now “for what they are worth”—today. And those kinds of imbalances and “corrections” are working their way through the whole American economy, and being magnified overseas. (If you think things are bad here when a few plants shut down, you should see Chinese ‘factory cities’ of 50,000 or more shut up and send everyone ‘home’ when we stop buying from them temporarily.)

And there’s also a pretty huge problem of perception. I doubt very much, for example, that the OP was correct when he said “every plant has closed down within a 30-mile radius” of where he is. I doubt if that’s even half true, literally.

We could be richer if we ever decided to become a nation of investors and producers again—which is how we got to be ‘the richest nation ever’ in the first place—but even now, as fat and comfortable as we are, and as happy as we are to be ‘consumers’ instead of ‘producers’ or ‘investors’—we’re still the richest nation on the planet, and will be for decades, probably.

To put it simply, since I’ve written a lot about this on other questions, it comes down to a lack of confidence that folks are getting a fair shake. The mortgage loan situation played a big role in this, but there were troubles in other industry sectors, as well.

The upshot was that a lot of people were being laid off ask at the same time and everyone got scared and hunkered down to see what would happen and they stopped buying stuff. The economy came to a screeching halt because no one was buying more than essentials any more.

Once confidence is gone and no one is willing to take risks any more, the economy stays soft. And stays soft. And will stay soft unroll enough of us believe things are getting better. Maybe I’m too optimistic, but with this last jobs report and the recent gains in the stock market, I think we’ve turned the confidence thing around.

Excessive government spending Excessive government spending Excessive government spending Excessive government spending Excessive government spending Excessive government spending Excessive government spending Excessive government spending Excessive government spending Excessive government spending Excessive government spending Excessive government spending Excessive government spending Excessive government spending Excessive government spending Excessive government spending.

Imo, the short answer is we all are since economies depend on huge groups of people I don’t think there is just one person responsible for it.
The corporations need people actually more than we need them.

@MeinTeil <——One trick pony?

Gross mismanagement at all levels of government and business, coupled with some corruption, greed, and illegal activities, all happen to coincide at the same time.

Out sourcing.

I chose not to buy at Wal-Fart because of the way they treat their employees. Now, though, unfortunatly the large retail stores are becoming more and more alike. As has been said in the other answers to this question both political parties are to blame, greed is the underlying cause, the gap between the rich and poor is increasing, outsourcing is a major part as is the growing desire for more and more of eveything.

both parties are really just 1 party, outsourcing is clinton’s fault and housing is bush’s fault and low wages high taxes is reagan’s fault.

@CyanoticWasp Actually I am literally correct on that statement I made about every factory closing down within a 30 mile radius of my immediate area. There are still convenience stores, restuarants and the local Wal-Mart if you count those but they do not pay the living wages that the 8 factories that closed down paid with decent benefits (this is a rural area so those closings were devastating).

It was a simple question but since you seem to prefer to disrespect certain users on here and make your own assumptions (like I’m making this shit up) I would prefer you didn’t respond to my posts anymore. Let me guess I’m supposed to respect you though you havn’t shown any back, uhm.

@GracieT Wal-Mart is, I believe, the aspiration of pretty much any supermarket chain. That said, Wal-Mart policy isn’t all that bad. There is room for abuse, as in most systems and relationships, but whether or not it’s actually present depends on the management.

@Paradox The example you have used could be just a sign that the companies have found cheaper locations to continue their work, or they are no longer feasible for this day and age. My Mom told me how her small town nearly died when the hand packing plants closed and move to the cities where the packing was done by machines.

Things change and sometimes progress can be blamed.

Over regulation of American business by government forcing them to move or source overseas.

Seas of red tape courtesy of the Fed choking small business.

Federal government forcing banks to loan to the unqualified in the name of “equality” for decades.

Greedy conservative investment bankers mostly voting for Republicans politicians hoping for as much deregulation as possible. This is why blaming Obama for the mess is so absurd.

^ Obama isn’t responsible for creating the mess you mention.

He is however responsible for completely absurd and ill timed “solutions” that have made the problem far worse.

@MeinTeil – we have the time to judge that when he’s only been in office for 18 months and it’s a problem that has been bubbling up for about a decade?

I didn’t know that was possible just yet…

18 months was plenty of time for Obama to initiate doomed from conception and stunningly ill timed projects such as the bank and automaker bailouts, hairbrained and counterproductive ideas like cash for clunkers and hypersocialist agendas like “universal” healthcare.

Isn’t it ironic that the first responsibility in healthcare is to first do no harm?

Anyone that doesn’t consider these things as defined by their cost are deluding themselves.

Obama’s health care concept has been implemented in Germany since 1950. In this time our country became the third strongest economy in the world. Both liberals and conservatives support it. All pregnant women get excellent prenatal care. To me it’s totally absurd to promote protection of unborn life while pregnant women without health insurance depend on charity which sometimes works and sometimes doesn’t. Should the American soldiers in Iraq depend on charity instead of taxes? Oh, sorry no ammunition this week. We’ll need another fundraiser.

@mattbrowne I like your argument. Generally speaking my natural tendency is to disagree with you. The main reason for my agreement is because it is concise and does not have the “Greedy conservative investment bankers mostly voting for Republicans” generalities.

I do not favor the health care proposal, I do favor deregulation, but I also know that, to your point, we do not want fundraisers to arm our troops.

We need sensible taxation. I would just like to see where our tax dollars are really going. Is the money requested for this health care package really necessary? That is a rhetorical question as I assume neither you, nor I, nor anyone else in this forum knows the answer.

The blanket statements re: investment bankers and Republicans cannot be substantiated. There are plenty of investment bankers that are quite close to the president.

I think greedy investment bankers cozying up to greedy politicians is more accurate. They are all greedy, Democrat and Republican. Barack Obama contributes less of his wealth to charity on a percentage basis than I do. Having it and not giving it defines greed to many.

Anyway, when your arguments are not ad hominem they are compelling. Keep up the good work.

When lenders approved of loans to high risk people knowing they were taking a “gamble” with being paid their money back because these same greedy lenders knew full well they would get their lost money back through the bailouts. How ironic we have so many people in our government that used to work for many of these institutions. Our government (both Republicans and Democrats) continue to appoint these same crooks to oversee the same government agencies and institutions who are supposed to be responsible for protecting us and enforcing laws to fight this corruption. Everything Ron Paul has said has been shown to be correct.

Hell if the lenders and traders can infiltrate the highest levels of our government they can pretty much assure they will get their “lost” money back from the unpaid loans and foreclosures either way. Where did this massive amount of bailout money come from when our federal budget was well in the -? We’ve must have just printed more, which lowers the value of the $. Do we get bailouts if we screw up?

@chris6137 Well said and another reason why I like Ron Paul so much since he wants to eliminate that institution as well.

@Paradox – I think it’s actually almost the opposite in terms of the lenders. The problem is that they were resting on the economic theory of the rational market when they were making these loans. During the housing bubble. Because they thought that although some would default, there wouldn’t be a situation where they would default in such numbers that they would require such an unprecedented government infusion of funds. When everyone reacted extremely to a downturn, it didn’t matter if the market should behave rationally because people don’t. And because all the mortgages had been chopped up, rebundled, leveraged and resold in private, unregulated transactions, no one really understood who they were taking a risk on.

I totally am disturbed, however, at the fact that the government is just a revolving door for these people who made the mistakes in the first place.

@iamthemob The governement seems to be a revolving door in more ways then that. These same crooks are in government positions. This list is just one example of what I’m talking about.

I’ve researched this issue a little bit. There were quite a few insiders, including former Goldman Sach’s employees who have openly talked about what I’ve hust mentioned above. These people knew they would get their money back regardless. There were many tweaks made in manipulating these very laws to allow many of these events to take place. These high risk loans were nothing more then a “gamble” where the odds this time was with gambler instead of the house. I would personally love to go to Las Vegas knowing even if I lost my money I would still get my money back in a worst case scenerio.

@Paradox – They were definitely not concerned with making the money back in the end – but the volume of the transactions was at such a level, and broken up over so many mortgages (because they only bought pieces of them, the risk was theoretically reduced that any “bundle” would lose all value if there were a few defaults).

There weren’t really any teaks in the law though – the problem with financial products is that the government specifically regulates some, and not others. So if you’re dealing in an unregulated security, as they were, you’re not subject to oversight. Plus, the transactions were going on for years.

I worked on the restructuring side of this during the fallout – it was pretty clear once the dust had settled that people were just resting on some very incorrect assumptions about the actual damage that could occur, and just happy that they weren’t regulated by the SEC. I feel like every twenty years or so the market just gets so good people end up stupid and greedy and focused on the quarter-based incentives.

That list was scary – I always reference the FDA/Monsanto connections as what really scares me, though.

That lis

@iamthemob I have alot more info on what I’ve been mentioning above. Unlike many others I prefer to not play the “left vs right” game. I will post some things at later dates but I have to leave the computer now.

Well, I think that it’s just you and I right now—it seems we’ve been able to stay away from the simple “it’s the Demi-don’ts” or “it’s the Republican’ts!” blame game. ;)

Whether I feel the economy is good or bad depends on my personal economy. Rick and I are both working, looking at buying a 2005 Durango…I’d say the economy is great!

One word: Congress.