What caused the current/ending recession

[shovelheadt 71]

Trying to win an argument at work.

[nikki2200 4]

There's no "All of the Above" option?

[tikigods 76]

The civil war in Darfur.

[sheadtoo 1]

i chose reckless borrow/spending by joe public...ONLY because regardless of if the banks were being shady in their lending practices or trading of those loans it is joe public's fault for not being educated enough in their decision. and it isn't the governments job to make sure we aren't too stupid for our own good.

[GettnHuge 2]

The two reckless options would not have been possible without the gov'ts idiotic interference, blessing, encouraging and guaranteeing the gretaness of said reckless activities.

[tikigods 76]

i chose reckless borrow/spending by joe public...ONLY because regardless of if the banks were being shady in their lending practices or trading of those loans it is joe public's fault for not being educated enough in their decision. and it isn't the governments job to make sure we aren't too stupid for our own good.

 

I usually sniff rubber glue and shop online.

[Voltaire 5,468]

Reckless Lending - Yes

Mortgage backed securities/housing bubble burst - Yes

Reckless borrowing/spending by joe public - Yes

Criminal/Fradulent activities by financial institutions - Yes

Actions/Indifference of our government - Yes

 

I don't know how to vote. It's like asking me which '80s Boston Celtic I hate.

[Savage Beast 1]

The Federal Government.

[Vikings4ever 568]

+1 for all of the above.

 

If I had to choose one, I'd go reckless spending/borrowing. People being willing to buy houses at inflated prices is what allowed the housing bubble to continue to grow, and when they were no longer willing to, the bubble burst.

[BLS 314]

The US GDP is 70% consumption.

 

Keynesian economic policy, which this country (and most of the world) has embraced since the 30's is what some would argue as a flawed animal.

The problem with the policy IMO, is that it's predicated on the idea that the marginal propensity to consume vs the marginal propensity to save is about 80/20.

 

And while the theory of Keynesian economics PROVES that when consumers spend 70%+ of their 'free' money on consumption, the economy DOES boom.

However, the residual effect is increased prices (inflation). Inflation is a normal and expected side effect of this policy, as long as it's 'controlled' and doesn't grow out of control.

Fixed asset backed currency (gold standard) typically makes 'growth' in economies very difficult because there are always more people growing up and consuming, yet a finite amount of money in the economy.

This delves into a WHOLE other arena for argument, and I won't go there, but this is typically the argument against a 'gold standard'.

 

When you couple inflation with BOOMING economies, price stability goes out the window (see housing prices). So while a BOOM in the stock market or the economy seems great, it's really a bubble that must readjust at some point. However, the Federal Reserve is a player in the this game that changes the rules.

Because when an asset bubble occurs, the economy would NORMALLY retract, losses liquidated and a 'fresh' start is began.

However, the Fed can manipulate this dynamic by not allowing this 'adjustment' to occur. Instead, they can inject more capital into the economy at their will, and this 'reinflates' those bubbles.

Which really just staves off the inevitable. But for the short term, (think politics) this is a good thing. Losses are quickly recouped and the economy goes on roaring.

 

But that bubble, no matter how much control you put on it, will eventually burst. It did in 2008.

 

Causes?

 

Ever since Nixon, we have had NO commodity based currency...they did this to pay for 'guns and butter' (Vietnam war).

It simply allowed us to print money to pay for debts we couldn't afford.

 

This began a cycle that led us to where we are today.

 

To blame Bush is so shortsighted it's beyond absurd. To blame Obama is just as stupid (although he's doing the EXACT same thing, but it won't work this time IMO).

Carter actually did the RIGHT thing by trying to allow the market to readjust....the result was VERY high inflation, high interest rates (a good thing if you're actually saving your money), and a stagnant economy.

Reagan 'fixed' this by spending and lowering taxes. Sure the economy boomed, and the .gov reigned in some nice revenues, but ultimately it led to the current situation we are in.

Nobody cared, because we only think about 'today' and not tomorrow.

 

Bush Sr. continued this policy, although not quite to the extent Reagan did. Then Clinton did the EXACT same thing....look at Fed rates during the 90's. Cheap, easy 'injection' capital (from the Fed) was rampant. Arpanet was given to the people (internet), and the dot com bubble was began. Many people made fortunes off this money and .gov made EVEN more money, even after raising some taxes (he did lower captial gains taxes), but it didn't matter...things were rolling so well things seemed perfect.

 

Then the dot com bubble burst, and we hit a recession, which was handed to Bush Jr. He followed the Keynesian model of more capital and more inflation and the economy 'recovered'. Even after 9/11, which is NO JOKE to the economy. Why do you think he explicitly said "go shopping"?

 

Along with a continuation of near 0% interest rates, legislation passed under Carter (but really pushed under Clinton and Bush) for minorities (and other low-income, low credit score persons) to be able to have the American Dream of owning a home, the final bubble was being inflated. It ran rampant; Wall Street saw another boom and cashed in on it. They INVENTED ways to make money off the ridiculous sales.

 

Employment was nuts, housing markets were through the roof, new home building was an at all time high. On the surface, EVERYTHING was great. Jobs, taxes, entitlement spending, 2 wars, and 70% consumption rate, along with a NEGATIVE savings rate throughout 2006 (and close to that throughout the 2000's) all led to people borrowing to consume what they could no longer afford. The bubble had truly reached a point where main street could no longer afford to purchase, so they borrowed.

 

That bubble has finally burst. And there is NOTHING Obama can do to win, but make no mistake, he's trying to reinflate that bubble. Passing it on to future generations is the plan...however it'll never make it that far. It will come down on us because it HAS TO. The only option to NOT let it deflate is to inflate it.

 

And now you know why gold has doubled in value in 4 years, and silver is almost 3 times it's value of 2008. It's not that an ounce of gold now makes more gold products. it's that money is so rampant, that same amount of gold is now worth twice as much paper currency.

 

In a nutshell...and I'm sure I missed a ton of stuff, because I'm a bit drunk and I don't give a fukk, there you have it.

[Voltaire 5,468]

All of the above but I'll attempt to choose the most decisive factor by process of elimination.

 

Mortgage backed securities/housing bubble burst - This is the more result of stupidity than the cause. This seemed inevitable to those of us paying attention (reading Krugman regularly) and was easily predicted long before it happened.

 

Criminal/Fradulent activities by financial institutions - This definitely happened but wasn't so extensive and may have been limited to a few firms. I think 95% of focking the economy was done by morons working within the rules doing perfectly legal transactions.

 

Actions/Indifference of our government - As much as I love throwing poo at the Bush administration, I'll eliminate the government next. The government is the least irresponsible one. When a bank wants to lend money to somebody with no income, it's hardest to blame the government for not preventing these two idiots from doing what they want.

 

Next eliminated is Joe Public- People want to buy homes. Even if they have no money and no hope of paying it back, it's natural to want to buy.

 

Reckless Lending- This is the winner. It's your money. Why do you insist on giving it to so many clueless losers who obviously can't pay?

[NorthernVike 2,094]

The US GDP is 70% consumption.

 

Keynesian economic policy, which this country (and most of the world) has embraced since the 30's is what some would argue as a flawed animal.

The problem with the policy IMO, is that it's predicated on the idea that the marginal propensity to consume vs the marginal propensity to save is about 80/20.

 

And while the theory of Keynesian economics PROVES that when consumers spend 70%+ of their 'free' money on consumption, the economy DOES boom.

However, the residual effect is increased prices (inflation). Inflation is a normal and expected side effect of this policy, as long as it's 'controlled' and doesn't grow out of control.

Fixed asset backed currency (gold standard) typically makes 'growth' in economies very difficult because there are always more people growing up and consuming, yet a finite amount of money in the economy.

This delves into a WHOLE other arena for argument, and I won't go there, but this is typically the argument against a 'gold standard'.

 

When you couple inflation with BOOMING economies, price stability goes out the window (see housing prices). So while a BOOM in the stock market or the economy seems great, it's really a bubble that must readjust at some point. However, the Federal Reserve is a player in the this game that changes the rules.

Because when an asset bubble occurs, the economy would NORMALLY retract, losses liquidated and a 'fresh' start is began.

However, the Fed can manipulate this dynamic by not allowing this 'adjustment' to occur. Instead, they can inject more capital into the economy at their will, and this 'reinflates' those bubbles.

Which really just staves off the inevitable. But for the short term, (think politics) this is a good thing. Losses are quickly recouped and the economy goes on roaring.

 

But that bubble, no matter how much control you put on it, will eventually burst. It did in 2008.

 

Causes?

 

Ever since Nixon, we have had NO commodity based currency...they did this to pay for 'guns and butter' (Vietnam war).

It simply allowed us to print money to pay for debts we couldn't afford.

 

This began a cycle that led us to where we are today.

 

To blame Bush is so shortsighted it's beyond absurd. To blame Obama is just as stupid (although he's doing the EXACT same thing, but it won't work this time IMO).

Carter actually did the RIGHT thing by trying to allow the market to readjust....the result was VERY high inflation, high interest rates (a good thing if you're actually saving your money), and a stagnant economy.

Reagan 'fixed' this by spending and lowering taxes. Sure the economy boomed, and the .gov reigned in some nice revenues, but ultimately it led to the current situation we are in.

Nobody cared, because we only think about 'today' and not tomorrow.

 

Bush Sr. continued this policy, although not quite to the extent Reagan did. Then Clinton did the EXACT same thing....look at Fed rates during the 90's. Cheap, easy 'injection' capital (from the Fed) was rampant. Arpanet was given to the people (internet), and the dot com bubble was began. Many people made fortunes off this money and .gov made EVEN more money, even after raising some taxes (he did lower captial gains taxes), but it didn't matter...things were rolling so well things seemed perfect.

 

Then the dot com bubble burst, and we hit a recession, which was handed to Bush Jr. He followed the Keynesian model of more capital and more inflation and the economy 'recovered'. Even after 9/11, which is NO JOKE to the economy. Why do you think he explicitly said "go shopping"?

 

Along with a continuation of near 0% interest rates, legislation passed under Carter (but really pushed under Clinton and Bush) for minorities (and other low-income, low credit score persons) to be able to have the American Dream of owning a home, the final bubble was being inflated. It ran rampant; Wall Street saw another boom and cashed in on it. They INVENTED ways to make money off the ridiculous sales.

 

Employment was nuts, housing markets were through the roof, new home building was an at all time high. On the surface, EVERYTHING was great. Jobs, taxes, entitlement spending, 2 wars, and 70% consumption rate, along with a NEGATIVE savings rate throughout 2006 (and close to that throughout the 2000's) all led to people borrowing to consume what they could no longer afford. The bubble had truly reached a point where main street could no longer afford to purchase, so they borrowed.

 

That bubble has finally burst. And there is NOTHING Obama can do to win, but make no mistake, he's trying to reinflate that bubble. Passing it on to future generations is the plan...however it'll never make it that far. It will come down on us because it HAS TO. The only option to NOT let it deflate is to inflate it.

 

And now you know why gold has doubled in value in 4 years, and silver is almost 3 times it's value of 2008. It's not that an ounce of gold now makes more gold products. it's that money is so rampant, that same amount of gold is now worth twice as much paper currency.

 

In a nutshell...and I'm sure I missed a ton of stuff, because I'm a bit drunk and I don't give a fukk, there you have it.

 

 

So your answer is...C ?

[RLLD 4,275]

It began, in earnest, with Clinton and the Community Reinvestment act of 1995, which opened up (and truly compelled) lenders to expand access to credit to the subprime market.

 

Later, when the dotcom bubble burst, Greenspan was pressured to improve the economic condition and lowered rates to hide the negative consequences of that burst, all the while claiming to be fighting a recession that was never going to happen.

 

Once those rates lowered, access to cheap credit opened up access to mortgages to a vast swath of people who now dramatically increased the demand for housing. This new credit-based demand then completely perverted the mortgage industry. Initially the issue was minor, but the impact of homes dramatically increasing in price quickly spread like a virus.

 

In order to keep this flow moving the banks had to hide the huge risk they knew was being created, and did so through the magic of CDO's. As the prices increased into a state of complete disconnection with reality, salaries, or anything approaching true value of the property....the usage of specialized loan tools such as IO and NegAM loans increased.....

 

Eventually, this ponzi scheme was bound to end with a bursting of the bubble, and it did, and along with it all those CDO's started to collapse, the then the insurers of those investments too.....before long the entire banking system shuddered and faltered.....

 

Our lifestyle is based on credit, and once access to credit began to evaporate, people got REAL nervous, and the government had to step in to save the banks, but forgot about the people. And to this day, they continue to defend the banks at the expense of the people. In a sense, the banks are their own worst enemy in this mix, every lobby action they have undertaken, and in particular the bankruptcy reform act of 2005, has served their short term goal to increase stock value, and the expense of their long term soundness.....and they are feeling now the fallout from extorting too much from the host on which their parasitic entities feed.

[BLS 314]

So your answer is...C ?

 

All of the above. Plus more.

[FlaHawker 24]

BUSH

[DanXIII 8]

There's no "All of the Above" option?

 

There should be, but even that wouldn't cover it.

 

[edjr 6,890]

 

 

 

and Stick

[shovelheadt 71]

It began, in earnest, with Clinton and the Community Reinvestment act of 1995, which opened up (and truly compelled) lenders to expand access to credit to the subprime market.

 

Later, when the dotcom bubble burst, Greenspan was pressured to improve the economic condition and lowered rates to hide the negative consequences of that burst, all the while claiming to be fighting a recession that was never going to happen.

 

Once those rates lowered, access to cheap credit opened up access to mortgages to a vast swath of people who now dramatically increased the demand for housing. This new credit-based demand then completely perverted the mortgage industry. Initially the issue was minor, but the impact of homes dramatically increasing in price quickly spread like a virus.

 

In order to keep this flow moving the banks had to hide the huge risk they knew was being created, and did so through the magic of CDO's. As the prices increased into a state of complete disconnection with reality, salaries, or anything approaching true value of the property....the usage of specialized loan tools such as IO and NegAM loans increased.....

 

Eventually, this ponzi scheme was bound to end with a bursting of the bubble, and it did, and along with it all those CDO's started to collapse, the then the insurers of those investments too.....before long the entire banking system shuddered and faltered.....

 

Our lifestyle is based on credit, and once access to credit began to evaporate, people got REAL nervous, and the government had to step in to save the banks, but forgot about the people. And to this day, they continue to defend the banks at the expense of the people. In a sense, the banks are their own worst enemy in this mix, every lobby action they have undertaken, and in particular the bankruptcy reform act of 2005, has served their short term goal to increase stock value, and the expense of their long term soundness.....and they are feeling now the fallout from extorting too much from the host on which their parasitic entities feed.

 

So you lean towards reckless lending, with a little push by the Fed?

[cyclone24 1,935]

Tiger Woods. The economy will not come back around until he starts winning tournaments again.

[surferskin 31]

http://www.youtube.com/watch?v=_HER2pGdAak

 

 

 

and Stick

 

It's pretty hard to argue with Mr. Greene.

[RLLD 4,275]

So you lean towards reckless lending, with a little push by the Fed?

 

Absolutely.

 

The Fed was the architect of the disaster, and then the banks stepped in and did what they do best, gouge the market for short term gains at the expense of long term position. All the while idiotic people lined up to sign on to buy from idiotic people who sold the stuff.....

[DanXIII 8]

The US GDP is 70% consumption.

 

Keynesian economic policy, which this country (and most of the world) has embraced since the 30's is what some would argue as a flawed animal.

The problem with the policy IMO, is that it's predicated on the idea that the marginal propensity to consume vs the marginal propensity to save is about 80/20.

 

That isn't a problem with "the policy." It's a problem with the implementation of "the policy." Keynes never said we should keep interest rates near zero during economic boom cycles. He never argued for increasing deficit spending into perpetuity. We're about as purely Keynesian right now as we are purely capitalistic or purely communist for that matter.

 

[Mike Honcho 5,414]

It began, in earnest, with Clinton and the Community Reinvestment act of 1995, which opened up (and truly compelled) lenders to expand access to credit to the subprime market.

 

Later, when the dotcom bubble burst, Greenspan was pressured to improve the economic condition and lowered rates to hide the negative consequences of that burst, all the while claiming to be fighting a recession that was never going to happen.

 

Once those rates lowered, access to cheap credit opened up access to mortgages to a vast swath of people who now dramatically increased the demand for housing. This new credit-based demand then completely perverted the mortgage industry. Initially the issue was minor, but the impact of homes dramatically increasing in price quickly spread like a virus.

 

In order to keep this flow moving the banks had to hide the huge risk they knew was being created, and did so through the magic of CDO's. As the prices increased into a state of complete disconnection with reality, salaries, or anything approaching true value of the property....the usage of specialized loan tools such as IO and NegAM loans increased.....

 

Eventually, this ponzi scheme was bound to end with a bursting of the bubble, and it did, and along with it all those CDO's started to collapse, the then the insurers of those investments too.....before long the entire banking system shuddered and faltered.....

 

Our lifestyle is based on credit, and once access to credit began to evaporate, people got REAL nervous, and the government had to step in to save the banks, but forgot about the people. And to this day, they continue to defend the banks at the expense of the people. In a sense, the banks are their own worst enemy in this mix, every lobby action they have undertaken, and in particular the bankruptcy reform act of 2005, has served their short term goal to increase stock value, and the expense of their long term soundness.....and they are feeling now the fallout from extorting too much from the host on which their parasitic entities feed.

 

 

Before you said it was Strikes fault??? Now you say this...make up your mind!

[BLS 314]

http://www.youtube.com/watch?v=di-TghjKC1Q

[MDC 7,850]

Obviously it's Obama's fault. That's what GettnHuge and his cronies tell me every day. Obama must've gone back in time in his Delorean and fvcked up the economy on Bush's watch. He's a criminal mastermind like that.

[jerryskids 7,062]

I went with "reckless borrowing/spending by Joe Public." This IMO encapsulates the housing situation which, perhaps technically, initiated the recession, but it is part of a larger problem.

 

That problem is that we have been putting lipstick on a pig for a long time. The "pig" is our entitlement mindset. For centuries we were the hardest working, assest kicking nation on the planet. We aren't anymore -- China and India at least are on a vector to pass us -- but we still act like we are. We have become Rome. Unfortunately at this point it is going to take a major crash of our economy on a worldwide scale for us to wake up to reality. Hopefully at that point, we can.

[Saint Elistan 106]

Woodrow Wilson.

[Bert 1,128]

Obviously it's Obama's fault. That's what GettnHuge and his cronies tell me every day. Delorean and fvcked up the economy on Bush's watch. He's a criminal mastermind like that.

 

No he went back and told Clinton he was a rasict and should relax lending standards so the minorities can be gettin' homes.

[RLLD 4,275]

Before you said it was Strikes fault??? Now you say this...make up your mind!

 

Link?

 

 

before you get started, remember.....I have all of them easily available, each and every one where I pointedly blamed the government and the banks. But share your stupidity with us, by all means....

[MDC 7,850]

No he went back and told Clinton he was a rasict and should relax lending standards so the minorities can be gettin' homes.

 

I knew Obama was involved somehow.

 

Probably used some of that socialist Negro voodoo he learned in Kenya.

[Mike Honcho 5,414]

Link?

 

 

before you get started, remember.....I have all of them easily available, each and every one where I pointedly blamed the government and the banks. But share your stupidity with us, by all means....

 

 

Need a midol?

[RLLD 4,275]

Need a midol?

 

Yeah, that's what I thought....

[Bert 1,128]

I knew Obama was involved somehow.

 

Probably used some of that socialist Negro voodoo he learned in Kenya.

 

Na, he prolly brought him one of his finest sistas from chi town to convince him. Them hos will do anything for a buck.

[Mike Honcho 5,414]

Yeah, that's what I thought....

 

 

That you have absolutely no sense of humor, then you would of been correct.

[MDC 7,850]

Na, he prolly brought him one of his finest sistas from chi town to convince him. Them hos will do anything for a buck.

 

I know - black women are all whores! Am I right?

[Bert 1,128]

I know - black women are all whores! Am I right?

 

No, I think it is just the ones from Chicago but I'm not sure. There queen was on TV for years.

[MDC 7,850]

There queen was on TV for years.

 

It's "their." You must've gone to one a them Chicago public schools for black people.

[kilroy69 1,268]

White people. Its all white peoples faults......kill whitey.....oh no...um wait...

[Bert 1,128]

It's "their." You must've gone to one a them Chicago public schools for black people.

Trying to keep it reel. The public school I went to was mostly messican.

[Bert 1,128]

White people. Its all white peoples faults......kill whitey.....oh no...um wait...

 

That sounds a lot like Ofruh.