The State of the Economy: Whose fault is it and why?

[_Jersey Girl]

Okay, I'm tired of hearing media "pundits" blather about this. In your view, whose fault is the current state of the economy and why?

Just lay it on me, okay?

And don't blather!!

:-)

[_cinepro]

It's our fault.

But to be more specific, I think there is enough blame to be shared by politicians of both parties, bankers and financiers, and borrowers and lenders all over the world.

We've set up our economies to give a few people (central bankers) great power over our economy and "money", in the hope that they will be wise and fair in how they use that power. From what I can tell, they are neither wise nor fair, so it would be better if they didn't have that power at all.

[_Buffalo]

First and foremost, the finance industry. You can spread the remaining blame among politicians, consumers, house flippers, etc.

[_just me]

Whoever invented buying on credit.

[_cinepro]

Whoever invented buying on credit.

QFT

The whole financial mess is just too big for any kind of quick summary, but if you want a good look at one part of it, the book "The Big Short" is really, really interesting.

The best part of the book is the afterword, where Lewis describes the reaction to the book. This includes getting phone calls from people all over the government who were just then reading the book and for the first time understanding what was going on in the industries they were supposed to be regulating.

At one point, Lewis gets a call from a certain office and they ask him about a call he had received from another branch of the government. They ask what information Lewis had gotten from them, and Lewis has to explain that the phone call had been to get information, not the other way around.

The book certainly speaks to one of the biggest myths about the whole financial mess: that no one saw what was happening at the time, and no one knew the crash was coming. Plenty of people saw what was going on, and several people (as profiled in the book) saw the crash coming and saw how they could profit from it.

Those who didn't see it were either too stupid, or too invested in it to care.

[_Bond James Bond]

Edit: Whose to blame?

Politicians for cutting taxes, corporations for cutting wages to maximize profits making it so that their own workers can't buy the products they make, workers for wanting cheap goods, and thus allowing their own jobs to be outsourced. In short we're all culpable. It's been a slow decline since the 1980s. 30 years of bad behavior that has come to a head.

As to how to solve the problems of the US economy? Well there are two problems, credit and jobs. Under those two problems we see these issues:

Jobs
1) We've outsourced most of our good blue collar jobs. Fewer jobs, more people, more unemployment. Lower wages has created more corporate profits, allowing the rich to get richer and the poor to get poorer. This has allowed money to be concentrated in the hands of the wealthy.

http://beta.images.theglobeandmail.com/ ... 40863a.jpg

2) Many people who are employed are under employed, meaning they might have a job, but work less for fewer dollars. People are forced to work harder for fewer dollars as wages have remained static. People have less, goods cost more meaning that less dollars are being circulated in the economy, creating fewer jobs. Jobs are created by money circulation. Money to store, store to manufacture, manufacture to grower of raw material, raw material producer to bank, bank loaned out, borrower back to bank, etc etc etc etc etc. When money is concentrated in the hands of the rich it tends to stay there, since rich people like their money and want to keep it.

Credit:
Predatory lending of all varieties, housing especially but also credit cards, payday loans, etc. to people who can't afford to pay off loans leads to too much default hurting banks as well as poor credit rankings allowing fewer people to borrow money, leading to less lending, less money circulation between lender/borrower, leading to stagnant money. Antidote, more regulation of financial sectors (hey that would also create jobs).

The larger issue of US funding of two wars, Medicare Part D, and the general issue of government spending while cutting revenue, the Bush tax cuts of 2001 but also tax cuts under Reagan leading to deficit spending since the 1980s. Revenue is the other side of this coin. The time when America was considered "great" (by many the Golden Age of the 1950s-60s) tax levels were far higher. In the 1950s under Eisenhower the highest tax bracket was 91%. Under Kennedy they dropped to 70%. Heck under Reagan's first term the highest tax bracket was 46%, higher than taxes are now. (Also busting the myth that Reagan never raised taxes as thought by many.)

highest tax bracket chart:
http://www.atlanticfinancial.com/images ... -chart.jpg

Basically our debt problem in America is caused by cutting taxes, something that has been proven time and again to not create jobs, and keeping spending the same, creating deficits that have slowly been building to our current debt of around 15 trillion. Also when it comes to spending cuts the main cuts proposed by the Republicans are things like welfare and NPR and stuff, things that make up a tiny fraction of the budget.

The big three of US spending are military, Medicare/Medicaid and Social Security. Social Security is it's own distinct thing and is fine for another 20 years. The place people want to cut are medicare (for Reps) and defense (for Democrats). Cuts will have to be made somewhere unless people want to raise taxes. I prefer small tax raises on the wealthy, who have done very well during this "jobless" recovery of 2009-11 when many of them caused it. A return to Clinton level tax brackets on the wealthy would do much to solve our deficit issues.

Also I think we should go to a single payer health care system that seeks to eliminate the price gouging by private health care with the caveat of allowing the better off to buy as much supplemental health care as they wish. Also there should be more emphasis on preventive health care, trying to get people to lower their blood pressure before they need a $200,000 bypass surgery and a hundred other things they could do to avoid needing expensive medical procedures.

That's it in short. (And when some conservative asshole comes in and tries to tear up these thoughts I preemptively say "Screw you". Small changes in the way our country runs could curtail a lot of the problems. Tax increases on the rich of 5% would do much to solve our debt problems. Also I'm perfectly willing to support spending cuts as long as they're across the board, welfare as well as militarily. Do we really need troops in Germany?)

The debt has been accumulated over 30 years. It will not be eliminated in 3. It will take a long slow growth of the economy coupled with minor cutbacks and small revenue increases (taxes. Yes taxes) and a general tightening of the collective belt.

[_moksha]

It is fault of those who blocked long term economic planning for short term gain. To bad we could not retroactively send Adam Smith to LaVerkin, Utah were he could have stayed safely huddled in a compound rather that proposing ultimately ruinous ideas.

[_Brackite]

Who's fault is it?
Former President George W. Bush's fault, for misleading us Americans into a war with Iraq that cost America over 1.5 trillion dollars.
Current President Barack Obama's fault, along with Senate Majority Leader Harry Reid's fault, and former Speaker of the House Nancy Pelosi's fault, for Passing and signing a stimulus Package that ended up Not working, and ended up costing America over 800 Billion dollars. When the stimulus Package was Passed by the House of Representatives and the Senate, and signed by President Barack Obama back in February of 2009, the Nation's Unemployment rate was at 8.2%. Now the Nation's Unemployment rate is at 9.2%.
in my opinion, These are the two main reasons why us Americans are in the mess that we are in today.

[_hatersinmyward]

Nobody's fault.

We did this to ourselves as a whole.

The people who realized we were dying in our own gluttony and still wanted more. Those who knew about it and tried to stop it were spit at or shot down.

It doesn't matter anymore everyone will pay for the gluttonous sloth. Things came easy and people got addicted.

Hind sight 20/20 of course.

[_Bond James Bond]

Current President Barack Obama's fault, along with Senate Majority Leader Harry Reid's fault, and former Speaker of the House Nancy Pelosi's fault, for Passing and signing a stimulus Package that ended up Not working, and ended up costing America over 800 Billion dollars. When the stimulus Package was Passed by the House of Representatives and the Senate, and signed by President Barack Obama back in February of 2009, the Nation's Unemployment rate was at 8.2%. Now the Nation's Unemployment rate is at 9.2%.

Brack, the stimulus slowed the loss of jobs. See chart:



Some progressives would advocate for more stimulus spending since private capital has been sitting on the sidelines for 3 years. Without money being infused into the economy we would have had 12-15% unemployment at the minimum.