Can someone sum up the reasons for our economic meltdown in 100 words?

[AzNick]

I need to explain the reasons for our economic meltdown to a few folks who forgot that it happened BEFORE Obama took office.

Could some economic expert(s) with a better command of the English language sum it up in 100 words or less?

It needs to be easy to memorize and present.

And yes, I would appreciate links to articles explaining in more details.

Thanks!

[Zoeisright]

1. The 2000 SCOTUS decision to give the election to Bush.

Basically, that's it.

Or, you could say that spending on two wars has broken us, while making Bush and Cheney's friends rich. And no regulation of Wall Street created the same situation as before the Great Depression, which is why it crashed. And Bush was the one who didn't even enforce the puny regulations left on Wall Street. Oh, and the Bush tax cuts made the rich richer and everybody else poorer.

[Mind_your_head]

11. +1

actually.....it goes back waaaaaaaaay farther.....Iran-Contra, the JFK/RFK Assasinations, MLK, 9/11.....NONE of the malfeasance has EVER been brought to justice.

Not addressing/not having addressed these things sits out there like a cancer....eating away at the very fabric of america.

[EmeraldCityGrl]

2. Read the Shock Doctrine.

Or, watch the film on cable that's running on cable now.
Cheers to whomever can explain free market economics in 100 words.

[w8liftinglady]

36. a few free interviews with klein explain a lot

http://www.naomiklein.org/shock-doctrine/video-audio

[EmeraldCityGrl]

39. Thanks.

:hi:

[Electric Monk]

3. The Nazis actually won WW2, they just moved west, joined the OSS, which turned into the CIA

Bosch=Bush blah blah blah, the end.

Oh, and don't forget the Hegelian Dialectic. Thule Society = Skull & Bones.



/knock knock, who's there?

[XemaSab]

4. Easy credit coupled with a rising cost of living and a sense of entitlement.

n/t

[The Northerner]

8. Yep, LOTS of cheap credit

The numbnuts over at the Fed thought it would be good to have banks loan more and more and expected a boom in wealth but the excessiveness allowed the creation of the housing market bubble and when it burst it took the economy with it.

[Bucky]

5. Tax cuts during flush years. Repeat that 19 more times.

[omega minimo]

6. They FORGOT?!!!!!!!!

:wtf:

"in 100 words"

"It needs to be easy to memorize and present."

How stupid are these people? Should the 100 words have 2 syllables or less? :evilfrown:

How do YOU try to communicate with these folks?




give them this http://www.thomhartmann.com

[AzNick]

32. It's harder than you think...

I work in IT and I would say about 50% are foreign born (like me) and absolutely understand it.

But even in IT, the US born folks are sometimes capable of saying the darndest things. Yet, they all are in the 100-130 IQ range.

One of these guys I know is very smart, one of the best database guys I know and yet, because he watches Fox all the time, they managed to get to him.

Note I can have an intelligent conversation with him, but it's not always easy. I get him to sway a little bit but it never lasts. Fox News in the evening and that's it.

Now what pisses me off are my firefighter friends. I play in a rock band and 2 of us are firefighters. Turns out that most of our gigs see a lot of their brothers come over.

I don't understand how these people vote against their own interests and trash the Recovery Act when right now recovery.gov shows 2 firehouses being built at 2 million dollars a pop in my town (Mesa, AZ, which I would call a pinkish town).

Blue collars are extremely hard to convince. Those are the dudes who listen to Rush and Beck in their pickup truck. Completely impossible to get to them. They are the ones absolutely convinced that Obama is a Kenyan, that he stole the elections and that he is a communist/fascist/Muslim/whatever.

[The Northerner]

7. Low interest rates flooded the market with cheap credit

As a result, banks were allowed to make risky loans and lend irresponsibly allowing people to get loans which they should've never been able to apply for in the first place.

Greenspan, Bernanke, and others thought it would be a good idea to prop up the housing market and now it has gone bust.

[sandnsea]

9. The banks created mortgage security investments

and then they took those investment securities and sliced them and diced them and sold them over and over again, and then they took out credit default swaps and gambled on the collapse of the mortgage securities they created.

In other words, they swindled us.

And that is ALL that happened. They *had* to write mortgages in order to continue to have their mortgage investment scam and they didn't care what lies they told or how bad the mortgages were. The mortgages were never the source of the income. The investment securities and credit default swaps were the money makers.

[The Straight Story]

10. I will sum it up rather easily, no links even needed

Corporations got the govt to trust them more, so regulations eased.

Companies were in the business to make money for their investors, be they sheiks, Chinese investors, etc and so on - instead of focusing on what was best for workers, the US, etc these companies found ways to make short term gains with long term consequences. They make money in both up and down markets.

No regulation, profit drives them, and screw the US and other countries - because it is about the investor class and profit now.

LETS HAVE A BETTER EXAMPLE for the simple minded you may encounter: Remove laws against theft and see what happens. Remove laws against murder, rape, robbery, etc and see what happens. Some people will use whatever means they have to get what they desire and to hell with every one else.

That is what happened but on an economic level (and, some would say, a criminal level - but the rich make the laws that best serve them).

[Name removed]

12. Deleted message

Message removed by moderator. Click here to review the message board rules.

[flvegan]

13. Hell, yeah. One word: ego.

Despite the wanna be "economists" above, the true culprit is the pathetic human ego. Like it or not.

I say this as a challenge, and if you don't get it you don't get economics so don't bother.

[Make7]

14. One hundred words are not enough. Here's an interactive timeline from Frontline:

Timeline: Inside the Meltdown

(Click on the marks between 2007 and October 13, 2008 to advance the slides.)


Also check out the Frontline episode Inside the Meltdown:

ANNOUNCER: On September 18th, 2008, the secretary of the Treasury, Henry Paulson, and the chairman of the Federal Reserve, Ben Bernanke, arrived for an emergency meeting at the Capitol.

JOE NOCERA, The New York Times: On Thursday, late afternoon, they go to Nancy Pelosi's office and there's a meeting of the senior legislators from both parties in both House and Senate.

ANNOUNCER: In the past seven months, they had bailed out one bank and let another one fail, nationalized three of the nation's largest companies, and watched in horror as the credit markets froze.

Sen. CHRISTOPHER DODD (D-CT), Banking Committee Chairman: It was obviously a big meeting. I had no idea I was going to hear what I heard. We turned it right over to Ben Bernanke and Hank Paulson.

Rep. BARNEY FRANK (D-MA), Financial Services Cmmt. Chairman: And they said they needed the authority to use $700 billion dollars to unstop the credit markets.

Sen. CHRISTOPHER DODD: Sitting in that room with Hank Paulson saying to us in very measured tones, no hyperbole, no excessive adjectives, that, "Unless you act, the financial system of this country and the world will melt down in a matter of days."

JOE NOCERA: Bernanke said, "If we don't do this tomorrow, we won't have an economy on Monday."

Sen. CHRISTOPHER DODD: There was literally a pause in that room where the oxygen left.


http://www.pbs.org/wgbh/pages/frontline/meltdown/etc/script.html

This is a slightly longer than 100 word summary from Salon:

The first, and the smallest (if you can believe it) at approximately $10 trillion, is the housing crash and the mortgage meltdown. Totally criminal, as its primary cause was banksters stuffing worthless mortgage paper into CDOs [securities known as collateralized debt obligations] and calling them AAA. Criminal at every level, as real estate agents were convincing their buyers to pay more, not less, to "earn" their fees through a winning bid, appraisers were offering non-independent and completely tainted appraisals, mortgage brokers were altering loan documents and changing income data to qualify buyers, bankers were paying rating agencies to call junk paper AAA, and principal investors like pension funds, insurance companies, and sovereign governments failed to perform even the minimum levels of due diligence demanded by their fiduciary duties.

But the second story is even bigger and extends far beyond mortgages to the entire banking system. The banks had found a way to avoid the regulation that everyone knew they needed ever since they were given federally backed depositor insurance to prevent bank runs back in the '30s. They became one of the biggest lobbyists and campaign contributors to your Congress and your presidents. Then, amazingly, they just asked that all limitations on their activities be removed -- and they were. If I paid you $2 for your vote, it would be illegal, but somehow these banks could pay hundreds of millions to our congressmen and presidents for their votes and it was all perfectly legal. Completely nuts!

So what did banks do that was criminal? Well, first they paid your government to eliminate bank restrictions, then they overleveraged, knowing they could not honor contracts with such leverage, then they lied to their shareholders about the risks and magnitudes of their positions, hid their positions illegally off balance sheet, and through the use of derivatives managed to violate minimum capital requirements on an almost daily basis. They took bank debt leverage from 8:1 to over 30:1, thus assuring that the banking system could not survive even a modest credit tightening or recession. They made crazy bets in the credit default swap market that they could never honor in a downturn. They loaned money to anyone who could fog a knife because they knew they were going to stuff it to others through securitization and CDOs. If we had a criminal investigation, we would have access to the incriminating phone calls and e-mails in which the banksters disclosed what they really thought of the assets they were pawning off on others. To see how traders incriminate themselves, watch "The Smartest Guys in the Room," about Enron's collapse.


http://www.salon.com/opinion/feature/2009/07/22/economic_crisis_part_one/

[Kalun D]

17. Now THAT

is a good post.

[SmileyRose]

15. You are (wrongly) assuming this was a "meltdown".

I believe this was planned a very long time ago by the predators when unions forced the greedy to behave within the confines of the US. This is simply part of a long term plan to

1. keep the wealth shoveling to the already wealthy,

2. step by step push quality of life as far down as possible to make us easier to control

3. continue to have a place on the planet they can shit up with irresponsible manufacturing.

[Tippy]

21. Your right this was no accident...

This was caused by GREED...and a strong desire to kill our Democracy. They are well on their way to owning us, as in slaves.

[laughingliberal]

37. +1 nt

[TrogL]

16. Off the top of my head, without referring to anybody else's post

Countries with coherent economics plans (eg. Canada) have fairly tight regulation of the banking and security industries to avoid the problems that led to the Great Depression - lesson learned. Economic "conservatives" (which they're not) deregulated the US banking and security industries. Toxic securities (e.g. bad mortgages disguised as "assets") were foisted on an unwitting public. Banks were allowed to loan money to people who had no business borrowing it, which drove housing prices through the roof. Eventually, the whole house of cards collapsed. People defaulted on mortgages made on huge, over-priced, poorly constructed McMansions, causing banks to collapse, driving down stock prices. Eventually the truth came out, destroying the market's most valuable asset - trust.

[ChicagoSuz219]

18. I can do it in one word:

GREED

[Sherman A1]

23. Agreed

I would add Ronald Reagan

[justabob]

31. hubris is the one I settled on nt

[Sebastian Doyle]

19. 30 years of continuous fucked up economic policies.

and the systematic destruction of everything FDR did to save this country from fascism.

[SergeStorms]

20. Corporate greed.

The premise that there can be unlimited sustainable growth, forever, and their attempts to perpetuate that premise with NAFTA, deregulation of every corporate sector, etc. They tried everything under the sun to perpetuate the lie that there can be unlimited growth and perpetual increased profits. They've simply run out of smoke and mirrors to distract us with.

Needless to say, that house of cards has come crashing down. What we now see is the logical conclusion of that unchecked corporate greed. Oh, they'll continue to find ways to put band-aids on the hemorrhaging capitalistic wound, for a while, but they can't put the toothpaste back into the tube. The illusion is over. Now the stark realities of it all have come home to roost.

[Spider Jerusalem]

22. Two words: Neoliberal economics.

100 words (or fewer):

Repeal of Glass-Steagall, high-risk lending and overextension of credit; packaging of risky and bad assets with good ones in ways that exposed lenders to unacceptable risks (as mortgage securities were rated according to the best not worst risks, many lenders and investors thought they were holding AAA+ rated paper that turned out to be junk).

[Vinca]

24. Greed over common sense.

[erpowers]

25. A little Information

First, the bank bailout occured on President Bush's watch. It was President Bush who pushed for and signed the bank bailout. According to the Washington Post the $700 billion Wall Street Bailout was signed into law by President Bush on October 3, 2008. As you know that was a full month before President Obama was even elected. It would be another two months after the election before President Obama was sworn in as president. This is a link to a time line on the Washington Post website. As you can see from the timeline the crisis started in September 2008. That is a full four months before President Obama took office.

http://www.washingtonpost.com/wp-srv/business/economy-watch/timeline/index.html

http://money.cnn.com/2008/10/03/news/economy/house_friday_bailout/index.htm?postversion=2008100309

The first paragraph of this link should say it all.

"After two weeks of contentious and often emotional debate, the federal government's
far-reaching and historic plan to bail out the nation's financial system was signed
into law by President Bush on Friday afternoon."

Second, President Bush can be blamed for the financial crisis. I cannot find the link for this article, but President Bush lifted the debt limits from Wall Street banks. The debt limits prevent Wall Street banks from taking on too much debt. It can be argued that if the debt limits had been left in place either the banks would not have collapsed, or the collapse would not have been as bad. There is a link to a New York Times article that gives blame to President Bush, President Clinton, and Congress.

http://www.nytimes.com/2008/09/20/business/worldbusiness/20iht-prexy.4.16321064.html?pagewanted=1&_r=1

So, to sum up Bush was in office when the economy began to have problems. In addition Bush,s bad policies caused a number of bad things to happen. These, bad things caused problems for the American economy. However, I think the main thing you should say is that the Wall Street bailout occured during Bush's presidency.

[madmom]

26. Greed

[peggygirl]

27. The wealthy facists haven taken the money out of the country.

The money garnered from various scams and fraud against the government and the poor and middle-class people of America now resides in banks in the Carribean, Quatar, Israel, India and Norway, Sweeden, and some small island nations and one or two places in Africa. If folks would follow the money, it's not in China. China just holds our debt. The actual physical money has been scammed away with the help of the corporate icons who ran amuck during the Bush years.

[HughMoran]

28. Bush artificially pumped up the economy with government spending, tax cuts & easy credit w/ no reg.

Result: record deficits & credit backed by nothing. the end.

[dysfunctional press]

35. it started waaaay before bush ever appeared on the scene.

[ThomWV]

29. Here you have it in 14 words

The sacrifice, labor, and bodies of our fathers were stolen from their rightful heirs.

[theothersnippywshrub]

30. Only three words are needed: Too Much Debt.

Under Bush, unregulated banks used leverage of 30 or 40 to 1 instead of the prior limits of 8 or 10 to 1. And some of those banks created and marketed hedge funds that were leveraged as high as 100 to 1. When the leveraged assets declined in value the banks became insolvent. When that happened the banks' stocks were sold short and the cost of the insurance on the banks' debt skyrocketed. That reduced the net worth of the banks to nearly zero. It also reduced the net worth of the companies insuring the banks' debt to nearly zero.

Under Bush, real wages and salaries declined and the individual saving rate turned negative. So people were incurring debt to maintain the same standard of living. Banks encouraged this by issuing credit cards with large limits to anyone with a pulse and by urging homeowners to take out second mortgages or home equity lines of credit. Unregulated banks and hedge funds were buying, packaging and reselling those credit card debts, mortgages and home equity loans as fast as they could.

Under Bush, the housing bubble created huge amounts of mortgage debt that never could be repaid. Those mortgages comprised much of the highly leveraged assets mentioned above. Again, the unregulated banks and hedge funds were buying, packaging and reselling those mortgages as fast as they could. So the actual mortgage lender had no concerns about whether the mortgages would ever be repaid. And the erroneous assumption that housing values would never decline made everyone involved believe that the mortgage debt, even the no money down mortgage debt, was sufficiently secured that no one could lose much money. But when housing values did decline, everyone lost money, and many lost enough to become insolvent.

When banks, insurance companies and millions of Americans became insolvent, a possibly normal recession became the Great Recession. Employers responded by slashing expenses, especially payrolls. Massive job cuts created more job cuts and the rising unemployment led to more worthless debt that could not be repaid. That further hurt the over leveraged banks and the insurers of their debt.

[indypaul]

33. The late John K. Galbraith described it very aptly

as a "sparrow and horse economy." The more you stuff into the horse,
the more likely it will eave something at the side of the road for the
sparrow. Quite the opposite of a trickle down economy that has prevailed
for at least the past eight years.

[adamuu]

34. Wikipedia: Financial crisis of 2007–2010

http://en.wikipedia.org/wiki/Global_financial_crisis_of_2008%E2%80%932009

The collapse of a global housing bubble, which peaked in the U.S. in 2006, caused the values of securities tied to real estate pricing to plummet thereafter, damaging financial institutions globally. Questions regarding bank solvency, declines in credit availability, and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during late 2008 and early 2009. Economies worldwide slowed during this period as credit tightened and international trade declined. Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st century financial markets

http://en.wikipedia.org/wiki/Global_financial_crisis_of_2008%E2%80%932009#Background_and_causes

[Stephanie]

38. This might help - small words, includes pictures >

http://www.time.com/time/specials/packages/article/0,28804,1872229_1872230_1872231,00.html

[EmeraldCityGrl]

41. OMG...this is perfect...the subprime primer...

http://docs.google.com/present/view?skipauth=true&id=ddp4zq7n_0cdjsr4fn

[Tierra_y_Libertad]

40. In a few words: We, as a nation, borrowed and spent more than we can afford.

[ChoppinBroccoli]

42. You Really Only Need 2 Words

Republican rule.

Or you can boil it down to one word: Bush.

When you start getting into more detail (things like deregulation, policies geared toward the rich, tax giveaways, rampant spending, war, et al.), it all leads you back to the original two words of this post: Republican rule.