I’m not an economist, so rest assured all of my comments are not qualified by a financial background or education. But, I think there are a variety of people and factors to blame for this disaster:
1) GREED! The banks and lending institutions continued to loan money to anyone and everyone with bad credit and no docs, with interest only loans and no money down. Duh! How could the government not oversee this?
2) Fannie & Freddie: This is why the government didn’t fix anything. Fannie and Freddie used their govt relationship as a way to gain competitive ground. They knew they’d get bailed out anyway. If I was running for president I’d want to be as far from these two groups as possible. But not Barack Obama. From 1989 to 2008, he received the second highest amount of money from Fannie and Freddie for his campaigns.. only that was from 2004 to 2008 alone! See the list here! At least it took Chris Dodd 19 years to make #1! And, The O-Man’s top financial advisor made over $100 MILLION in just SIX (6) years working as the head of Fannie. Read about Franklin Raines! Yeah, change I can believe in…
3) Co Conspirators. And I’m gonna say what no one seems to want to say… Alan Greenspan is also to blame! If you lower the rates for years and years and allow a bubble to form, it doesn’t take a financial wizard to predict what will happen! Then he retires and gives speeches about how its the worst economy he’s ever seen. Thanks for the observation. I hope that people will stop kissing his ass all around the country and observe that he IS neck-deep in this crisis as well.
4) HUBRIS: I don’t disagree with the failure to bail out Lehman. Its a bummer and yes, my buddy works there and that really sucks, but Lehman’s CEO failed to act on this issue and pretended that all was well. He had months to find a suitor and failed to do so. The management @ Lehman is to blame for their downfall. Merrill saw the writing on the wall and made a deal – good for them. I can only assume that Lehman’s investments were in such dire shape that even the government couldn’t help them.
5) A do-nothing Congress: Seriously! Even today, Harry Ried the Democratic Leader in the Senate, stated: “no one knows what to do”. Oh…. my… god. So instead, they are going to adjurn congress and let the Administration take care of it. Wonderful! It seems to me that years ago, the Bush admin tried to take on Fannie and Freddie and they were blocked by congress… BUT also…..
6) THE BUSH ADMIN: I’m going to say it! The administration has sat idly by and done very little here. While Paulson and Bernacke are definitely doing a great job at this point, it is a bit late for heroism. They needed to reign this in as the bubble was forming.
So, blame goes all over. What is the future? I’m an optimist. It seems to me that so far, this is a financial crisis. So the REAL den of vipers, 8 miles to my east, is suffering greatly. And they deserve it (see point #1). Frankly, I think there is more suffering to come. How this plays into the economy as a whole is yet to be seen. I believe McCain was right before he corrected himself – the economy’s fundamentals ARE strong. The financials suck. So lets give Wall Street another couple of months to consolidate, lick their wounds, and I’m sure that by this time next year we’ll have a consistent growth pattern again.
After all, everything is cyclical! Economics, politics… Environment…? But that’s another argument!
