Lookoutlady’s Marsh

$$$ meltdown
September 30, 2008, 12:21 pm
Filed under: Gov't, Life, vision

IMHO this mess start more than a decade ago.

In 1994 Congress had a Republican Majority. The community act went into affect Jan. 1995. It was hailed as a bi-partisan bill very much favored by Republicans who had picked up the issue from democratic lobby groups after gaining power in the House.

In 2003 in spite of having the absolute majority in Congress and Senate, the proposed regulatory changes did not pass when Bush proposed them.

Everybody was making money, the gravy train was running and no one wanted to change anything, or jump for fear of being left behind. It only stopped last year when the train wreck already happened.

The current mess of our financial sector cannot uniquely be attributed to Democrats or Republicans. It is collective greed on both sides of the aisle, and the unwillingness to stop when it became apparent that the system took on a life of its own. Warren Buffet warned about the situation and the re-insurance of debt issuances as having the potential of a weapon of mass destruction of or our economy as far back as 2005. No one wanted to hear about it, borrowers (middle income and poor) could get much bigger houses than they really could afford, mortgage their homes to feed their consumption, bankers were able to lend without needing to know their borrowers since they could resell their loans to Walls Street, and Wall Street loved the commission it earned repackaging, the lure of easy money drove everybody to collective blindness. At the level of government, the appearance prevailed that the economy was humming along even though public and private debt drew at alarming rates and middle class income actually shrunk. State governments filled their coffers from the windfall of growing property taxes. It was too good to be true, and in the end that is precisely what it was.



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