Who do you blame for the financial crisis

[lindajdunn]

Time recently listed 25 people to blame for the financial mess and while I agree with some choices, I disagree with others.

http://www.time.com/time/specials/pa...877350,00.html

Personally, I think the problems started with in the Reagan years, with his proclamation that government wasn't the solution; government was the problem. While this may have been true at that time, it's the age-old problem of the pendulum swinging to the left, then the right, and never stopping for long in the middle.

Unfortunately, Bush's administration let the pendulumn swing so far without correction that it took the whole system down. I complained at the time, when I saw some worrisome things happening but his approval rating was high and everyone was complaining about deadbeats while ignoring the other side of the coin (predatory lenders).

I quote:

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules...But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks." "Predatory Lenders' Partner in Crime," By Eliot Spitzer, The Washington Post, February 14, 2008

So here's a poll, which Inq will declare flawed.

Who do YOU blame for the current financial crisis?

[sionnach]

Having Obama as an option is absolutely absurd

[Fencergrl]

I was under the impression it was a flawed banking system and some bad policies. Canadian banks are typically leveraged at 18 to 1, compared with U.S. banks at 26 to 1 and European banks at 61 to 1.... that's scary!

Partly this reflects Canada's more risk-averse business culture, but it is also a product of old-fashioned rules on banking. World Economic Forum ranked Canada's banking system the healthiest in the world. America's ranked 40th, & Britain's 44th.

Canada has also been shielded from the worst aspects of this crisis because its housing prices have not fluctuated as wildly as those in the United States. Home prices are down 25 percent in the United States, but only half as much in Canada. Why? Well, the Canadian tax code does not provide the massive incentive for overconsumption that the U.S. code does: interest on your mortgage isn't deductible up north. In addition, home loans in the United States are "non-recourse," which basically means that if you go belly up on a bad mortgage, it's mostly the bank's problem. In Canada, it's yours.

Ah, but you've heard American politicians wax eloquent on the need for these expensive programs-interest deductibility alone costs the federal government $100 billion a year-because they allow the average Joe to fulfill the American Dream of owning a home. Sixty-eight percent of Americans own their own homes. And the rate of Canadian homeownership? It's 68.4 percent.

http://www.newsweek.com/id/183670

[lindajdunn]

Having Obama as an option is absolutely absurd

I'd agree but Sean Hannity and Rush Limbaugh have been pointing their fingers at Obama.

To Quote Sean Hannity on November 11th: "Wall Street keeps sinking. Could it be the Obama recession: The fear that taxes are gonna go up, forcing people to pull out of the market?"

Limbaugh referred to an "Obama recession" on the November 6 and November 11 broadcasts of his nationally syndicated radio show.

RUSH: The Obama recession is in full swing, ladies and gentlemen. Stocks are dying, which is a precursor of things to come. This is an Obama recession.

This is from http://www.rushlimbaugh.com/home/dai...107.guest.html

Another quote from that transcript:

He's not facing a sinking economy. That's exactly right. He's causing it! He is causing the sinking economy.

===

Given that these media giants with vast influence are making a case for it being Obama's recession, I felt that option needed to be included.

[lindajdunn]

Ah, but you've heard American politicians wax eloquent on the need for these expensive programs-interest deductibility alone costs the federal government $100 billion a year-because they allow the average Joe to fulfill the American Dream of owning a home. Sixty-eight percent of Americans own their own homes. And the rate of Canadian homeownership? It's 68.4 percent.

http://www.newsweek.com/id/183670

I think the deduction for home mortgages is a bad idea, partially because experts tried to talk me out of paying off the mortgage, noting that I'd lose my deduction. And they were serious!

Yes, I want to pay about $6,000 a year in interest so the government will refund maybe $1,500 of taxes.

That's nuts!

[Morale Officer]

I'd say mostly corp greed, but the whole system is mixed up. I've often wondered why a baseball player makes millions of dollars to play a game when on average EMS where I live make less than $40,000 a year. Anyone else see a problem here?

[Lemonaide]

We could debate lots of the choices, but I put the initial cause to Bill Clinton, with the rest following as a domino effect. In maybe fifty years, people will be better able to analyze the turn of the century, but I hope they include the Clinton-Kenneth star duo as being the most dangeous mix in US history. If Bill was going to cheat, he should checked the Stars.

[sionnach]

I'd agree but Sean Hannity and Rush Limbaugh have been pointing their fingers at Obama.

Two people who are ignored by anyone with any sense. Limbaugh.... how on earth does anyone take that man seriously.

[Lemonaide]

There's another guy on Television who has a little show, I can't remember his name, but he does nothing but scream and yell about the world. He sits at a desk with an old fashioned microphone and does nothing but scream.... who is he and how did he get a program of his own? Does anyone else notice this phenomena? People simply get 1/2 hour shows and bombard the world? Writing on this little web-site with the same basic people for nearly a decade, with an audience of about 50 or so has barely a dent in anything in the world at all... just think of the millions of people whose minds are completely bent by the dialogue of some of these people!!!

[BrianH]

There's another guy on Television who has a little show, I can't remember his name, but he does nothing but scream and yell about the world. ........

That would be right-wing windbag Glenn Beck, who has a larger word-count to content ratio than even Sean Hannity.

[Black Sunshine]

I think the deduction for home mortgages is a bad idea, partially because experts tried to talk me out of paying off the mortgage, noting that I'd lose my deduction. And they were serious!

Yes, I want to pay about $6,000 a year in interest so the government will refund maybe $1,500 of taxes.

That's nuts!

Not if you have other debt that is NOT tax deductable. For anyone dumb enough to have a credit card balance, your experts are correct.

[Black Sunshine]

That would be right-wing windbag Glenn Beck, who has a larger word-count to content ratio than even Sean Hannity.

Could be Keith Olbermann too. I'm an equal oportunity hater of douchebags.

http://www.dickipedia.org/dick.php?t...eith_Olbermann

[lindajdunn]

Not if you have other debt that is NOT tax deductable. For anyone dumb enough to have a credit card balance, your experts are correct.

I forgot about that.

Various friends went deep into credit card debt, buying clothes, jewelry, furniture, etc. and then refinanced their home because the value had risen. Thus, they paid off their credit card debt and... went out and took on more debt. They were upside down on their homes even before the bubble burst.

I have other friends who have refinanced their home to pay for college for their kids, to pay off medical bills, to obtain funds after losing their jobs back when they thought they just needed enough to survive for a few months, to start a new business after losing their job, etc.

They're all facing hard times.

[Fencergrl]

Not if you have other debt that is NOT tax deductable. For anyone dumb enough to have a credit card balance, your experts are correct.

Yeah, but paying off your credit card before your mortgage just makes good sense without the deduction. Mortgages (or any loan with collateral) is always cheaper interest than credit cards or other loans.

[Black Sunshine]

I forgot about that.

Various friends went deep into credit card debt, buying clothes, jewelry, furniture, etc. and then refinanced their home because the value had risen. Thus, they paid off their credit card debt and... went out and took on more debt. They were upside down on their homes even before the bubble burst.

I have other friends who have refinanced their home to pay for college for their kids, to pay off medical bills, to obtain funds after losing their jobs back when they thought they just needed enough to survive for a few months, to start a new business after losing their job, etc.

They're all facing hard times.

That's why I voted for people living above their means. We know a bunch who paid off credit cards with home equity, then charged up their cards again. Some people never learn. Not to say this was the only thing that caused the problem, but the mentality was rampent. So while those I know were driving Merecedes, I drove a Jetta. At the current time the crisis has had no effect on me or LN. In fact, we are doing better because we have been able to get cars etc on the cheap. So we are actually better off.

[Fencergrl]

I forgot about that.

Various friends went deep into credit card debt, buying clothes, jewelry, furniture, etc. and then refinanced their home because the value had risen. Thus, they paid off their credit card debt and... went out and took on more debt. They were upside down on their homes even before the bubble burst.

I have other friends who have refinanced their home to pay for college for their kids, to pay off medical bills, to obtain funds after losing their jobs back when they thought they just needed enough to survive for a few months, to start a new business after losing their job, etc.

They're all facing hard times.

I'm not saying that spending money stupidly is a good idea. However using your home to secure a cheap interest rate, to pay off those debts isn't a completely bad idea. The trouble is when the value of your home is inflated and you're unable to pay off your debts or don't change your spending habits... or all of the above.

[Black Sunshine]

Yeah, but paying off your credit card before your mortgage just makes good sense without the deduction. Mortgages (or any loan with collateral) is always cheaper interest than credit cards or other loans.

Yup, no arguement here!

Americans my age have a lot to learn about delayed gratification. It's good in sooooo many places.

[I_luv_saber]

As an interesting anecdote...

I have a credit card with a roughly $2k credit limit. I used it for everything I bought (since I earn points), but was always sure to pay it off every WEEK. Never carried a balance. Well, with the wedding coming up, honeymoon, and all such, I decided it would be easier to get my credit extended so I could put it all on at once, and pay it all at once (I had all the money required saved already). So, I applied to Wells Fargo to see if I could get credit extended (I have nearly spotless credit... something like 800).

Denied. Reason? I loved this: excessive use of credit. I laughed my ass off. At any rate, it was no big deal. I'd just put on and pay off things on my credit card immediately. Well, due to unforeseen circumstances regarding Nusy's visa (i.e. huge visa fee we weren't expecting... long story), I ended up in debt $1,000 dollars. Now, this didn't worry me too much. I'm fairly frugal, and this will be paid off in short term.

So the funny part? As soon as I was in debt $1,000 dollars, Wells Fargo extended my credit by another $1,000, without an application from me (I'm assuming approving the application they previously denied). Now... I haven't been using credit any less. I still use it for my purchases and keep everything paid off. So what changed? Nothing, aside from the fact that now I was in debt. A wonderful example of one of the reasons we are in the situation we are in.

Thought I'd mention that.

[lindajdunn]

So the funny part? As soon as I was in debt $1,000 dollars, Wells Fargo extended my credit by another $1,000, without an application from me (I'm assuming approving the application they previously denied). Now... I haven't been using credit any less. I still use it for my purchases and keep everything paid off. So what changed? Nothing, aside from the fact that now I was in debt. A wonderful example of one of the reasons we are in the situation we are in.

Thought I'd mention that.

It seems to be standard practice. When I first obtained a credit card, they wouldn't increase my limit until I had a major expenditure that took me near the limit and THEN they increased it automatically.

We pay paid our credit cards in full every month and the card companies, before the recent financial problems:
(1) flooded up with credit card offers.
(2) raised our limits again and again even though we never went near the limit and asked them to reduce the limits because we had no desire to have credit cards with (in one case) a $15,000 limit. [We no longer have this problem as the current crisis seems to have restored common sense to the industry.]
(3) sent us offers to skip a month's payment with no interest and no penalty every single January (which I considered a baited trap)
(4) gradually shortened the amount of time between receipt of bill and due dates until it was impossibly short and I set up online banking to send a monthly minimum payment before the due date after getting dinged once for $25.00 late fee when I paid it the day after receiving the bill.

Some of the literature we've received from places that wanted us to open credit cards with them reads like a deal with the devil. IOW, everything is wonderful until you go online and read the fine print and google for horror stories.

Credit cards are useful and practically essential today but the companies issuing them really and truly want people to fall into debt and pay penalties and high interest rates. It's all about maximizing profit and to hell with their customers. IMHO, this is a very short sighted business plan but this seems to be true of most businesses today. Focus on short-term profit and to hell with what comes later because you'll probably be working someplace else anyway.

[tchwojko]

I'd say mostly corp greed, but the whole system is mixed up. I've often wondered why a baseball player makes millions of dollars to play a game when on average EMS where I live make less than $40,000 a year. Anyone else see a problem here?

Yes and no. Supply and demand dictate pay scales. Also, you're not quite making a fair comparison. Are you going to take the average professional baseball player's salary? And are you going to include minor league players? What about the length of the average career?

Even we start with the assumption that this is not a good balance of salaries, how would you go about changing it. Would you dictate that EMS workers get more? That would mean raising taxes. Have you volunteered in the political process to work towards that goal? (Serious question, not snarky.)