What do you you guys think about the root cause of the lousy global Economy?

Givens:
1. US corporations very top heavy with perks (e.g. Private Jet to Washington DC)
2. Poor planning by the automakers (invest in Hybrid technology)
3. Poor government policy
... examples:
... Sub-prime mortgages
... Discouraging of savings, retirement planning
... e.g. You can't convert E,EE bonds to Treasury Bonds anymore
... A president declaring war rather than Congress declare war?
4. Oil prices

My hypotesis:

Oil prices going through the roof encouraged Consumers to "Smell the Roses" and cut back drastically on spending which caused the downward spiral. If it were not for oil prices going up, then it would have been "Business as Usual" which is "No Pro-active planning".

Usually you fight a problem by stopping something entirely, rather than putting controls on it:

e.g. Someone puts 1/4 cup of creamer in their coffee and everyone else uses a tablespoon.
Solution A: No more Coffee club
Solution B: No creamer gets bought (Most often implemented)
Solution C: Tell person that uses 1/4 cup to bring their own creamer.

This happened and Solution A was implemented.

Obama has a Pro-active approach
Example:
... Computerize health care records
... Invest in Infrastructure improvement rather than waiting for the Bridge to Collapse

We "Are throwing money at the problems", with strings attached and this is a good thing.

I read your post several times, and some very good thoughts and points. After I read it I kept coming up with the same thoughts I had for a while. Americans are to fat and to greedy WE forgot how we got here. We need to remember to make sacrificers and good old hard kicking butt work like it used to be. Just ask our 75 year old elders. The depression was hard and it made hard people and they got good and tuff. I think in a good way if we have just the right amount of recession to bring our dollar value down enough so we can be more competitive in the global market and that hopefully bring some of our business back to the U.S. ( hay it was a dream) I think government got way to big and so did cooperations. This country was built completely on mom and pop business and with honesty and integrity. The old American way. IF congress is so smart at laws isn't it about time for every new law take two off the books. The new law covers it. Huh I feel Americans are not truly United anymore Good capitalism was replaced with greed.
There are some tuff choices coming up Welfare and crime suck up and effect this county too much now and the residuals are in the trillions in cost and the real estate value going quick because we don't want to offend anybody and the irony is it effects every man women and child living here including the war zones in our cities, Are cities actual values are plummeting because we ignored the 3 world mentality effect we now have in great numbers. Look at our big city schools and the graduation rates compared to 30 years ago and the war zone gets bigger. WE the people and our government better wake up. The success of a country is simply measured by top education of its people and the value of there way of life and its crime and the land value. They talk about Welfare Reform. This a no brainier. I for years wanted random drug testing for welfare recipients. You work for a corp. a public trans. Gov job. All drug tested Except the GOV paycheck a welfare person receives individually. That system is so broken a policemen this summer caught a criminal with THREE welfare checks NY.NJ.Pa. He calls NY welfare they say to him OOHH we can't do anything about it and this is the computer age?? One prisoner cost over $90,000.00 a year to keep!! Do the numbers it doesn't matter to a point how good our economy does. The crime and welfare and real estate falling in worth will eventually off set it all. You think Iraq was expensive HUH Simple high school math says different compared to the upcoming cost to fight crime and hold prisoners.
God Bless America and we need it soon

Nope. This post was today. I joined AMHD in 2007.

Ha I know I re checked it and changed my post It just proves that I'm perfectly imperfect

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Originally Posted by 21boat

Good capitalism was replaced with greed.

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Capitalism as all about greed. That was Adam Smith's point.

To #3 of the OP (Poor government policy) U would add massive deregulation of the financial markets and attrocious fiscal policy.

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Originally Posted by Akoue

Capitalism as all about greed. That was Adam Smith's point.

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I think you miss understood If I were to take your sentence to that level one could easily say That a prominent person in a coo capitalized on his position and became the new dictator because of GREED.
Noun
S: (n) greed (excessive desire to acquire or possess more (especially more material wealth) than one needs or deserves)
S: (n) avarice, greed, covetousness, rapacity, avaritia (reprehensible acquisitiveness; insatiable desire for wealth (personified as one of the deadly sins))

Noun
S: (n) capitalism, capitalist economy (an economic system based on private ownership of capital)

One a side note Greed because of excessive Greed a couple of men took 50 billion from this country and hurt peoples lives

Smith's view was that we are self-interested and motivated by greed. Capitalism is meant to harness our nature and to provide a marketplace where self-interested parties can compete. The private ownership of capital is not the sum-total of capitalist doctrine (many socialists also favor the private ownership of capital). Greed is the sentiment (in Adam Smith's sense of "sentiment") that both drives capitalism and is exacerbated by capitalism. This is why laissez faire capitalism is such a disaster: Without a regulatory regime to inhibit, or at least mitigate, greed, the system conduces to unjust social arrangements (child labor, for example). And as we can see all around us today, the absence of adequate regulation imperils the capitalist system itself (because of greed).

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Originally Posted by KeepItSimpleStupid

What do you you guys think about the root cause of the lousy global Economy?

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Hello KISS:

Root cause?? Nixon/inflation!

Before Nixon, our dollar was pegged to the price of gold. We COULDN'T inflate because we couldn't make more gold. When Nixon CUT the dollar from gold, the government was free to print ALL the money it needed. And, it did.

They DID this, because they wanted more money, but they didn't want to pass a tax to get it... Of course, inflation IS a tax - just not one passed through the LEGAL channels...

BEFORE inflation, people worked for their money. AFTER inflation people speculated for their money. Speculation doesn't provide a product OR service. Working does.

Inflation causes excess cash. Excess cash causes bubbles. Bubbles burst.

Printing and borrowing money GOT us INTO this problem in the first place. Printing and borrowing MORE, AIN'T the way out.

Buy gold.

excon

Root cause Greed and people on the top who think they deserve to live at the cost of living they are accustomed to and not have to answer to anybody.
Also Clinton signed for banks to have to lend mortgages to people who could not afford to pay it back
Car companies were required to keep employees that were replaced by machines.
Bailouts got spent by greedy on vacations rather than fixing the problem.
I wish somebody would bail me out!
I only need about a $5,000. Bail out :D

The greed permeates across the spectrum... not just people at the top levels .

What caused the latest collapse was the "bubble" that preceded it. Bubbles have occurred since humans created speculation markets.

A bubble is when the value of something goes up beyond any reasonable rational. The latest bubble was in real estate... before that it was in the value of stocks in new web based companies(dot-com ). But the cycle of bubbles and bubbles bursting began long before Richard Nixon and most likely will happen again once the caution caused by this collapse is forgotten.

Long before there was a United States there was a bubble in Holland that came from over-speculation in the tulip market. Yes ,at first it was only the fat cat rich who were buying up these tulips .But by 1630 the craze for Dutch tulips permeated through out Europe... all classes.
The market reached its height in late 1637, after the bulbs had been planted to bloom in spring. People mortgaged their homes and industries in order to buy the bulbs for resale at higher prices. In February 1637, as spring drew near and the bulbs were close to flowering, consumer confidence evaporated and the market suddenly crashed.People were going to lose everything ,but the Dutch gvt. Set up a commission that ruled the contracts could be annulled for 3.5% of the agreed price.

The bull market bubble of the roaring 20s burst long before Richard Nixon. The reason the stock market bubbled then was because of the use of leverage by both the fat cat rich ,and average middle class investors. Consumers used credit to purchase stocks, and as the stock market escalated, investors began to take advantage of margin loans provided by their brokers. They primarily invested in industries involving new technologies, such as the automobile, motion picture, and aircraft . Radio stocks boomed, rising by 400 percent in 1928 alone.

This latest bubble was due to real estate speculation , again , a game that all sections of the population played . House prices almost never go down... right ? But what happens when they more than double in price in less than a decade ? Well you would be a fool not to be in real estate... right ? Heck ;the government for more than a decade was promoting the hell out of having as many Americans as possible home owners . Did that create an artificial bubble ? Yup .

Low interest rates, population growth, new mortgage products, a new ownership society, and, of course, the fact that “they aren't making any more land” made real estate a no-brainer . In retrospect all the bubbles show an "irrational exuberance "for the market.But at the time it was more than reasonable to conclude that buying tulips ;stocks on leverage ;stocks of companies with no assets ;or real estate was a lock safe investment . The buyer wanted to buy a house; the real-estate agent wanted to earn a commission; the mortgage broker wanted to sell a loan; Wall Street wanted to buy loans so it could package and resell them as “mortgage-backed securities”; Alan Greenspan(the maestro) wanted to keep American prosperity alive; members of Congress and the administrations involved wanted to get reelected.

When a bubble expands there are a few who don't get caught up in it and become Cassandra's giving warning of approaching disaster. But like Cassandra ,history shows they are largely ignored.. No one wants to hear it while there are good times.When the excrement ultimately hits the fan ,everyone gets retrospective and demands new regulations designed to prevent the last cycle of bubble and burst... not foreseeing the one coming down the road .

This one is pretty bad . But we will recover from it and the we'll see the process repeat.

I agree greed is on all levels.
I call the greedy poor greedy needy.
Thing is there is a big difference between a po' person being greedy for a couple hundred or even a thousand dollars and top levels feeling they are entitled to millions and even billions of dollars because they have to keep up with the lifestyle they are accustomed to.
I know poor people that have the greed entitlement attitude and it isn't any prettier but still all in all greed at any level is rotten.

To understand HOW we got here, we must understand what RULE of LAW means and how it can be manipulated to serve only special interests such that it becomes indistinguishable from RULE by FIAT.

Fi·at [fee-aht, -at; fahy-uht, -at] –noun

An authoritative decree, sanction, or order: a royal fiat.
A formula containing the word fiat, by which a person in authority gives sanction.
An arbitrary decree or pronouncement, esp. by a person or group of persons having absolute authority to enforce it: The king ruled by fiat.
Most people think that Rule by Fiat is corrupt and objectionable while Rule of Law is exemplary and desirable, when in fact the latter can easily degenerate into the former.

If the essential characteristic of the law is the same (i.e. unjust), then the only difference between a monarchy, under which people are commonly known to be 'ruled by fiat,' and a "democracy" under which people are commonly understood to be 'ruled by law,' is simply a formality.

In other words, the democratic process underwhich we are supposedly "ruled by law" is nothing but a charade.

Take for example, the Federal Reserve Act, passed into law in 1913. The United States was not a monarchy at the time, but whether passed by Congress, "democratically" or decreed as fiat by a King, the law's common feature is that it favors one group of people to the detriment of others.

In other words, it is corrupt and UNJUST.

And just as LAWS decreed by FIAT favor one group of people over others, private MONEY created by FIAT does the same.

In fact, the reason people prefer that money be based on something tangible is so that it cannot be manipulated to favor one group over another.

Of course, many people believe that money should be based on gold or silver. I disagree, but that's the subject of a different post.

My point is that it's not just our FIAT money system that is destroying our nation - it's our FIAT legal system too.

Americans cannot remedy the problems that we face as a nation today, unless we realize that our system of democracy is seriously flawed - it enables a corrupt few to RULE by FIAT over the vast majority.

Of course, first and foremost, we must dismantle the monopoly of our FIAT money supply.

But, we must also disarm the corrupt process that enables vipers and extortionists to "legally" establish their RULE by FIAT.

AMERICANS MUST BAN LOBBYING IN CONGRESS.

WE MUST MAKE SURE THAT OUR GOVERNMENT IS BY THE PEOPLE AND FOR THE PEOPLE - REGARDLESS OF Whether THEY HAVE MONEY.

If we don't, the US will be condemned to CERTAIN DEATH by FIAT.

Oh yea, and...

There's Not Enough Money on Earth to Satisfy all Outstanding Debts

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Originally Posted by N0help4u

Root cause Greed and people on the top who think they deserve to live at the cost of living they are accustomed to and not have to answer to anybody.
Also Clinton signed for banks to have to lend mortgages to people who could not afford to pay it back
Car companies were required to keep employees that were replaced by machines.
Bailouts got spent by greedy on vacations rather than fixing the problem.
I wish somebody would bail me out!!
I only need about a $5,000. bail out :D

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Like you point out here, how can anyone say the mortgage companies were not regulated? The regulation was going the wrong way! And that is the fault of Congress for the most part.

I agree with Galveston. This past election too many people blamed Bush Jr of the collapse in mortgages. He should have addressed it but It was CLINTON that started that ball rolling. It was the Liberal act so to speak trying to save the wale and killed the beach to watch the wale. He forgot only people can raise themselves not the government. I remember when it was tough to get a car loan and a years later a mortgage. And that was when our economy was strong and solid as were the values better. How Clinton screwed up. They say One man can't do much! It took ONE man on the stock market to buy a "lot" barrels of crude at $100.00 a barrel because he wanted to get in the history books of wall street. I don't remember the exact figure but I think it the crude was $78.00 at the time. And now here cames the 50 Billion man to Put this Country so bankrupt.
Does any body know what the HECK there doing anymore. I'm a business man and I'm getting tired of the Gov not knowing how to run a business and if you don't you certainly can't run a country and an economy Wheres My bailout!?

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Originally Posted by Akoue

Smith's view was that we are self-interested and motivated by greed. Capitalism is meant to harness our nature and to provide a marketplace where self-interested parties can compete. The private ownership of capital is not the sum-total of capitalist doctrine (many socialists also favor the private ownership of capital). Greed is the sentiment (in Adam Smith's sense of "sentiment") that both drives capitalism and is exacerbated by capitalism. This is why laissez faire capitalism is such a disaster: Without a regulatory regime to inhibit, or at least mitigate, greed, the system conduces to unjust social arrangements (child labor, for example). And as we can see all around us today, the absence of adequate regulation imperils the capitalist system itself (because of greed).

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It was CRA and government interference in the mortgage markets that contributing to the housing bubble.

Greed is a root cause but it is not exclusive to the private sector. Look at the government's greed at raising and taxing almost everything they can so that they [ the politicians ] can fulfill their greed for power.

The politicians know voters are greedy for entitlements and if the "rich" pay for it, all the better. Yeah! We can vote ourselves benefits while ignoring the true cost. Is medicare , medicaid or soc security going to be solvent or in the next couple of years? It will eat up greater and greater percantage of the GDP.


The one thing that capitalism does do is bring goods and services to the market more efficiently and less costly than the government can.






G&P

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Originally Posted by inthebox

It was CRA and government interference in the mortgage markets that contributing to the housing bubble.

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Well, lots of things contributed. Deregulation, low interest rates, consumer overreaching, etc.

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Greed is a root cause but it is not exclusive to the private sector.

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I agree.

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The politicians know voters are greedy for entitlements and if the "rich" pay for it, all the better. Yeah! We can vote ourselves benefits while ignoring the true cost. Is medicare , medicaid or soc security going to be solvent or in the next couple of years? It will eat up greater and greater percantage of the GDP.

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Yeah, there are lots of boomers out there. Let's cut them all off, the mooches.

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The one thing that capitalism does do is bring goods and services to the market more efficiently and less costly than the government can.

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It's sure done a bang-up job with health care. The free market, with its invisible hand, has proven itself very efficient indeed. The problem with capitalism--or a problem with capitalism--is that it's a system designed to *magnify*, *intensify*, greed, not curb it. It's the "invisible hand" that's supposed to play this role, but it's so thoroughly invisible I can't see it. Hence the need for regulation. As I said in my earlier post, it conduces to unjust social arrangements. People sometimes forget that we tried laissez faire capitalism and it led to some very ugly things.

Government - Medicare part D, hundreds of bilions of dolllars paid for by taxes and still has a donut hole.

Walmart - $4 per month for same generics. Taxpayor cost $0.

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Fannie mae and freddie Mac - [ a gse, not a purely capitalist entity ]
Private profits, socialized losses. The cause or the tipping point to the recession we are in.

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Military contracts - ever hear of the price of screws and toilet seats?


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Obama , McCain - a billion spent on election
About 87 millioin a piece in public funding?
What good has that billion done?


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Now about a trillion in bailouts and TARP - what good has it done? What harm will it do for generations to come?








G&P

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Originally Posted by inthebox

Government - Medicare part D, hundreds of bilions of dolllars paid for by taxes and still has a donut hole.

Walmart - $4 per month for same generics. Taxpayor cost $0.

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Really, so you favor Walmartization? There have been some problems there, you know.

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Fannie mae and freddie Mac - [ a gse, not a purely capitalist entity ]
Private profits, socialized losses. The cause or the tipping point to the recession we are in.

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Yeah, they really screwed the pooch. A pity there wasn't adequate regulation and oversight.

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Military contracts - ever hear of the price of screws and toilet seats?

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And who bills the government for those? It's corporate graft meets a supine government regulatory regime.

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Obama , McCain - a billion spent on election
About 87 millioin a piece in public funding?
What good has that billion done?

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We spend about a billion dollars on Easter candy. I think we can pony up a billion for a presidential election. (But then I also favor free air time for candidates.)

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Now about a trillion in bailouts and TARP - what good has it done? What harm will it do for generations to come?

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Well, we have some idea what a wholesale collapse of the financial industry would do. We've got a near collapse now, and look how hard that sucks. That said, I'd like to have seen some oversight and regulation regarding that seven hundred billion. Give it to banks and their greed runs away with them.