Hi dave, <br />
Old Farm Guy has it right regarding the strategic cause. The tactical cause was the lack of/insufficiency of oversight/regulations to prevent/detect problems. That lack/insufficiency resulted from powerful financial interests making huge campaign contributions to legislators who promised to "get the government off the backs of business." In addition, those doing the gambling ("speculation") knew that if they won their bets, they could keep the money. If they lost on their bets, others would pay what they owed. It was a disaster waiting to happen.<br />
When the Glass-Stegal [sp,?] Act was repealed by Congress, one legislator predicted that a financial disaster would result from removing the necessary regulation. Unfortunately, he was right--about TEN YEARS before the meltdown.<br />
It's sort of like a situation where cows eat moldy hay that kills them. The hay is the "tactical" cause. The farmer's failure to keep the cows away from the hay--or to know that it is moldy--is the "strategic" cause. Good fences/regulations keep the herd/investors safe. When can go wherever they like, they may get into the moldy hay....
The derivatives market was "endorsed" by government regulators because they didn't really understand it. Why not? It was deliberately made UN-transparent in order to get by with skulduggery that was "legal"--sort of the same way people have created designer drugs that have a ring or two different from the illegal thing but still has the same intoxicating and addictive effects.
As a result, government oversight wasn't really oversight. Had Glass-Stegal not been repealed (by Republicans, at the hands of their plutocratic puppeteers), things might very well have gone differently.
Fortunately--for all of us--American car manufacturers are alive and Bin Ladin is dead. That's something we should all cheer, no matter what our political frame of reference happens to be.... Problems in both of those areas helped create a lack of confidence among investors.
Correction (grammar): Change "has" to "have" in the fifth line of my reply.
Nobody in the for-profit financial industry was going to lend money to the automakers following a bankruptcy. There was--and still is--a liquidity problem, especially for people/companies trying to get back on their feet.
Regarding the "highly paid people with mega authority," one part of the oversight problem goes back to the sainted Ronald Reagan, who cut the number of auditors/examiners in order to "get the government off the backs of business." Oversight and enforcement are separate functions. The oversight people depend on "boots on the ground" in order to know what's really going on. Cut the number of boots on the ground, and problems arise.
People/Countries spending money they hadn't got.....................
Just about sums it up, along with irresponsible banks lending money to people that they couldn't hope to repay
Government and the Federal Reserve policy. Government decided that people who banks would never lend to would be lent too so the banks lent out and the Fed printed money and kept interest rates low enough to allow this.<br />
Of course the money printing and the low interest rates created an inflationary bubble in the housing market. The banks knew all the debt that was being created was worthless and created all kinds of derivatives to try and make it as secure as possible, with Government backing. Then like all bubbles it burst and took the whole banking sector with it because everyone realised that the derivatives they had bought were worthless.<br />
Government then quickly blamed the banks, churned out the rhetoric about evil and greedy capitalists wrecking the economy and because it's simpler to understand the rhetoric than the economics everyone bought it.<br />
"Bad guys did evil things because they're greedy" is a better headline than "The Market was destabilised by daft monetary policy leading to malinvestments pursued for unobtainable and utopian goals."<br />
So now America is in a position where it's running off Obama's (printed) stimulus money and that'll run out soon and when the money runs out Obama will be in a position where either he massively cuts government spending in order to finance the debt or he'll have to print more money.<br />
This will massively devalue the dollar, people will then sell their dollars which will cause a run on the dollar leading to hyperinflation and the total economic ruin of the US.<br />
If I were an American I'd be buying gold and silver and stocking up on at least two years worth of supplies. Also I'd be praying that the delegates nominate Ron Paul and that he gets elected, otherwise you're all screwed.
The problem has been the builders, the guys who wanted government to do more and thought government could solve problems. If you understand this you understand why Ron Paul talks about history so much and why people like him so much: his solution is really simple, cut government spending, stick to the constitution. The solution is not another builder, the solution is to get back to the policies which made America powerful in the first place.
Paul cannot bring himself to be so crass as to utter his basic belief: "Every man for himself." He absolutely detests taxes of any kind, hence his stance against the Iraqistan wars. He knows they have to be paid for, and he doesn't feel like paying. Ditto his stance on drug legalization: he figures the taxes derived from legal drugs would help keep his own taxes much lower.
He is a long-time believer in the failed "philosophy" of Ayn Rand (named his own son after her). Ayn Rand liked to wrap herself in the flag of individualism, when, in reality, she was at heart, a self-centered atheist (who needs God, anyway?) who also was in favor of abortion (who needs a g***amn baby, anyway?) Her "philosophy," boiled down, was that people should be totally "objective" about their decisions. The problem is that when people act only in their own self interest, they are being very subjective, not objective--self-absorbed, bordering on narcissistic. When I was a sophomore in high school, I read everything of hers that I could. I thought that she was a genius. Then I matured....
"Feeling a need to show your [sic] went to high school" ?
Bush's administration looked the other way on all the corruption in going on at that time. Madoff, AIG, banks, the war in Iraq.
The banks weren't corrupt, they were doing what government told them to do, Iraq was a natural extention of US foreign policy. Madoff and MAYBE AIG are examples of corruption but they're not economy threatening examples of corruption and they were resolved via the courts.
Actually, the sainted Ronald Reagan campaigned on cutting bank regulations--and the number of auditors--in order to get "government off the backs of business." The number of auditors and audits decreased during his time (kept that promise!!). Guess what resulted from having fewer audits and auditors?
Regarding the Freddie/Fannie debacle, its a wide-spread conservative talking point that is only half true, but since most people (if their eyes aren't glazing over) know nothing about the Frannies, they tend to just accept the whole baloney. I could give the facts, but those who don't care won't listen/read, and those who do care have already made up their minds.
I like most of your posts, but on this one, you just don't know what you're talking about.
Vulture capitalist investment bankers. Bloodsucking parasites who serve no useful purpose to society at large.
If you read the answer , I said investment bankers.....the banking crash , did you hear about it ?
That's what I meant , those hot shot financial managers whose only talent is to create vast profits with their mathematical prowess out of thin air. They should all be in jail.
This could be a first for us ! :)