Free-market extremists brought us this needless economic collapse. Here's a rundown of the mistakes we've made and the reforms we need now.Free-market extremists, otherwise known as Republicans. And one of the people most at fault is Alan Greenspan. His entire philosophy since he became head of the fed is to do what he could to make the economy business friendly. Here's an article by Digsby on how Greenspan created this current crisis, Digsby quotes Newsweek's Michael Hirsh:
This mess is mostly a titanic failure of regulation. And the largest share of blame goes back to one man: Alan Greenspan. People mainly fault the former Fed chief, who once enjoyed a near-saintly reputation because of his reputed "feel" for market conditions, for ushering in an era of easy credit that accelerated the mortgage mania. But the much bigger problem was Greenspan's Ayn Randian passion for regulatory minimalism. Under the Home Ownership and Equity Protection Act enacted by Congress in 1994, the Fed was given the authority to oversee mortgage loans. But Greenspan kept putting off writing any rules. As late as April 2005, when things were seriously beginning to go wrong, he was saying that subprime lending would work out for the common good—without government interference.There were others responsible, Phil Gramm comes to mind - you know, McCain's economic adviser - but the heart of it all goes back to Reagan's election in 1980. That's when the idea that government was evil and regulations come from government and are evil too. McCain himself is one of those free-market extremists who has supported de-regulation every time he could in his 26 year senate career. But now he likes regulation (hahah).
But not to worry, the government bailout should save us all from collapse, now the Fed is running some major companies, like Fannie Mae and AIG, and actually own all or part of these companies. This means that eventually we all might make a profit from these companies.
A guy on the Today show this morning had a good analogy for it. Think of the hurricane that just wiped out Galvaston. All the people there are screwed because they are individual homeowners with limited resources. But suppose some really rich guy owned it all and could afford to sit back and take big loses for several years, eventually all that property would be rebuilt and he'd make a fortune. The key is being rich enough to get through the financial loses. When it comes to AIG and all the others the Fed has bailed out, only the government is rich enough to do that on the scale needed. Wow, the government as a solution to a major problem, what a concept!
And don't worry, the Fed has money even though the country is in debt. They are the people who print money so they can make as much as they want. But in the modern age of computers actually printing money is not necessary, so the Fed magically created billions of dollars that only exist in computer storage. Isn't that cool? Don't you wish you could make Magic Money?
The main point is that we should be OK, eventually, as long as some strong regulations are enacted to prevent this from happening again. How do we do that? By electing Democrats, especially as president, and throwing out alllthe clowns who want deregulation no matter what. And who are they? Republicans. Republicans should not be allowed to rule and they should never be given moeny to handle, and this has now been proven definitively by the current crisis.