I've hesitated to write about the mortgage/credit/stock market/ meltdown because I am not an economist and don't really understand all that has brought this about. But then, even economists, and experts within the government, claim not to fully understand what is happening in the economy. Even more frightening, they seem not to know how to fix it.
But, writing as a layperson with some education, here's what I think I do understand:
A couple of decades ago, manufacturing started leaving this country, jobs moved overseas to take advantage of cheap labor.
The only growing industry in this country was in banking: lending and borrowing and bundling loans into stocks to sell in the domestic and international markets.
People who couldn't afford homes were encouraged to take out mortgages with low interest that would reset within five years, leaving them with a house payment they could no longer afford. When the loans reset, they began walking away from these homes.
In addition, the value of homes increased astronomically and people took out home equity loans so they could buy huge SUVs (gas was cheap) and flat screen televisions and pay for their kids' college tuition. When the bottom fell out of the housing market, and their homes lost value leaving them upside down on their loans, they too walked away from their homes.
Unemployment started to go up, as the real estate and mortgage industries suffered. People stopped buying and started saving, if they still had a job, and the retail industry started to suffer. Large companies, including electronic stores and restaurant chains, began going out of business. More layoffs.
With people defaulting on their mortgages, banks started to fail and more people were laid off.
The stock market declined at a rapid rate and Congress panicked. They passed a 700 billion dollar stimulus package almost overnight, giving the treasury secretary of the worst administration in our nation's history the sole authority to distribute the money.
Treasury Secretary Hank Paulson has already spent 300 billion of the 700 billion dollar bailout package and things are getting worse. And no one knows what he spent it on. Some of the banks that got money are still sending executives on overseas vacations and giving huge bonuses to top executives.
A few months ago the cost of gasoline made driving any distance unaffordable for many people. Large SUVs became dinosaurs. Foreign made cars with better gas mileage were much more attractive to those who could still afford to buy a car. The big three American auto makers finally experienced the consequences of not moving to alternative fuel cars or at least more fuel efficient cars. They hover on the verge of bankruptcy as they beg Congress to give them some of the 700 billion as a loan to help them survive. As many as 3 million jobs may be at stake in the auto and related industries. The Republicans say "no," let the free market kill these companies if they can't compete with Toyota. The Republicans really would love to see the big three go down as it would kill one of the nation's biggest unions. The Democrats want to help, but they may not be able to until Barack Obama takes office. By then it may be too late.
The stock market continues to go down and no one can say when it will reach bottom.
Everyone is nervous. No one's job is safe. No one is spending money. The rest of the world looks to the United States to start fixing the mess they began, but nothing Paulson does helps. And he keeps changing his mind on what he wants to do with the money. No one knows what the hell is going on or how to fix it.
Obama is not yet president and has no real power to do anything, and the current president who has power is in hiding. The man who took us to war on the basis of a lie, who couldn't figure out how to get people off rooftops or out of the Superdome after Hurrican Katrina, certainly can't figure out how to fix this mess, that is largely the making of his own party, a party that presided over deregulation for decades. So what does he do? He hides in the White House after allowing his cronies to go on their final crime spree, looting our 401Ks and destroying our economy.
Bush is acting anything but presidential. There is no grand speech, no reassurance, no supervision of the bailout, no help for struggling homeowners, no attempt to coordinate things with the incoming Obama administration.
Once again, we are left to drown, this time in a sea of debt, as we watch the tidal wave of total financial collapse bear down on us.
This horrible man, this man who was installed in the White House by the Supreme Court when he actually lost the popular vote and stole the Florida vote, should spend the rest of his life doing public penance for what he has done to this country and its people. And those on the court who installed him should also do penance.
These people are criminals of the highest order and they should receive no mercy.
