What's wrong with our economy?

[johnson1010]

What do you think?

Here's an interesting video i saw on the subject.
http://www.wimp.com/crisescapitalism/

I get a hollow feeling when i think about what our country does for a living.
We don't really make anything anymore. It's all service jobs. We are bankers, salesmen, salesmen of finance, television providers, creators of entertainment, restaurant servers, limo drivers, and pundits.

Where are the producers? Who MAKES things these days? We are all just passing around permission slips that enable us to do things on credit, without ever actually providing a fundamentally useful thing in return.

Why are we importing giant ships full of useless, poisoned, stamped-plastic garbage from over seas? Can't we make useless, poisoned, stamp-plastic garbage here? Or betery yet, an energy delivery system to replace the internal combustion engine? Something that we can make that is more than just busy work? Something that truly brings us forward.

Why pin your hopes and dreams on becoming the world's next great scientist and engineer when there is so much wealth and adjulation to be had as a pro football player? nevermind the likelyhood of success, or what you will be contributing to society.

You are better off sitting behind a desk, allegedly "running" a corporation and making truly astronomical amounts of blood money from the true hard work and effort of the thousands which work beneath you, for a pittance.

sigh...

[Robert Tulip]

When America works out how to get oil from algae it will regain its place as number one in the world. Americans are very smart.

Build a sea city in the Caribbean.

[stahrwe]

Johnson1010 thank you very much for the post!!!

I was born when there were only 48 states and the St. Louis Arch did not exist, but the United States was the leading manufacturer in the world.

We need jobs that don't involve pushing paper or electrons around.

[johnson1010]

I agree with both of you.

Americans are very smart, or at least, they have been in the past. (haha)
We need to stir that pot of creativity.

And you are right Starhwe. Desk jobs have their place, but fundamentally they are organizational jobs. They need a REAL something TO organize. Not everybody can work at a desk, or selling junk made somewhere else.

[phillies4evr]

no jobs and no money. I wonder who spent it all?

[johnson1010]

That is not what i wrote, and your implied conclusion is completly off base.

[phillies4evr]

well, this topic is..what's wrong with our economy ........ and that was my answer... end of story!

[Jim Watters]

This explains the economic meltdown before the election in 2008. It does not take into account the massive spending since Obama took office. The video is fast paced, so you will probably want to pause certain frames.

Click the download link on this page: Burning Down The House - What Caused Our Economic Crisis?

[etudiant]

The amazing irony for the political right here is that it is Obama that saved the bacon of that constituency. He has (apparently) been so afraid of alienating the corporate elite/ financially smug class that he has tilted very far in their direction. If anyone has anything to complain about it is the center-left moderates, who have been short changed.

Some policies were probably unavoidable due to the shear momentum of the Bush administration catastrophe. But in reality Obama must have exceeded the best expectations of the rentier class in his first two years. That he is being trashed now for not going far enough, even to the extent of lying about the root causes of today’s economic problems, is a measure of the hysteria and disinformation abounding today


http://opinionator.blogs.nytimes.com/20 ... f=homepage

[stahrwe]

Video not necessary.

1) decades ago passed the Communite Reinvestment act with the goal of making housing affordable to those who couldn't afford it. Sounds great and noble but the government neglected to understand the implications of 'who couldn't afford it'.

Banks were slow to loan money to high risk buyers for housing so Fannie and Freddie stepped in and said they would back.

Banks started loaning money for housing to high risk borrowers, housing demand went up, market prices of houses went up, banks a bit nervous but making money so they're happy, everyone is happy.

Banks used to bundle mortgages and sell them to investors. The bundles normally contained some very safe mortages but a mix of risky ones too. The price of the bundles dependied on the ratio of safe to risky loans. As more and more of the risky loans entered the market the bundle method became more and more unnattractive so Mortgage Backed Securities were invented. Huge bundles of mortgages were divided up into shares and the shares were sold. Now, no one bank or investor owned the bundle, tens, hundreds or perhaps thousands owned tiny pieces of the bundle.

Demand for housing really got hot, prices boomed, people made lots and lots of money and who cared if there were an increasing number of people who 'couldn't afford' the housing they were in because the house they bought today would be worth twice as much next year.

Bubble gets bigger and bigger until it broke. What broke it? So many people were in houses they couldn't afford that the default rate began to rise and it began to dawn on investors that the total value of all of the MBS was much less than what had been paid for them.

As this realization solidified a sickening feeling began to take hold of the investors. They were required by law to report the values of the assets to shareholders. When the market for housing was hot that wasn't a problem but now, there was no way to know what a share of an MBS was worth because so many people were in houses they couldn't afford.

Foreclosures increased dramatically causing politicians to freak out. The foreclosures made the economy look bad so the courts started demanding that the original deed be filed as part of the foreclosure. That was easy to do back when the mortgages were bundled but now, some holding comany somewhere had maybe a million mortgages and they weren't always easy to find.

So now the banks had assets of unknown value because they couldn't be foreclosed on and the banks can only loan money based on the value of their assets. Credit dried up.

More later unless this is totally boring all of you.