Skip to comments.Wall Street didn't cause crash of '08
Posted on 04/26/2010 2:43:07 PM PDT by ATX 1985
Financial reform? Not exactly. The bill before Congress does nothing to address the fundamental background causes of the crash of 2008. Wall Street may have been the instrument of the crash. But the crash was made elsewhere: in Washington's failed policies for middle-class families -- and in China's distorted rush for economic growth. The story is not a simple one. But I hope you will pay attention to the details. If you don't, you may find that the pocket that has been picked is your own. As you've heard, the crash begins with the huge excess load of debt built up in the last two decades by American households. Why did Americans borrow so much? Some like to tell a story of irresponsibility: We borrowed too much because we were self-involved yuppies who just could not deny ourselves the latest flat-screen doodad for our McMansions. Maybe that describes some people. But many millions of middle-class families plunged into debt for a very practical reason. Their incomes were not keeping pace with the cost of crucial items of the middle-class lifestyle: housing, medical care, college tuition. At the same time as housing, medical care and tuition were jumping in cost, the cost of borrowing was dropping to historic lows. Adjusted for inflation, the typical American family earned less in 2007 than that family had earned in 2000. Meanwhile, everyday necessities such as energy were becoming more expensive: By 2007, the typical American family paid more for energy than it did for clothes and entertainment combined. As everyday bills piled up, families borrowed to pay extraordinary bills. Mom needs nursing care? Junior got admitted to Chapel Hill? The roof needs refixing? No worries -- just cash out with a cheap refinance deal.
(Excerpt) Read more at cnn.com ...
Typical democrat party propaganda CNN misdirection:
Start with the democrats in Congress mandating banks to issue toxic debt: mortgages to people with no intention/ability to pay the loans.
He’s obtuse and genuinely dishonest in who is to blame. The villain in all of this is the Community Reinvestment Act passed under Carter and renewed under Clinton. That gave government the power to force banks into loaning money to people who couldn’t pay back the loans. Fannie and Freddie opened up a floodgate of subprime mortgage lending. Again, to people who didn’t have the means to pay back the loans. Lending institutions faced stiff penalties if they turned their backs on any low income individual or family seeking a housing loan.
"Mr. Obama, Tear Down That Wall Street"
Exactly@ both of you.
The propaganda/misdirection formula has been working for them, but we’ll never get to the truth of the matter, or correct the problems that led to ‘08, with that formula.
What a freaking MORON!!!
Frum is truly a legend in his own mind. Now CNN has to give him space to spew his drivel.
yeah, except frum is a republican. well, actually, he’s from canada.
Yes, he did seem to avoid the sub-prime issue and the Community Re-Investment Act. But, what I gained from this story is how much of an impact China had on exacerbating our debt bubble. I haven’t seen too many other pundits talk about their hidden role in this fiasco.
Yeah right, blame it on Wall Street. Can’t these propaganda pimps even think up new lies??
Hey David, ask Greenspan.
Wall Street & Washington too the existing horrific debt level and sent it soaring to new and unsustainable heights.
The result precipitated a crash.
Obama is now soaring the debt to ridiculous heights, setting up “Financial Crash, the Sequel”.
I think Frum does a good job of explaining why credit was so cheap.
What he didn’t explain is that it all falls at the feet of Bill Clinton, who decreased Americans earning power by exporting jobs to China through his infamous “trade missions”, while also increasing their debt tolerance by the low interest rates that the trade deficit fostered.
Where he messed up was trying to create the fiction that the Chinese demand for MBS fueled the mortage boom. That could not happen without U.S. govt intervention....and we all know what that was.
It’s sickening though he tries to blame it on the bankers when it was the govt who was the enablers.