Hey grasscity, I need some advice. I need to write an essay on 2 things that (in my view) caused the recession. I deciced to focus part of my essay on the housing bubble. I just need help deciding which other cause I could write about. If anybody can help, its always appreciated! Thanks!
The democratic party and its awful policies of social engineering. That probably won't go over well with the typical liberal professor, however. If you simply write a paper that's all about "blame bush" you'll get a guaranteed A from the liberal prof. no matter how terrible your essay is. How the Democrats Created the Financial Crisis: Kevin Hassett - Bloomberg.com [ame=http://www.youtube.com/watch?v=_MGT_cSi7Rs]YouTube - Shocking Video Unearthed Democrats in their own words Covering up the Fannie Mae, Freddie Mac Scam that caused our Economic Crisis[/ame] The democratic party is directly behind the disaster. As Obama's adviser and now chief-of-staff Rahm Emmanuel said, "Never let a crisis go to waste." Deritivites also played a major role, but the democrats insisted on not allowing them to be regulated: FRONTLINE: the warning: watch the full program online | PBS Again, the democratic party created this crisis-- and now they've gotten their long held desire... taking over banks, auto industry, nearly taking over healthcare... etc... In the span of a year Obama has attempted to nationalize (or has nationalized) approaching 50% of the economy.
1. 1977 Community Reinvestment Act This law forces banks to lend to risky borrowers. It was lobbied for primarily by the community organization groups that benefit from it, such as the famed ACORN. It wasn't until the mid-late 90s with Clinton(See 1998 in graph) that the CRA played a larger role in the housing market, when banks were required to statistically prove that they were lending to poor communities. In addition, if a community group such as NACA or ACORN successfully protests to the FDIC, The Fed, The Comptroller or the Office of Thrift Supervision then the banks will be heavily penalized for not meeting their demands. In this sense the law has essentially legalized extortion for community organizers, whereby the banks are pressured with the threat of "protests" to lend billions of dollars to risky communities. 2. The Federal Reserve and Keynesian Economics The central bank sets interest rates, prints money at will and insures the safety of our largest financial institutions. The insurance alone creates a moral hazard which encourages banks to act dumber than they normally would in a free market, where risk exists. Central economic planning causes the business cycle, boom & bust. Once the 90's bubble collapsed, and 9/11 happened, the Federal Reserve responded by lowering interest rates to 0%: And printed a shit ton of new money: This then led to the creation of the housing bubble: Nobel Prize Winner NYT Economist Paul Krugman in 2002: When they award goons like that the nobel prize in economics, it's no wonder Obama the war monger wins the peace prize. 420 edit