This is a very volatile topic being discussed here. A recession affects people at the micro level because it impacts their jobs, personal wealth, and financial future. However; the problems arose at the macro level well beyond the control of the individual.
Assigning blame to the causes is easy. Politicians, unscrupulous banksters, big oil, multi-national corporations, individual responsibility, etc., the list goes on and on. All played there role.
IMO the current “Recession” (yes we are still in a recession in many areas of the country despite media reports to the contrary) had its root in two primary areas both occurring at about the same time. NAFTA allowed corporations to outsource jobs wholesale to wherever the lowest cost of production could be obtained. While good for corporate profitability and shareholder value, it was terrible for the American worker. Secondly a “perfect storm” began to occur in the 1990’s of cheap credit policy by the Federal Reserve allowed a massive infusion of capital into the economy. This capital began chasing areas for investment and found housing. Encouraged by bad government policy to increase home homeownership and encourage the building industry, fraudulent banking practices (no documentation lending, “criminal” practices by wall street bankers on securitization of mortgages and the leveraging of these securities for outrageous profits) the lack of any meaningful regulatory control by those federal agencies responsible, led to the “Chernobyl” meltdown of the economy in late 2008. A classic asset bubble collapse.
Since one’s home is typically the largest store of personnel wealth, the American middle class took a tremendous hit. Combined with loss of jobs exacerbated by U.S. trade policies, well you end up with the current state affairs that everyone seems to be experiencing.
Do not believe for one minute any of the official statistics put out by our government. Unemployment figures are based on those who are receiving unemployment insurance only. The inflation rate is based on bogus numbers. The Federal Reserve System does not report inflation figures based on basket of goods crap or the “real” money supply (M4). They do not want the American people to know these figures in order to potentially inflate their way out of the deficit mess they’ve created.
I could go on but I’ve probably lost most of our readers by now. I sorry; it’s my old economics/finance education bubbling out. Do not expect the political arena to offer solutions – they are part of the problem not the solution. The ridiculous amount of money in that arena buying influence and policy determination does not mode well for us as individuals. So called reforms that have been recently enacted to solve some of these issues are window dressing, policy essentially written via influence by those impacted.
For those interested in reading more on these issues, a brief bibliography:
End the Fed – Ron Paul
The Revolution, A Manifesto – Ron Paul
Too Big to Fail – Andrew Ross Sorkin
The Big Short – Michael Lewis
13 Bankers – Simon Johnson
And for your viewing pleasure, a most excellent documentary on personnel financial responsibility titled “Maxed Out” available on DVD. Very depressing.
Sorry about this cynical rant but I could not help myself. Until the American public wises up to what is taking place (I have my doubts!) do not expect much improvement in conditions. Those in control want us to be uneducated sheep looking for our government to provide them with the answers. IMHO, all things political start with the financial first!
Note – Com’on AJ, do a little editing and post your response. I am interested in your take on this matter.
