Careening Towards a Financial Crisis?

It's been debated many times: Who is responsible for the mess our nation's finances are in - Democrats or Republicans?

The reality, of course, is that both sides share the blame. No matter how hard they try, partisans can't take away from the fact that politicians on the left and the right have had plenty of opportunity to change things. But they haven't

Instead, with few exceptions, it seems like virtually anyone who gets elected to office - often on a platform based on change, ironically enough - ends up falling into line with the bad habits of a system that has long been broken.

And now, with the financial system and the economy under increasing stress, America's financial condition is careening towards a crisis. In "U.S. Spending Obligations Surge," The Christian Science Monitor's Gail Russell Chaddock details the latest.

Comments

[adan:]

very true re both parties at fault, and the irony that each new group runs on "change" yet changes nothing except you in office benefits

2008 Aug 06 08:39 AM

[adan:]

opps, meant to say "who in office benefits" - i must need a change :-)

2008 Aug 06 08:39 AM

[robert.b.fe...:]

Careening towards a crisis? Have you seen the headlines lately? That ship sailed awhile ago.

2008 Aug 06 09:03 AM

[unimpressed...:]

Politicians are corrupt! Politicians are ignorant, incompetent, often stupid, and always self-interested. They are not the brightest bulbs in the package or they would not have gone into politics. The really sharp and successfully inclined enter the private sector or science. The lowest achievers enter politics. So, what do you expect will happen? You got it - disaster!

2008 Aug 06 09:17 AM

[jdl51:]

What I find interesting is when the republicans are in office it's both sides fault and when the democrats are in office it's the democrats fault. Just ask yourself this: If we weren't $10 trillion in debt and counting, would we be having this discussion. Since Reagan was in office the republicans have added $9 trillion to our national debt with their tax cut policies that were supposedly supposed to pay for themselves, remember? It was their trickle down, tax cuts reduce the deficit, deficits don't matter, borrow and spend, laffer curve, etc, etc, theories that have driven this country to the brink of financial disaster. It was all a big con scheme to destroy social security. The $185 billion a year SS surplus went to pay for their tax cuts for the wealthy taking the poor and middle class's SS surplus. Now there's nothing left and yet they still claim they're the party of fiscal responsibility.

2008 Aug 06 10:32 AM

[OldLimey:]

The debate here seems to be predicated on the assumption that politicians are ultimately in control. Perhaps they're not. Perhaps real control has slipped away to a corporate kleptocracy and representative democracy, in its contemporary form, has become little more than a 'bread and circuses' diversion.

2008 Aug 06 10:41 AM

[billp37:]

"Careening towards a crisis? Have you seen the headlines lately? That ship sailed awhile ago. "

Mid-February?


"Aug. 6 (Bloomberg) -- Citigroup Inc. may buy back $5 billion of illiquid auction rate securities from investors and pay regulators a fine of $100 million for allegedly telling investors the securities were safe, the Wall Street Journal reported. ...

Citigroup committed fraud by misrepresenting and omitting information while underwriting, distributing and selling auction- rate securities, Cuomo said in a letter sent Aug. 1 to the bank following a five-month investigation by his office. Cuomo won't sue the bank if his terms, including a fine, are met, spokesman Alex Detrick said at the time. ...

Auction-rate securities are typically bonds whose interest rates are reset by periodic bidding. Brokers abandoned their role as buyers of last resort in mid-February, allowing a $330 billion market to collapse, and investors were stuck with bonds they could not sell. "

www.bloomberg.com/apps...

2008 Aug 06 10:56 AM

[DaveW:]

rbf, the 'subprime' ship sailed already but the prime ARMs ship is coming in to port. August will preset a good buying opp for SKF, batton down the hatches, there are red morning skys coming...

2008 Aug 06 10:57 AM

[el pescador:]

24 Answers how George W. Bush, Republican congress and his Economic Policies Caused the Mortgage Crisis and This Bad Economy.
24 Answers how George W. Bush, Republican congress and his Economic Policies Caused the Mortgage Crisis and This Bad Economy.

1. Fiscal Irresponsibility with tax cuts while trying to fund 4-7 Billion per month for War. You cannot have both. Not surprising coming from a 2.0 GPA MBA student….he would not understand that….

2. Blocking anti-predatory lending legislation in 2000 enacted by democrats in congress to place additional regulation on mortgage lender and brokers. Repubs said no! Republican Phil Gramm then chairman on the Senate Banking Committee told a group of bankers in 2000…"In the name of predatory lending, we could end denying people with moderate income and limited credit rating the opportunity to borrow money:"…Damn, HINDSIGHT IS BITCH!....

3. Bush campaigning on the 2000 platform to increase minority housing ownership-This was the initial seed that was planted that eventually bloomed into this debacle.

4. Democrats continued to introduce bills to regulate the lending practice of Mortgage lenders lead by then senior democrat Barney Frank. Again, Republican dominated congress block such legislation…Damn, they were given a second chance to prevent this sub-prime debacle.

5. Paul O' Neil, the first Bush Treasury Secretary was castigated for his statements was forced out but come of his economic acumen on tax cuts and war spending. The Bushies fired him…..Read his book the "The Price of Loyalty" written by former Wall Street Journal reporter and Pulitzer Prize-winning journalist Ron Suskind, the book says Bush's economic policies were irresponsible, Bush was unquestioning and uncurious, and the war in Iraq was planned from the first National Security Council meeting, soon after the administration took office, even though Bush had promised not to engage in nation building during his campaign.

6. Take two on Treasury Secretaries; Bush nominates John W. Snow as Treasury Secretary on Jan of 2003. He later resigned. No actual reason given. Hmmm... They still cannot get it right...

7. Take three on Treasury Secretaries, Bush nominated Henry Paulson. Paulson is trying to enact measures and REGULATION (BIGGER GOVERNMENT) that have not been seen since the GREAT DEPRESSION…thought the Tax cut worked….

8. The dollar continues to drop due the fact that the international smart money is starting to lose faith in the economic viability of the U.S. Supply and demand will dictate they are selling or getting rid of the dollar. The dollar has not risen since his tenure

9. Light Sweet Crude (OIL) was around $31 dollar a barrel when Bush took office..coincidence or supply or demand..you be the judge... Now, it is over 100….When you have commodity inflation as such with energy price that trickled into to the economy sowing the seeds for CONSUMER inflation. Is your grocery bill higher than it was 8 years ago?...Of course, it is normal business cycle., but the ELEPHANT IN ROOM gave HUGE TAX CUTS AND BREAKS TO THE OIL COMPANIES (his base that supported his election)

10. A lack of oversight in the Security Exchange Commission. –precursor. You may not understand this next point, but I will state it anyway. The SEC, the organization that oversees and garners the responsibility for federal security legislation over the security markets (stock market etc.)…They did not institute FASB 123 soon enough. FASB 123 basically provided security legislation to make corporation expense stock options. It was done too late. Many corporations later had to report larger than normal losses due to this fact.

11. Enron-Once the 5th Largest company in the World—many of the executive where huge donor to the Bushies and consult with the bushies on energy before their demise

12. Speaking of energy consulting, the secret meeting notes of the energy brainstorming session with executives from Enron Cheney never released to the powers that may be. Cheney claimed executive privileges. Total disingenuous policies that could be the smoking gun behind why light sweet crude swimming over $100 a barrel…Can you smell collusion?

13. Raising the debt ceiling 4 times in 5 years….HOW WOULD LIKE THE CREDIT CARD COMPANY TO INCREASE YOUR CREDIT CARD LIMIT 5 TIMES?...talk about fiscal irresponsibility..9 TRILLION DOLLAR LIMIT.

14. Spending out of control-SEE 13

15. A higher than foreclosure market that could have been prevent..SEE 2, 3, 4 above

16. If the tax cut worked, then why has growth stalled at point 6 basis point last quarter.

17. Corporate Welfare / borderline socialistic regulatory policies that smell of planned government. (ala Kremlin economics)—i.e. Bear Stern debacle
fo
18. Two recessions so far

19. Irresponsible stimulus package

20. Redefining the rules of capitalism

21. Feeding the American public on the bullshit on the American economy is the envy of the world

22. The Government requiring Fannie and Freddie to fund more loans for low-income people, but lets them do so by buying sub-prime mortgage-DAMN, Hindsight is a BITCH compliments of the Bushies…..

23. the corporate socialist practice of bailing out the banks (e.g. Bear Stern, Fannie Mae, Freddie Mac etc...) privatizing profits and socializing risk

24. Changing the rules on market protocols...picking battle to support their own agenda ( naked shorting , shorting..ETC)

2008 Aug 06 01:08 PM

[Jason Rines...:]

Both parties to blame. If you want to lump Presidents into it, the include George Bush I, Clinton and GW Bush. Gentlemen, the failure is based on three things:

1) Failed economic theory. Milton Friedman style. Your talking about the 60's on theory and 1978 when Greenspan first did a limited trial of the theories using Housing then.
2) Misunderstanding of the benefits of globalization. Yes, some got very rich but the proceeds were not reinvested in America where the political system is corrupt. Investors and capatalists will invest where money considered safest to grow.
3) Diversion away from Judeo Christian values and focus on family. Some of this came back after 2001 but in general, the West has become secular. God and the bible are not about hocus pocus. It is about very simply and powerful guidebook full of example of nations and individuals whom showed principle and benefited or showed corruption and fell. This counter-culture began in the late 60's. Some are not aware the initial propoganda was funded by Soviet and Chinese communists. Those hippies of the counter culture became the leaders of our nation. Compare the slogans of the counter culture vs. biblical:

Bible: Love thy neighbor as thyself
Secularlist: If it feels good, do it

Bible: You reap what you sow
Secuarlist: The collective shall pay for your failures

Bible: There is a heirchy of this universe and chain of command, accountability and benevolence.
Secuarlist: I am god and refuse to admit as men we make mistakes and make them often. Society shall literally pay in gold for my mistakes.

2008 Aug 06 01:44 PM

[ATHELSTAN:]

The thought of the well-heeled, instant millionaires created since the early Reagan years losing their fortunes today may bring cheers to doctrinaire left wingers, but it is a scarey sign of ominous things to come for the rest of us. When one stops to think some guy and his wife are living in a $20,000,000 house in the Hamptons or in Fairfield County Connecticut, and now have had their credit cut off. Due, of course to plummeting wealth and declining mansion values.

The rest of us may feel relieved to see the rich suffering. We tend to think somehow we are left off the hook, but be careful about celebrating the bad fortune of the rich or anyone else for that matter. Your turn may be coming soon.

I can't help wondering, where and when does it all end?

2008 Aug 06 01:52 PM

[carey_jim:]

Define careening: Cause the ship to tilt on its side, usually to clean or repair the hull below the water line.

Careening is part of the financial crisis itself.

2008 Aug 06 03:27 PM

[surgcare:]

I know that democrats are incapable of arguing facts but I'll try to present the most important facts . The constitution gives the power of spending money to congress .Every year its congress who sends an economic bill to fun america to the president to sign or veto .I'm sure most democrats think its just the opposite .The democrats controlled both houses of congress from at least 1960 ,if not before , until the republicans took control in 1995 .The federal deficit started in the late 60's when the democrats controlled congress and the presidency from1960 to 1969 .When R Reagan became president in 1981 after 4 years of total democratic rule ,the country was near total collapse .In spite of the so-called economic boom under Clinton in the 90's , just before he left office the country was in a recession and the military was completely decimated giving us 9/11 .Every state , such as New York,louisiana and California , who have had predominant democratic governmemts , are catastrophes . So , all you democrats have a lot to be proud of .So I'm looking forward to a complete sweep by the democrats this fall so we can finally see how their going to destroy america for good .

2008 Aug 06 07:30 PM

[jdl51:]

surgcare: From 1800 to 1980 the total federal deficit was around $1 trillion. Since Reagan, Bush I, Clinton, Bush II the deficit is now closing in on $10 trillion. Clinton was the only president to move the budget into surplus at that time mainly because of his 1993 tax increase which was criticized by republicans who said it would destroy the economy. The military was so decimated by the Clinton years that 10 months after he left office our military invaded Afghanistan and completely took over the country. Then a year and a half later, they invaded Iraq and overran that country in 3 weeks. If you want to look at a state that is in terrible shape, look at Florida which is on the verge of collapse because of the policies of Jeb Bush and the republican state legislature. Like his older brother he was left with a budget surplus and squandered it all. People are leaving the state in droves. California has had republican governors for 21 of the past 25 years. The failed policies and the outright criminality of the Bush administration and his rubberstamp republican congress had damaged our economy, our credibility around the world, and has completely decimated our military. It will take years to fix the damage Bush and his supporters have done to our great country.

2008 Aug 07 12:26 AM