What has caused the financial meltdown? --We have to understand this if we are going to fix the problem and then make sure that it doesn’t come back again in just a few years. What began as purely an American problem which was caused by deregulation, greed, and living beyond our means has now grown into a full-blown global recession.
The American president Ronald Reagan’s anti-government rhetoric fired up the movement to dismantle the protections of the American government. They gave this the label “deregulation,” said it was good, and encouraged it with almost religious fervor. Once all proper oversight of the financial industry was removed the speculative onslaught began. The now outrageously wealthy speculators have only one God; the God of money and wealth and greed. They have taken from the poor to give to the rich. I call this Reverse Robin Hood.
The cancellation of this essential governmental regulation led to massive financial fraud. To solve the problem the people who were responsible need to be held accountable for their fraudulent behavior. They need to do jail time. We can’t just turn our heads this time.
The God of Greed led companies to move their manufacturing operations overseas. This was convenient and profitable, because poor Mexicans or Chinese children don’t get paid the American minimum wage. Nor does anyone worry much about pesky subjects like workplace safety or protecting the environment. This loss of manufacturing coupled with the massive spiraling of debt led to the bankruptcy of the real economy.
So more and more people are beginning to lose their jobs. This means that they can’t pay their mortgage so they lose their houses (and marriages). The same Republican anti-government philosophy of greed led to massive underfunding of social service agencies, so the government does not have the staff or money to do much at all to help these unfortunate members of society.
Individual people, companies, and governments (city, county, state, federal) have all been living far beyond their means; for a long time. Dick Cheney once said that the federal debt was irrelevant.
With the castrated government regulators fully aware of what was going on, people were encouraged to borrow more than they could possibly ever pay back in order to buy big homes, big terrible-fuel-economy vehicles, big screen TVs, and all the latest gadgets and boy toys. Before this economic crisis can be genuinely solved, this excessive debt burden has to be paid off down to manageable levels.
The consumer has seen the minimum payments of his credit cards beginning to rise, and he is worried that he may be next one to lose his job. So finally he is starting to behave in a somewhat rational manner: He has begun slowing down his wasteful spending on silly, useless, soon to be obsolete toys. This slowing of consumer purchases is bankrupting lots of companies from General Motors to Circuit City.
The lower, working, and middle classes include any family earning about $150,000 per year or less. These people are seeing the gap between themselves and the super-rich increasing each year. Wealth in America is being concentrated, just like in Mexico and the Central American dictatorships. Democracy is dependent upon a strong middle class and a well educated electorate.
The percent of people covered by reliable and safely funded pension plans has gone down strikingly in the last 30 years. So has the percentage of people who have health insurance and good access to health care in America. Many millions of people now have no access at all to the health care system.
Religious and ethnic wars all around the world have made the bellicose Republicans get involved in military conflicts all over the place. And instead of raising taxes to pay for this massive military effort like was done in prior wars, the loser and mentally incompetent President George W. Bush actually reduced taxes. Of course he did this mostly for the wealthiest members of society.
It has taken at least 30 years of profligate living and spending to get ourselves into this mess. The now discredited concept of deregulation allowed it to grow exponentially.
Anyone who thinks that this horrible situation will be solved in a year or so just by taking on even more governmental debt is delusional. Yes, short term we do need to do even more deficit spending. But long term the manufacturing needs to come back to America. And the government needs to begin doing what it is supposed to do: Protect the average citizen from fraud by the greedy, rich, and powerful. And we need to begin living within our means again.
This is going to take some time. Even with a Super Star like Obama at the helm. In two terms (eight years) can he make some real progress? Yes. If he gets genuine cooperation from the greedy bastards on the Right Wing.
But if not….
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