Blaming government for fiscal crisis is scapegoating

I do not blame President Bush or his party for the Great Recession that occurred on his watch. Yes, there were things he should have done that might have prevented the situation from getting as bad as it did, and there were things he did do that made the situation somewhat worse than it needed to be. When crunch time came in the latter half of 2008, when things really started to fall apart in dramatic fashion, he and his Cabinet responded competently if not perfectly, even if they had to repeatedly strongarm fellow Republicans in Congress to do the smart and necessary thing.

But ladies and gentlemen, we were headed for a fall regardless of what government did, and the fault was our own, as a people and as a culture. We as Americans started believing our own press releases, as the saying goes, and we stopped doing the things that got us where we were. I blame Bush for a lot of things — I still believe he will go down as one of the worst presidents in our history — but I cannot honestly blame him for that.

What inspires that bit of a rant? Take a look at this graph, borrowed from Barry Ritholz’ Big Picture blog.

from http://www.ritholtz.com/blog/

from http://www.ritholtz.com/blog/

Ritholz uses the chart to suggest that former Federal Reserve Board Chairman Alan Greenspan got a little too free and easy with the credit, allowing the real-estate bubble and credit crisis to develop. There’s some truth to that — when the financial history of this mess is written, it will not be kind to “The Maestro.”

But really, look at that chart and ask yourself whether that could be sustained. And again, while Greenspan and the Fed could have moderated some of that spending spree, this was bigger than one man or one agency. (Also note how large that gap between consumer spending and cash income remains even now.)

It’s also interesting to compare the above chart to a similar illustration below charting the rise of our national debt over the same time frame. Notice any similarities?

I’d suggest that the two phenomenon — one consumer spending, one federal debt — share a common source, a belief that as Americans the rules of financial gravity didn’t apply to us. Yeah, that’s what we were being told by many of our leaders, but we as a people chose to believe them because it sure sounded good, didn’t it?

I’d further argue that anybody who thinks we’re going back to our recent heydays is deluding himself, because as these charts demonstrate, those heydays were as false as Bernie Madoff’s financial statements.

challenges07-640

399 comments Add your comment

Scooter

February 24th, 2010
7:55 am

Scooter

February 24th, 2010
7:56 am

The Eyes Have It

February 24th, 2010
7:59 am

Jay,

Have you read Munger’s parable about Basicland. If history truly is our guide then we’re just riding out that pre-destined road to a death of our own making. It’s all down hill from here.

I Report (-: You Whine )-: mmm, mmmm, mmmmm!

February 24th, 2010
8:00 am

This spending Bookman speaks of was coerced by the government, forcing lenders to provide capital to people that were unable to pay back that capital.

Period.

The third day in a row that Bookman has blamed the direct results of failed government policy on someone other than government, just sayin….

USinUK

February 24th, 2010
8:01 am

Scooter – you beat Jenifer??!! wow! you fast!

The Eyes Have It

February 24th, 2010
8:02 am

Darned that CRA. Isn’t that so, Whine. By the way, the FDIC now has 702 banks on their list of their endangered species and the FDIC is broke too. It’s times like these that make mattress stuffing a popular pasttime.

jt

February 24th, 2010
8:03 am

It is called a fiat currency.

And yes, the government is 98.9% responsible.

USinUK

February 24th, 2010
8:04 am

whiner – “This spending Bookman speaks of was coerced by the government, forcing lenders to provide capital to people that were unable to pay back that capital.”

wow. so the gummint made the banks coerce people into using their houses like ATMs? the gummint made banks and lending institutions offer credit cards with thousands of dollars to university students (and then keep hiking the upper limit?)? the gummint made banks force people to spend themselves into a negative savings rate???

lame. lame. lame.

Peadawg

February 24th, 2010
8:04 am

“I do not blame President Bush or his party for the Great Recession that occurred on his watch. ”

A Democrat who doesn’t still blame Bush…holy shyt! Now THAT is change I can believe in!

USinUK

February 24th, 2010
8:06 am

jt

February 24th, 2010
8:07 am

The other 1.1% can be attributed to global acceleration as the normal market cycles are getting closer together.

Scooter

February 24th, 2010
8:07 am

USinUK, yeah I was thinking about thumbing my nose at her but I know I would probably pay a heavy price for it. Like most of you ladies here she can have a sharp tongue at times. :smile:

I Report (-: You Whine )-: mmm, mmmm, mmmmm!

February 24th, 2010
8:12 am

Let’s be serious, if deficit spending is so bad as Bookman says, exactly what path do you mouthbreathers think Obozo has set the US government upon?

And I’m so sure, the bankers just woke up one morning and said “let’s destroy ourselves, give all our money away for free,” gee, it’s almost as though they had an implicit guarantee from some entity that would secure the loans that they made. Gosh, almost like the 400 billion that Fannie Mac holds and by golly, the TARP program that did just exactly that.

Duuuhhhh, how stupid can you be?

jt

February 24th, 2010
8:12 am

USinUK -

I owned many “disposable” SEATS in Spain. It was a FIAT sold to Spain by the Italian goverment.
You could get them for 4 or 5 hundred dollars. We once took a Seat 850 Especial, made a ramp out of boards and blocks, and jumped it into the Bay of Cadiz. Over forty feet. I’ve got pictures.

I had no idea that I had to get all of those cars out of my name before I left country. I had 5 unaccounted for. Cost me major bucks.

USinUK

February 24th, 2010
8:14 am

jt – they still sell SEATS in Spain and all over Europe. Me, I la-la-LOVE the 500 (and they’re one of the highest-rated compacts on the road)

what were you doing in Spain (besides attempting to build the Nuevo Armada)??

stands for decibels

February 24th, 2010
8:15 am

If anyone’s interested, here’s the actual piece containing the chart info:

http://www.ritholtz.com/blog/2010/02/when-were-stocks-last-under-valued/

And me–it’s all a bit too brain-hurty too early in the am for me to comment on Jay’s thesis just yet so I’ll just have a gander at how our resident economist is tackling the usual distractions (hi, Youze-in-Yook!)

USinUK

February 24th, 2010
8:16 am

hey dB – haven’t seen you in AGES!

The Eyes Have It

February 24th, 2010
8:16 am

The conservatives out there probably listened to one too many Ron Paul Youtube video and then went out and went into debt in order to turn around and invest their newfound wealth all in gold. Alas, gold is not all that it is hyped up to be though for other rarer earthly elements are in the forefront given our developing interests in batteries and the power of the kilowatt and other just thingys. Of course, there will always be a need for little layers of gold plate on those high fidelity connections but for the most part, gold is just the stuff that tales of doubloons are made of. Arghhhh!

Mick

February 24th, 2010
8:16 am

If you go back to 2002 when bush pushed through his tax cuts that was the beginning of our decline. He should have used the surplus that clinton and congress left him by shoring up social security. He continued with tax cuts and kept the cost of our wars off the books through supplementals. Bin laden and his rag tag group got very lucky on one september morning and nothing has been the same since. Bush was all brawn and no brain then walked into the trap. I’m sorry but history will record that the previous administration was incompetent, arrogant, and supremely ignorant of world history and culture. We will be paying for these mistakes for decades if we don’t make corrections. No matter who followed bush – his successor was doomed by the shear weight of the previous administrations failures.

jt

February 24th, 2010
8:18 am

USinUK -

Working for the Gubmint. Navy.

NowReally

February 24th, 2010
8:19 am

Oh Really,

The lenders were giddy to have people come in at at low rates, didn’t validate and in some cases falsified income all because the government told them they had to do it or else. Then they were told to bundle up the “prizes” and sell them to unsuspecting loosers for even more profit.

All in the name of creativity and success. Now they are greedy loosers.

Scooter

February 24th, 2010
8:19 am

Dang jt,sounds like you know how to have a good time! I did something similar with an old push button Dodge Polaris.

Peadawg

February 24th, 2010
8:20 am

“If you go back to 2002 when bush pushed through his tax cuts that was the beginning of our decline”

Are you equally outraged at $282 billion in Obama’s stimulus package? just wondering……

stands for decibels

February 24th, 2010
8:21 am

hey dB – haven’t seen you in AGES!

yeah, our shed-yules haven’t synched in quite awhile. I’ll be able to check in a bit more often in the am for the near term though.

USinUK

February 24th, 2010
8:22 am

jt – “Working for the Gubmint. Navy.”

man – if you gotta be stationed somewhere, that’s not a bad place to be!

Scooter

February 24th, 2010
8:22 am

Good morn DB, where ya been?

The Eyes Have It

February 24th, 2010
8:22 am

Oh Noes! Someone has brung up the pushbutton Chryslers! Now we are truly doomed. Reminiscing about the good old days of driving cars that had bumpers on them that weigh more than a new Ford Focus.

Jimmy Carter

February 24th, 2010
8:23 am

I guess this isn’t the govts fault as well, right?

“WHAT BUDGET TROUBLES? OBAMA PLANS $1B BRIT EMBASSY “

DAVID: AJC Truth Detector

February 24th, 2010
8:27 am

NOW THAT HIS GUY…….IS IN CHARGE…& added to the BIG MESS………BOOKMAN BLAMEs SOCIETY FOR THE MESS………..WAY TO GO…….JAY

jt

February 24th, 2010
8:27 am

Scooter-

I was also stupid enough to have an Z-28 IROC shipped over there. A Mercedes 350 SEL clocked me at just shy of 150mph. My American Z felt scary at that speed. We switched cars, and at 150mph the Mercedes hadn’t even started to float yet. Amazing. It could have gone much faster.

Mick

February 24th, 2010
8:28 am

**Are you equally outraged at $282 billion in Obama’s stimulus package? just wondering**

No. Money for that is used for the american people and the states they live in does not bother me, these wars and their cost on the other hand, does. Just sayin..

DAVID: AJC Truth Detector

February 24th, 2010
8:28 am

AJC did a lot of finger pointing when G. BUSH was in office.

USinUK

February 24th, 2010
8:28 am

not jimmeh –

the US embassey had to move following a 2001 study which found that 80% of the embassies around the world were unsafe (note the timing). The land, itself, was bought in late 2008

http://www.telegraph.co.uk/news/uknews/3123915/US-embassy-to-move-from-Grosvenor-Square-to-industrial-estate.html

david wayne osedach

February 24th, 2010
8:28 am

We won’t learn from this and can count on having the next great recession down the road.

stands for decibels

February 24th, 2010
8:29 am

Good morn DB, where ya been?

I was fumigating what had been Dick Cheney’s undisclosed location.

USinUK

February 24th, 2010
8:31 am

jt – I don’t know if BBA America airs the program “Top Gear” – if they do, you should look it up … it sounds right up your alley (and I think you’ll love the host, Jeremy Clarkson)

Peadawg

February 24th, 2010
8:32 am

Mick, “No.”

Figured. Typical. Thanks for playing!

Grumpy

February 24th, 2010
8:33 am

I love it. Now that the lefties have realized their guy Obama can’t do JACK SQUAT to fix things, and that scapegoating corporations and “greedy” Wall Street folks isn’t gaining them any traction, they have finally started to get a grip on reality: we, the people, are to blame.

I fully expected these lefty “talking points” to pop up as blind lefty government loyalists started to realize there is no savior in D.C. that can magically “create” wealth through government redistribution.

It’s the “ant and the grasshopper” story, and this country has had too many grasshoppers, and not enough ants. Yet all anyone in D.C. wants to do is kick the can down the road until my kids are forced to deal with it.

Redneck Convert (R--and proud of it)

February 24th, 2010
8:33 am

Well, I’m kind of tired and grumpy this a.m. I didn’t sleep worth a lick last night. I made the mistake of checking in on the Bookman blog kind of late and somebody brought up motorcycles and then Sister Dusty wrote about how she wondered how she’d do on a motorcycle and so all night I got these visions of her on a motorcycle with all that flesh drooping over the seat and coming straight at me.

Anyhow, all Bookman’s doing is showing what happened when the guvmint forced banks and the mortgage cos. to make loans to Those People and the illegal Mexicans and just about everybody else with a pulse. They didn’t even check income, and it’s pretty hard to pay for a $400,000 house when all you got coming in is a welfare check or maybe 20 bucks you made from mowing somebody’s yard.

I just know those bank and mortgage co. big shots were bawling their eyes out all those years when they saw their money going out on second mortgages or maybe first mortgages and knew they wouldn’t never see it again. The rest of us were living in our trailers and within our means.

But alot of us got laid off anyway when the economy went bust. This Barney Frank all by hisself laid our economy to waste like Sherman done Atlanta. Forcing the banks and mortgage cos. to make loans to people that had no business getting loans. He ought to be locked up!

And the same thing goes for forcing the banks to give credit cards to all the worthless people and colledge students. You just have to know the banks didn’t want to do it and they wouldn’t of done it but the law said they had to so they did.

So let this be a lesson to all of us. Only the well-off people ought to have big houses and credit cards. And if they get them, well, then we can have Trickle Down and everything will be fine. They got to spend all that money someplace and it might as well be on jobs for the rest of the folk.

That’s the Conservative way and the Right way. Have a good day everybody.

Jimmy Carter

February 24th, 2010
8:33 am

The Eyes Have It

February 24th, 2010
8:22 am

I have a “Pacer” I can sell you.

DAVID: AJC Truth Detector

February 24th, 2010
8:34 am

SORRY JAY…………NEVER,,NEVER,,,NEVER did I bELIEVE THE STORIES IN THE AJC on the ECONOMY..

jt

February 24th, 2010
8:34 am

From Drudge-

“Hoyer: Comprehensive health bill may be no go”

He knows that he better listen to me.

mmm, mmm, mmm, Barack the Liar Obama

February 24th, 2010
8:34 am

Yeah, I guess it’s the taxpayer’s fault.

N-GA

February 24th, 2010
8:35 am

As we post, the Greeks are rioting in the streets because of the austerity measures being imposed by their government. Americans need to take a hard look at what could happen. Hollywood releases “disaster” films about comets, meteors, earthquakes, storms, global warming, etc. Maybe if they actually released a film that accurately portrays the consequences of fiscal stupidity then people might start looking inward.

BTW, I always thought that Greenspan tested the political winds using his stinky finger.

Jimmy Carter

February 24th, 2010
8:35 am

USinUK

February 24th, 2010
8:28 am

I’m aware of that, but $1 Billion? Will it be built with our money or China’s?

jimmy62

February 24th, 2010
8:35 am

Ummm.. Fannie Mae and Freddie Mac are as responsible for this as anyone else. They created the market, they started buying up securities they weren’t supposed. And when both Bush and McCain tried to stop the bleeding, the Democrats in congress gave them the finger.

Last I checked, Fannie and Freddie are government sponsored enterprises that had the full implicit backing of the federal government.

Government is not the scapegoat, it’s the cause. Along with Greenspan keeping rates too low too long. And may I remind you, for all it’s independence, the Fed is still the government.

The Eyes Have It

February 24th, 2010
8:36 am

I have a “Pacer” I can sell you.

You can pay me to haul it off for you.

Scooter

February 24th, 2010
8:36 am

I know what you talking about jt. I have never driven an American car that wouldn’t float at 150 plus.

Jimmy Carter

February 24th, 2010
8:36 am

“ABCNEWS to cut staff in ‘transformation’ of news division… ”

I didn’t realize ABC still had a new division.

Jimmy Carter

February 24th, 2010
8:37 am

The Eyes Have It

February 24th, 2010
8:36 am

No on the Pacer, huh? How ’bout a Gremlin?

stands for decibels

February 24th, 2010
8:37 am

I fully expected these lefty “talking points” to pop up

really? wow. Kindly post links to where you had posted these expectations online, Grumpy. This I gotta see.

The Cynical White Boy

February 24th, 2010
8:38 am

Dang Jay, friend-o, if this ain’t a thoughtful column, grounded in facts and actually trying to educate the masses.

I’m sure your bosses at the AJC will admonish you for such conduct – ha!

Back in the early 90’s I worked for a Ga Democrat in DC – day one on the job, he told me: “Everybody in the Capital knows how to balance the budget tomorrow – cut spending, including defense and social security, and raise some taxes, but nobody has the guts to do it.”

At least our State Gov’t has to do the same thing with it’s checkbook that I have to do with mine, balance it.

But, our Fed Gov’t just keeps spending and borrowing, setting a bad example for those lucky Obama voters who can do much the same as the rest of us pay for their food, their housing, their healthcare, and their mistakes.

jt

February 24th, 2010
8:38 am

I wonder if NECKBOY knows what all smart women know,

about the size of a man’s truck in relation to,…..,

as he tools around in his F-650.

Ragnar Danneskjöld

February 24th, 2010
8:39 am

I agree that the Fed held rates below market, thus driving the fall in the dollar. In such an economy, where financial instruments provide no return, rational investors turn to commodities. Of the choices available in the early 2000s, real estate, and related instruments, always provided the safest and most consistent return on the investment (reason: they aren’t making any more land.) However, when everyone got into the same game at the same time, we had too much diminished-value paper chasing too few investment opportunities, thus building the bubble. I attribute Fed actions to 50% responsibility for building the bubble.

I dissent with that portion of our host’s essay that says the government otherwise has no culpability in the economic collapse. Continuing our focus on the housing bubble, the Congress determined to stimulate the housing market, by raising taxpayer obligations for instruments issued by FNMA and FHLMC and FHA. The insanity reached its climax with the 2007 Congressional action to increase the size of mortgages eligible for the government support, to $700,000 – the very definition of insanity. The primary reason i am no fan of Mr. Isakson is that he has never seen a taxpayer housing stimulus bill unworthy of his support; that mentality that compels taxpayers to commit to the care and feeding of investment bubbles is endemic among leftist democrats, and I am unable to distinguish Mr. Isakson from those. I assess 40% of the blame for the housing bubble to taxpayer-guaranteed instruments.

Those outside the industry cannot comprehend the role of CRA, the Carter-era “feel good” law that compels financial institutions to set aggregate lending procedures that consider the needs of “low- and moderate-income” borrowers. In fact, during the Clinton administration, the bank regulators turned CRA into weapon of brutal enforcement – think you can find the history if you google “Bank of America” and “branch application” and CRA. All bankers got the message. The regulators gave them a path out – by originating mortgages to low-income borrowers and selling them to FNMA and FHLMC, the banks fulfill their “statutory” obligations. I assess 10% of the bubble to the regulatory pressure from CRA. (Did you know that OCC, FED, and FDIC CRA examiners are culled from the regular financial analysts who review safety and soundness, to keep such concerns from corrupting their perspective?)

However the housing bubble was less than 50% causative of the financial distress. We will address that more significant causation of the economic collapse in our next posting.

kitty

February 24th, 2010
8:40 am

Anyone remember Bush touting the “ownership” society and his “deficits don’t matter” so the GOP is just as much at fault as the Dems for this mess. The American people who bought more than they could afford are the most fault. Remember personal responsibility. Anyone with any sense at all could see this coming like a freight train, but no one seemed to want to look. So here we are. Quite the mess and America’s hey days are over. The last decade was smoke and mirrors prosperity anyway…probably the last couple.

RLJ

February 24th, 2010
8:41 am

Jay,
It sounds like you want people to take personal responsibility for their situation. That sounds sound un-liberal like. Are you feeling well?
And by the way, I agree with your point.

USinUK

February 24th, 2010
8:43 am

not jimmeh – “I’m aware of that, but $1 Billion? Will it be built with our money or China’s?”

and where are you getting $1B??

http://www.bloomberg.com/apps/news?pid=20601088&sid=a9LgvJUJ3nZ8

Mick

February 24th, 2010
8:47 am

Peadawg

I can assure you that I am in no way typical.

Gordon

February 24th, 2010
8:50 am

I agree with Jay, but I would add that the government we have is just a reflection of who we are. What is sad to me is that Jay and many others still look to the government to solve too many problems. What government should be doing now is preparing people for the time when it can provide less help than it can now. The biggest problem is that too many people spend too much time bouncing back and forth between Republican and Democratic positions. The difference between Republican and Democrat solutions is small compared to the difference between the solutions either propose and the solutions that will work, which is much smaller government. Our society (and thus our government) must change fundamentally, and eventually people are going to understand that one way or another.

Bobby

February 24th, 2010
8:51 am

Obama needs to put people to work. If it takes debt to do it, so be it. Let the Bush tax cuts for the rich expire and use that money for jobs. The republicans ran up this debt. Let them pay for it when they come back in power.

Jenifer

February 24th, 2010
8:52 am

Yep, those days are gone and not coming back. We may as well get used to the new normal.

By the way, Shrub WILL go down in history as one of the worst presidents.

Bosch

February 24th, 2010
8:54 am

X marks the spot indeed (in the chart above). Nice column Bookman.

Jenifer

February 24th, 2010
8:59 am

Man Elected, Cheated With Mom-In-Law

It don’t get any better than this!

http://www.ajc.com/news/stout-elected-to-fill-325507.html

Jed Clampett

February 24th, 2010
9:02 am

Boy Howdy, that Ragnar feller sure is smart. The rest of you’uns only think you know what happened.

Joe

February 24th, 2010
9:03 am

Yet more loony logic. It was all on Bushes’ watch? What a complete and utter fool you are Jay. 3 million people have lost their job since your hero Obama has become President. All he has done is waste tax payer money since….. Of course you would believe what he has done helped. LOL. More ill informed logic. It honestly don’t take a rocket scientist to understand that Obama and his far left policies are failing and he perhaps will go down as one of the worst Presidents ever….

md

February 24th, 2010
9:03 am

” Maybe if they actually released a film that accurately portrays the consequences of fiscal stupidity then people might start looking inward.”

The “me” generation doesn’t have an inward.

As for the gov’t not responsible – bs, it took the gov’t, Wall St and Main St to create the perfect storm – I hold them ALL accountable.

Call it like it is.

February 24th, 2010
9:03 am

After years and years of research and looking at graphs and charts, I have come to this conclusion for helping America and its citizens.

*Spend less then what you earn.

Yes its radical, but I think it can work. You heard it here first.

Gordon

February 24th, 2010
9:03 am

Yes, I must agree with Bosch. This is a nice column, and I wish others would write similar pieces. It will be interesting to watch over the next few years as reality dawns on more and more people. That includes me, because although I have seen this coming for years, it is a lot easier to talk about a depression than to participate in one.

Sluggo

February 24th, 2010
9:03 am

If you like these graphs just wait till the Obama spending is added on top. Bush spent too much money. But Obama and the progressives have shoved the runaway deficit train into overdrive.

shirley

February 24th, 2010
9:05 am

Thanks for the charts. I hadn’t seen them. They reinforce my thoughts about promises of new or better services and higher wages made at every level of government during political speeches and elections without any commitment to new revenue sources. It just doesn’t work that way.

Scooter

February 24th, 2010
9:05 am

Bobby

February 24th, 2010
8:51 am

I think Obama is doing everything he can to put people back to work. I heard he and his wife have hired the largest staff of any Prez ever.

Scooter

February 24th, 2010
9:08 am

Spend less then what you earn.

AMEN!

md

February 24th, 2010
9:10 am

“Spend less then what you earn.”

But, but, but…..I can’t keep up with my neigbor if I do that.

JIMBOB (aka James Robert)

February 24th, 2010
9:11 am

It’s fascinating that we’ve reached a point in US history where the ‘left wingers’ are staunch defenders of the government, staunch advocates for State Department policy in general.

Jimmy Carter

February 24th, 2010
9:11 am

Thogwummpy

February 24th, 2010
9:11 am

Jay, my brother-in-law works for Fannie Mae here in Atlanta. Wish you could talk to him, boy-o; he’d really pin your ears back on this! You are just flat dead factually wrong. Government DID cause this. He was predicting how this housing bubble was going to bust way back in the ’90’s. AND, he said each time the Bush administration tried to reign in the loose lending policies, he’d have to sit in Fannie Mae meetings speculating how they’d react (Chris Dodd by the way, managed to shoot down any regulation in committee…notice your type always leaves that out). Guidelines such as the “zero down/no doc” policies from HUD were very instrumental on deepening the risk. I can go on and on showing how wrong you are, by citing government mandate after mandate on the real estate lending sector.
ON THE CONTRARY, I dare you to cite just one specific Bush economic policy you think caused the crisis. Because on ONE HAND, you remove the government from any blame, yet turn around and blame Bush (who was a government official). How can you have it both ways, Jay? Your column today is just further proof that you rant from ignorance.

Bosch

February 24th, 2010
9:12 am

Gordon,

“Yes, I must agree with Bosch.”

Did that hurt? J/K :-)

I actually blame consumers (us) more than any institution (government, Wall St.) because we are all ultimately responsible for our own situations. We elect the people to government, we do the spending ourselves, we invest in shoddy corporations. Blaming anyone other than yourself for your own shortcomings is easy – it’s hard to admit everything that happens to you is your own fault in a majority of the cases – good or bad.

F-105 Thunderchief

February 24th, 2010
9:14 am

Amen, Jay. Any society with its citizens spending way more than they make is bound to fall. Same with its government. A permanent contraction, a return to living within one’s means has to return.

Gordon

February 24th, 2010
9:14 am

Here’s the bad news: the second chart Jay shows only refers to actual debt. It does not mention unfunded liabilities. Unfunded liabilities are the difference between our best guesses of future income and future expenses. The unfunded liabilities of Social Security, Medicare, and Medicaid are estimated at nearly $100 trillion. The reason they aren’t counted as debt (as they would be in the private sector for something like a pension plan) is because the government isn’t legally liable to pay them.

YIKES!

How low can you go?w

February 24th, 2010
9:15 am

I recall graduating from college in the late 90s and looking at becoming a real estate investor (who wasn’t around the time?). Anyway, when I sat down with different mortgage lenders, the deals that they were offering were too good to be true. But they tried to convince me that it wasn’t. Glad I listened to my internal bs meter.

A friend of mine who was a lender said that most in his profession only cared about making the deal happen, getting their commission, and passing the buck to some poor schmuck who would clean up the mess.

Gordon

February 24th, 2010
9:16 am

Bosch,

I agree. As I said earlier, our government is a reflection of us. Other people’s money is a very addictive drug.

The Eyes Have It

February 24th, 2010
9:17 am

Well, my hairdresser told me that he went in and got a loan from this person at a bank and this person told him way back in 19 hundred and seventy that there was gonna be a housing bubble because bubbles were all the rage and he was right.

Bosch

February 24th, 2010
9:17 am

“and passing the buck to some poor schmuck who would clean up the mess.”

Turns out the taxpayer became the poor schmuck.

Ragnar Danneskjöld

February 24th, 2010
9:18 am

The more consequential question – what caused the economic collapse? – requires a little knowledge of the incentives that make private enterprise work, that which the leftists deride as “greed.” Greed is a comparatively consistent commodity, rarely increasing or decreasing over the course of humanity. That system that harnesses greed most effectively is the most productive; any system that quashes greed diminishes its own future.

In January 2007, on taking the role of speaker of the house, Nancy Pelosi declared the Bush tax cuts “dead,” an affirmation that a higher tax regimen was enroute. The democrats anointed a hard leftist as their presidential candidate, and coupled that with a hard leftist control of both houses of Congress, the future was clear: higher employee healthcare costs, higher energy costs from “cap and trade,” debilitating regulation of business practices. After the collapse of the housing bubble in September 2008, immediately before election, any employer with half a brain realized the inevitability of the leftist regime, and began to prepare for economic disaster, cutting personnel and expenditures to the bone.

And there we stay. For now, no employer has any incentive to make a change. And a one-time $3000 tax credit won’t change minds anywhere, except at Burger Doodle, where the employees are the only thing that costs less than the product. Reviving the economy will take a sea-change in the bureaucratic and political mindset. The tea partiers realize that. I doubt that our political class does.

GBO

February 24th, 2010
9:18 am

This (and an article about scrapping the nuclear waste burial grounds in Nevada for political reasons) are possibly the only articles you have ever written that I agree with the gist of. There has been for a long time some kind of sense of entitlement in this country, in both public and private sectors. Both the country and the people seem to think they have the right to every single thing they want, right now, whether they have worked to pay for it or not.

I’m a fairly high income and fairly high tax paying individual. I have worked hard for every dime I make. I accept the fact that there are some people who need food clothing and shelter and I need to help them. I do not believe I should have to buy every one of you a high def television, unlimited talk and text messaging on your cell phones, and privide you a nicer house than the one I worked 50+ hour weeks to live in.

We have somehow accepted the myth that everyone should have it all, regardless of their work ethic or their own personal sacrifice and regardless of who has to pay for it. Thus, we have a government that spends more than it takes in, a consumer population that spends more than it makes and could possibly pay for, and a sense that everyone else should pay or bail us out for our own lack of accountability and poor decisions.

It is a house of cards that cannot survive without crashing down sooner or later. Unfortunately a whole bunch of people seem to think it does not matter because they will have had theirs and be long gone before the bill comes due. My kids and grandkids (and yours too) are the ones who are going to be hosed.

Olbermann's Cold Sore

February 24th, 2010
9:18 am

Both political parties are to blame. Why?

PROGRESSIVES!

Obama is a progressive. Bush was a progressive. Clinton was a progressive and so is McCain.

The goal of these people is to control every aspect of your life and create an all-powerful federal state.

Progressives don’t believe in the concept of individual freedoms and the rights of the states to make their own laws. They only want one National government. They believe you work for them and their agenda. They believe they have some mandate to steal from one earner and redistribute that cash to somebody else because of their race or economic status.

Progressives believe they know what’s best for everybody and anybody who disagrees with them is called either stupid, a racist or a radical right-winger.

Prohibition in the 1920’s = Progressive Policy
Income Tax (It’s actually titled The Progressive Income Tax) = Progressive Policy
Federal Reserve System = Progressive Policy
Welfare Entitlements= Progressive Policy
Social Security = Progressive Policy
AMTRAK = Progressive Policy
United Nations/League of Nations = Progressive Policy

None of the above systems is financially solvent. Get it?

They don’t care about paying for their promises. They’ll say anything to pull the wool over the public’s eyes and then blame the opposition when their plans don’t work.

Research – Cloward and Piven. The entire scheme is to destroy the financial system by overloading it until it collapses from the inside. After the walls come down they will preach about how guvmint needs to protect you from everybody including yourself.

Save me guvmint…. Save me……

The liberal agenda is garbage in it’s most disgusting stink.

Throw the Progressives into the trash compactor and hit the green button. Problem solved.

Bruno

February 24th, 2010
9:19 am

Jay–I think the “whole” picture becomes clearer when you include spending and revenue data from 2008 and 2009 as well:

http://2.bp.blogspot.com/_4jIlyJ10uJU/S3_pm-yVujI/AAAAAAAAGEg/kOTFLOLBJaU/s1600-h/Revenues+and+surplus.JPG

If you look at the forty year graph of spending vs. revenues, you might get a clue as to why people are a tad upset with the government right now, and with the Democrats in particular. From 1970 through 2007, the graphs of revenues and expenditures had a similar contour, i.e the same “slope” to use a mathematical term. From 2008 through 2010, however, the graphs are divergent, with the spending graph going almost straight up and the revenue graph heading downward.

Bruno

February 24th, 2010
9:21 am

Here’s a graph illustrating the magnitude of the deficit the past 40 years:

http://4.bp.blogspot.com/_4jIlyJ10uJU/S3_qofA5-WI/AAAAAAAAGEo/gco-QtkluzU/s1600-h/Deficits.JPG

Bruno

February 24th, 2010
9:22 am

Gotta run for a while…..

The Eyes Have It

February 24th, 2010
9:24 am

Darned government is the root of all our evils. Do your part come election day and vote for nobody. That’ll reduce the size of government and save us a bunch in taxes too.

jt

February 24th, 2010
9:25 am

We need less SCAPEGOATING and more TAR AND FEATHERING.

imho.

Blue

February 24th, 2010
9:25 am

Yeah, Jay…you certainly have NEVER pointed your finger at Bush in the past about the recession. Sell that crap somewhere else. What a JOKE.

Mick

February 24th, 2010
9:25 am

Olbermann’s Cold Sore

Sounds like you quote the beck bible hook, line, and sinker. The guy is a second rate fool who makes good payola. He starts fires then sits back to watch the chaos he begat all the while laughing at his minions.

Normal

February 24th, 2010
9:26 am

Olbermann’s Cold Sore

February 24th, 2010
9:18 am

To quote a friend…”I don’t care who you are, thass funny”.

The Eyes Have It

February 24th, 2010
9:27 am

My income less expenses, when plotted versus time, has a variable slope but it has never been negative over a period greater than or equal to one pay period.

HDB

February 24th, 2010
9:28 am

Too many people are blaming the CRA for the economic trouble that this nation is in; it was not the cause. The CRA stated that banks had to lend in the communities that they served…..that’s all!! The culprits were the lenders who loosened credit restrictions to maximize profit at other’s expense!!

Tax cuts and taking the wars off-the-books didn’t help either!!

getalife

February 24th, 2010
9:28 am

Waste of time with the blame game when nobody is held accountable.

Well, I guess if you are blaming the people, they lost their jobs.

Jimmy Carter

February 24th, 2010
9:28 am

Blue

February 24th, 2010
9:25 am

Perhaps Jay’s logic is that if he now gives W a pass, he may be able to convince himself that BHO also deserves a pass.

reverend haggis

February 24th, 2010
9:29 am

man who lay down with same sex, bad man….man who fornicate with mother-in-law while wife is pregnant good man,able politician-deutoronomy 3:16 per the GOP Georgia Bible…..God is not mocked, but we sure enjoy a good laugh in his name we pray…..

N-GA

February 24th, 2010
9:29 am

Ragnar….you really had me going. You posted some well-thought-out comments that were on target. Then you had to go and blow it by blaming the CRA.

I actually get tired of re-posting this, so you get the short version.

The purpose of the CRA was not to have banks go out and and make poor loans. It was to prevent banks from putting a branch in a poor area and use the deposits for loans in more prosperous areas while denying credit to the actual depositors.

Banks did not have to expand into poor areas. In fact, CRA was a dis-incentive to do that. Banks chose to expand into poor areas. Banks chose to make loans to people with poor credit. Just like credit card companies (banks) choose to issue cards to people who are already drowning in debt.

So you ruin an otherwise good post with a right-wing taking point. BTW, I spent more than 25 years in the banking industry while all this was going on.