Many people have lost their jobs due to our current economic situation, while others have seemingly been unaffected by it. Why did our economy, the most powerful in the world, have a stroke? The economic meltdown was caused by three factors: social policies (another name for communism), greedy bankers, and greedy Americans. My argument is that not only did we ourselves contribute to the economic meltdown, but everyone will be affected by it in the years to come.
Banks for years have followed certain practices by which they base their decisions on whether to make a loan or to withhold it. To give an extreme example, if a homeless guy came up to me and asked me to borrow $100,000 to buy a home I would not feel inclined to do so for fear that I would never see my money again. I would feel sorry for the guy and try to help him in other ways, but a home loan is out of the question. Banks look at income brackets and past credit scores in determining who should receive loans. If a bank makes a bad loan they lose money! Over the years people like Janet Reno implemented social policies which penalized banks who didn’t make loans to lower income areas. True market forces were interrupted to push political agendas.
Big banks, the ones which are deemed “too big to fall” and yet are currently failing, are at the heart of this crisis. They started making subprime loans to individuals that had very little chance of even paying these loans off. These banks even gave NINJA loans (No Income, No Job, No Assets). What the banks started doing was packaging loans together and selling them as securities on the stock market. Thus the risk was shifted from the bank to investors, and it allowed the banks to continue making subprime loans. They all knew this was bad economics but they were making money and the economy was booming. Housing prices were soaring because of the huge demand for housing. That is, until the loans were not paid and these banks ended up with toxic assets.
Finally, those of us who went into debt and defaulted on our loans should have known better. Just because a bank is willing to give you the loan doesn’t mean that you can afford it or that it is a sound financial move. A large percentage of the American people live outside their means. They have done so in the past, and continue to do so.
Our system is such that it takes about a year for a bank to reclaim these homes. The loving way in which people hand these homes back to the banks is to strip the home of everything and damage as much as possible to stick it to the man. In all reality they are only hurting themselves and the rest of the American people because currently our banks are receiving billions of dollars to keep them from going under.
So what does all this mean? President Obama has now spent over 2.6 trillion dollars trying to stimulate the economy. The White House claims they have “saved or created 640,329 jobs" with all the money they have put into the economy, yet all this while unemployment rates have done nothing but grow. Even if the White House makes such allegations and we choose to believe them, that would mean that it took nearly 4 million dollars of stimulus money per job “saved or created” by the white house. The white house responds with the statement that this is calculator abuse. UNEMPLOYMENT IS STILL RISING!
With all this, in the end we messed up economically and we got ourselves in a rut. But I’m more worried about the long term implications of our debt than trying to make the economy look good for the short term just to get reelected. Dumping stimulus money doesn’t do much for the economy. How will we ever pay off this debt? The debt already exceeds 12 trillion dollars. Our interest on the debt is more than the federal government spends in a year on education. If we stop trying to manipulate the economic forces, they will work themselves out in the end. Our big focus should be eliminating this debt, which we would otherwise immorally pass on to our children.

Josh O.

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