Everyone is affect in one way or another by the recession. Common wisdom is that the underlying cause for the recession and its projected continuation through 2009 is the result of the collapse of the housing market. Although the market’s retraction is more or less centered in a small cluster of cities, the ripple effect is being felt everywhere. You probably already know this unless you’ve been comatose over the last 18 months.
When examining the cause of the market’s retraction, you quickly encounter the term “Housing Bubble”, which has now clearly burst and is spewing out its contents (sub-prime mortgages, financial mismanagement by mortgage lenders, greed, get-rich quick schemes, adjustable mortgage rates, and ordianry greed, etc.) all over the financial world. If you are able to get past the stench of the contents (I hesitate to use the term “guts” here), and stick to objective analysis of the cause of the bubble, you will find that the government’s fiscal and monetary policies are at the root of the problem. You can read more about housing bubbles in this article.
Now consider this. The TARP, now discredited as Treasury Mumbo-Jumbo and Fear Mongering, has done nothing to help out the homeowners that are being crushed by the stinky internals of the burst bubble. Maybe a pimple would be a better analogy, but pimples just aren’t big enough to properly describe the situation.
Anyways, the point here is that after three months of misguidance and mismanagement by the Treasury and the Congress, economic recovery amounts to zip, zero, nada. The banks, financial institutions, insurance companies, and now the automobile industry have taken hundrends of billions of taxpayer’s dollars for their own purposes. We, that is we the taxpayers have been held up and there’s nothing we can do, or could have done about it.
In summary, there are many reasons for economic bubbles, such as the housing bubble. But in the free market, capitalist society of America, the cause and the problem is the government’s meddling based upon flawed knowledge, political intrigue, and a healthy dose of greed. The more you understand the problem with planned, Soviet style economies, the more you have to wonder where the nation is headed to over the coming decade.
