The question many minds have been pondering for quite awhile now is just what happened to our great economy? While quite easy to explain, it will be much harder to get back on track. There are several factors, which alone would never sink the economy alone, but together they become a different story.
Short version? Greed and stupidity. Our Major companies are run by computer programs that play monopoly with our houses.
#1 Military spending. The old adage that War is good for the economy is simply not true. The section of the economy that produces weapons is small and doesn't interact much with the rest of the economy. Therefore it draws money away from other sectors. The Bush administration spent half of our gross national product on wars, a nasty habit that the Obama administration has chosen to continue...
#2 Over inflated housing market. Big investors blinded by greed and run by computers poured billions of dollars, into over inflated housing markets. You need not be a rocket scientist to figure out that in a market like southern California when housing prices rise 400% in a few short years that the bottom will dropout, but a computer doesn't understand the concept of something that is too good to be true. So of course when did drop out, the computers didn't see it coming, and those holding the paper took the beating.
#3 Credit card economy. Sometime late in the twentieth century, it occurred to some economists that you could spur economic growth by selling things on credit. So somehow it got to the point in the 1990's where you could get credit cards for your kids, your dog, companies that don't really exist. In the end, at 25% interest is like paying double for everything you charge, and at some point in debt far enough that it will take forever to pay it back.
#4 International investment drain. Dubai Launched a huge growth in the luxury housing market, one that could only be afforded by millionaires. This adventure attracted a large portion of the international investment funds and in the long run will be doomed because there isn't enough Millionaires world wide to buy up all this property. Even so the greed factor has sent billions of dollars off to Dubai where no one lives, pulling that money from real projects that would help promote the global economy.
#5 Which leaves just one more little problem, Gas and Oil companies. Exxon Mobile has posted record profits of over 8 billion dollars a quarter every quarter since the beginning of the recession. How did the oil companies make so much money while the economy falls apart? Easy they caused it, while peoples paychecks were shrinking they raised prices of gas to record levels blaming foreign oil suppliers. Near half of the oil used in this country is produced in this country, they gave no raises, had no production cost increases, yet raised the price of gas 200%. Notwithstanding, billions of gallons of gas held in reserve, which was purchased and produced at lower rates. Their excuse a perversion of supply and demand, if you use more we must charge more and oil costs abroad. Transportation of goods is a major cost factor, by raising gas prices, so high they pushed the cost of all consumer goods and products, at every single point in the supply chain. Thereby creating the largest driving force in the collapse of our economy and made a trillion dollars in doing so. A small fuss was raised, yet in the end nothing was done about this gross rip off of the American peoples. Why? Because the oil companies own Congress. What can be done?
So what happens when a country or a world puts too many eggs in one economic basket? The basket either overflows, or tips over and in the end, you have a mess to clean up. A new kind of economy?
What can government do?
Who can really help?
~ Return to Web Station # 19
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