Sep 24 2008
IT ALL HIT THE FAN
IT ALL HIT THE FAN
The latest pitch is that the Presidential Election will be decided on the economy, i.e., which candidate is perceived to be better able to turn the economy around.
The fact is, most voters do not have the most basic understanding of the complex financial maneuverings that led to the current economic mess.
In a nutshell, our economy is messed up because the housing “bubble” burst, just as all “bubbles” burst. The enthusiasm with which financial institutions jumped into the housing boom, providing loans to high risk buyers and to people who normally wouldn’t qualify, led to less margin - less in reserve - to cover bad debts. When these home buyers couldn’t make their payments, foreclosures resulted, and financial institutions that had bought these loans up as investments…well it just gets more complicated from there….
The unemployment problems today stem mostly from the bust in home building and related industries that produce products for the home builders.
Okay, that is a simplification, but is there ANY subject that Americans know LESS about than ECONOMICS?
Sex. Wait a minute. Americans KNOW about it, but they don’t Understand IT.
I watched former President Bill Clinton on Letterman trying to explain the current economic and financial situation…how the country got itself into the current fix and what needs to be done next to recover from it. David Letterman’s eyes glazed over. He couldn’t follow the train of thought. Clinton asked if he didn’t do a good job of explaining. “Then,” Clinton said, “it all hit the fan” and Letterman perked up immediately. “I understand that part,” he said.
