Who is to Blame??

Quite recently there has been a discussion in class about who is to blame for the economic crisis our country is facing. Many of the students in class adamantly believe that it is our nation’s current Republican administration’s policies on free markets. It is due to the lack of government regulation in the markets that our economy has declined. Those who invested in the market, in stocks, borrowed loans from banks, have lost money or can no longer afford their mortgages on their homes. It appears, for many, that President Bush and his administration is responsible for this terrible economic downfall.

I myself am not so certain to point the culprit for the country’s current situation. I am aware that the differences in party ideologies depend on the amount of government involvement in the markets. Democrats stress the need for government regulation, primarily for social welfare, and Republicans believe in less government intervention. I have heard in class that, because of lack of government regulation in the markets, greed ultimately is the evil that has brought us into an economic downfall. CEO, such as Richard Fuld, has walked away with millions of dollars before his business filed for bankruptcy < www.c-span.org/ – 85k>. The apparent amount Fuld collected from his business was 480million dollars. When asked by congress man, Henry Waxman, if it is fair for him to have received such an amount of money, Fuld had no answer. When asked about what should be done differently to avoid such a catastrophe, Fuld responded that there needs to be more transparency, overview, and reserves…government regulation www.youtube.com/watch?v=BKsixRnJwj4. In shame, Fuld admitted that this is an experience that he wakes up every night thinking about and that it will haunt him for the rest of his life.

So, pursuing “invincible” money can be the root of the economic crisis, backed by the policies of free markets under the Republican administration of President George Bush. Yet, although many blame our current unregulated market system, there are other factors to consider. For example, congress is largely made up of Democrats. Although many argue that the Republicans have run the country for the longest time, Democrats too make decisions and vote on policies that affect the people, not just the Republicans. Since Congress is powerful and made up mostly of Democrats they too are responsible for the crisis. Congressman Artur Davis of Alabama, confessed: “Like a lot of my Democrat colleagues I was too slow to appreciate the recklessness of Fannie and Freddie when in retrospect I should have heeded the concerns raised. I wish my Democrat colleagues would admit that we were wrong.” <d.lawson@independent.co.uk>. Democrats had also supported the idea of people borrowing money from banks, taking loans, to buy homes, even if individuals were not able to afford the home or qualified for loans. SO in essence the policies of our entire government is what brought us into the economic situation we are in, “The saddest outcome of all this within America – apart from the crippling cost to the nation’s taxpayers – is that the very people the Democrats had intended to help will be the biggest victims: for many years to come banks will demand the most stringent terms for mortgages to the least well off” <d.lawson@independent.co.uk>.

When people begin to panic, is seems, it is easy to want to blame one specific cause. Yet, when the markets and banks were beginning to not do so well, people began to get scared and therefore not spend money and rather save. Saving money meant goods were not being bought, when goods are not being bought there are less jobs, and hence affecting the economy. It is fair to say then that all causes are intertwined, no one specific person, system, policies, is to blame when all things are interconnected.

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2 Comments

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2 responses to “Who is to Blame??

  1. Tony Robinson

    Interesting post and provocative points about the widespread distribution of “blame” for this economic crisis. You have some good quotes from Dems that help make your case that Dems were also asleep at the switch–especially your Congressman Davis quote.

    To improve this post:

    1) Post your name as the author right after the title. I’m not sure whose post this is.

    2) Work at embedding links and youtube videos into the post more appropriately. Check out how these links look in other blog posts. You can ask friends, people in class, or myself for help in this as you get ready for your next post, so that the style looks a bit better. My office hours are a good time to spend a few minutes learning how to use a few of the technical blogging tools on WordPress. They are actually very easy and it won’t take very long. For example, one problem is your links related to “d.lawson@independent.co.uk.” That’s not a URL link, and it needs to be embedded into the post in a different style also. We can talk this over in my office, if you can come by for a few minutes.

    3) Break up your paragraphs a bit more, to make the reading easier.

    4) Your claims that all parties are equally to blame, and that Dems also vote on policies, has some truth, and it is true that widespread fear and panic (which cannot be blamed on any specific party) is part of the blame–but here are some other points to consider:

    — even though Dems voted to enable much of the Supply-side, deregulated, anything goes investment era we have lived through, there is no denying that the Republican Party has been the leading force in bringing this era to be. It began with the election of Reagan, and the devastating defeat of several old New Deal Democrats during the 1980s, including presidential and congressional Dems. Dems were so shattered by their defeats, and Republicans so invigorated and confident, that an era began where Republicans took the ideological lead in America, and Dems were relegated to voting in support and/or reforming at the edges. Yes, Dems were collaborators (out of electoral fear and ideological confusion post-Reagan and post-1994)–but that is different than being the actual author of the era.

    Back in the 1940s-1960s, Republicans often went along with the Democrat’s big-government New Deal policies, including supporting Social Security, the Minimum Wage and Union rights. But it would be inaccurate to say that therefore all things are intertwined and that Dems and Reps are equally to “blame” for the New Deal. Dems were the authors of the New Deal, hands down, and the Rockefeller Repubs who went along were lower-level collaborators. It’s the same with Dems today, in terms of their role in building an era of wall street excess–Repubs were the author, Dems collaborated.

    — In fact, where there has been efforts to reform the economic system and avoid the crash we are in (such as efforts to regulate and punish predatory lending, efforts to cap interest rates on credit cards, efforts to raise wages through minimum wage increases and the like (unions), efforts to tax stock market transactions to discourage speculation and to pay for larger insurance pools, and efforts to tax stock and dividends gains and capital gains to more broadly share the wealth), these reforms were always more broadly authored and advanced by Dems, while Repubs were always more likely to resist and defeat them.

    There ARE differences between the parties and what they have stood for over the years, and it is possible to actually unravel who has stood for what over the years and to chart a better course from there. Simply alleging that everyone is to blame equally mystifies the reality that political choices where made by specific people and parties over time that resulted in this crisis and that different choices were in fact proposed and advanced by different groups of people.

  2. Stephen Noriega

    This is an interesting post but my take on it is much more theoretical than what agencies or parties caused this. Marx writes over and over again that as capitalist markets get further and further away from the actual value of their labor, the economic system becomes unstable and falls into inevitable crash and conflict. I believe this is a Marxist materialism as real estate loans, something not super far from labor value, are chopped up and used for other financial activities. When this happens, the value of the real estate becomes marooned away from the labor that built it and maintained it.

    To put it simply, if a bank has one loan for one property, it makes less money but it enjoys stability for the life of that loan. The lender enjoys accountability and transparency of the bank. If a thousand banks each hold parts of one hundred million loans, it is difficult to see a collapse until it is happening. It is difficult to determine if each bank or lender are behaving properly.

    If you want reasons for the dysfunctions of convoluted capitalism, instead of looking at political parties, I really do recommend Marx’s “Das Capital”.

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