Yesterday the stock market fell 387 points. Most of it appeared to be based on credit concerns as a French bank was freezing three funds that invested in the United States Mortgage Market. It seems our credit and debt issues here are spreading to other markets.
The supposedly "strong and vibrant" economy Bush has touted for years has been propped up by false premises. First, most of the economy's success was based off the housing market but as anyone that knows how mortgages work that is a deceptive game at best. The reason being was buying a house was considerably more affordable when the fed dropped interest rates early in the Bush Administration's term.
Fixed rate mortgages are always a bit higher for your payment but at least the actual house payment will not change over the life of the loan.
On the flip side Adjustable Rate Mortgages have incredibly low introductory rates but the payment goes up every time interest rates do. As someone who worked as a mortgage loan servicing representative let me just say that a large portion of first time home buyers do not understand how drastic their payment changes can be.
So many people who never thought they could own a house before saw these rates and jumped in. Now they're paying for it. Interest rates have gone back up and people can't pay off their loans. Mortgage foreclosures are becoming a serious problem in our economy.
As this Bloomberg article put it:
U.S. housing prices will fall this year, the first annual decline since the Great Depression of the 1930s, according to the National Association of Realtors, based in Chicago.
The inventory of unsold U.S. homes in May was the largest since the realtors group started counting them in 1999. Defaults and foreclosures may increase because about $1 trillion of payments on adjustable-rate mortgages are scheduled to rise this year, hitting a peak in October, according to Credit Suisse.
Housing and related industries generate almost a quarter of U.S. gross domestic product, according to the Joint Center for Housing Studies at Harvard University in Cambridge, Massachusetts.
The mortgage fallout "ensures the economy will grow well below its potential through the remainder of the year and next," says Mark Zandi, chief economist for Moody's Economy.com in West Chester, Pennsylvania, who predicts GDP growth of 2.5 percent this quarter and next. Second-quarter growth was 3.4 percent.
And it's not only the mortgage itself. Homeowners are responsible for property taxes and homeowner's insurance as well.
The Bush economy has squeezed State budgets and local municipalities to the point that to make up their shortfalls and provide the services they need to provide, many have had to raise property taxes to help shoulder the burden.
Also insurance companies have not been a help as the Bush Administration chooses business over people and doesn't force these companies to help people. With disasters like Katrina, people lost their homes to disasters but insurance companies that had taken their money happily for years refused to pay to repair or replace the homes. Some said their hurricane coverage did not include either flood damage or wind damage which is a fine print fraud if there ever was one.
Not to mention this economy has been propped up by more and more outsourcing and in turn many of the best jobs (in manufacturing particularly) have been taken overseas and those workers are working through staffing agencies and making half or less than half of what their former wages used to be.
The Bush Administration rewards corporations who outsource and continues to allow corporate tax loopholes so they don't have to pay their tax bill every year while you do. Then as an extra reward, those CEOs who got rich downsizing American jobs and sending them to India, not paying their corporate taxes here and cutting off pensions and health care benefits, have received incredible tax cuts from the Bush Administration that affect basically only the top 1% of the income bracket. Not to mention huge financial windfalls from their own companies.
Nice to know what side Bush is on. It's no wonder why America has lived on credit alone these past seven years. And no wonder why international banks feel the need to cut off investment and loans to us.
But the strange thing is when you look at the chart above, something happened right around the time Bush gave a speech on his plans for the economy.
He wants to cut corporate taxes too. So now even though they've been able to dodge paying taxes here, dump workers and their benefits at will and have been rewarded for their outsourcing, we're going to give more corporate welfare out?
On Wall Street these policies usually do well for the market. After all the market is based off of investors wanting to turn a profit off the corporations they invest in and corporations have made a killing off of Bush and his policies. But today once they heard that the market seemed to sink like the Titanic.
Any honest economist has to know that putting more of the bill onto the backs of Americans when you have never shown any fiscal restraint before is just a way to deepen our debts with international countries who are lending us the money that is keeping our economy afloat.
And considering how some banks are now pulling out even the greediest investors on Wall Street have to know we're running out of capital to keep borrowing from other countries and looking for a major crash in our economy that would crush investors and everyday Americans alike.
But don't tell Bush that. He tried to run some phony numbers out there and blame Democrats for fiscal irresponsibility. This from a guy that didn't veto a single pork laden spending package the Republicans sent to him in 6 years.
What should we expect though from a guy who has ridden every business he ever ran into the ground?
Why break up such a dubious streak at this point?
-Rp
2 comments:
The dramatic run up of housing prices correlate to interest rates and lending standards. What you attribute to Bush's administration started in year five of Clinton's eight year administration.
Please don't assume that things will be better when Bush leaves. He isn't the illness, he's a symptom.
So wait, it's "blame Clinton" again? The housing market started it's upswing under Clinton, no doubt, but it really was the fuel to Bush's deceptive "strong economy" claims earlier this decade.
It is his Administration and 6 years of a Republican Congress that had been warned about the housing bubble being on the verge of bursting without acting on it to protect homeowners and lenders alike that got us to the place we are.
Let's stop playing the immature game of "Blame Clinton" for everything. Clinton had 8 years. Bush has had 7. In Clinton's 8 years everything was his fault. In Bush's 7 years everything was Clinton's fault. I call bullshit.
Bush is responsible for the failures during his tenure, even moreso than Clinton because unlike Clinton who had two years of Democratic Congress on his side, Bush had his entire first term and half of his second with a wildly partisan Republican Congress on his side and like puppets they passed anything he wanted them to.
If he had wanted to push a housing market correction package he could have. But Bush has no interest in helping the poor and middle class and could care less if people lose their homes.
You say Bush is the symptom. Well that would make this the first time the sympton destroyed everything in it's wake without being a full blown illness. He is without a doubt the disease and all of his neo-cons are infected with the same delusional destructive illness as he.
Hopefully like an animal that is very sick, somebody puts these people down for good. As in politically we should never have nutcases like this in power again.
-Rp
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