Housing Crisis a Symptom of Capitalism's Failure

Housing Crisis, System Failure

Saturday 21 August 2010

Housing Crisis a Symptom of Capitalism's Failure
(Photo: woodley wonderworks / Flickr)

This capitalist crisis resembles a certain kind of serious disease. Different symptoms keep flaring up at different locations. It began with sub-prime mortgages in residential housing. Then, sequential flare-ups hit the private banking system, forced millions out of their jobs and homes, drastically cut world trade, and undermined the public services and national debts of several European countries. Meanwhile, another symptom festered in the credit freeze crippling so much private borrowing. Now, yet another symptom matures as government subsidies and supports to our crisis-ridden private housing industry add rising billions to the deficit.

The unspoken ideological taboo in most public discussion of the economic crisis prohibits seeing or treating the problem as systemic, as a problem of capitalism as a system. Instead, our political, journalistic, and academic leaders mostly see only symptoms and "develop policies" only for those symptoms. Alarms about one symptom -- and contested efforts to address it -- soon shift to another symptom and "policy responses" for it. Often such policies for one symptom actually worsen another symptom. For example, when stock markets collapsed early in 2000 (symptom), the Federal Reserve drastically cut interest rates (policy response); that move facilitated the excess lending that collapsed the entire economy in 2007.

Today's alarms focus on housing and huge government subsidies there. To see the systemic problems of the US housing industry, consider its basic economics. The "American dream" of owning one's home was never affordable to the vast majority of US families because the wages or salaries paid by their employers were never enough. To realize the dream therefore required borrowing. However, because working families had insufficient wages and salaries and no accumulated wealth -- their situation inside US capitalism -- private banks rarely lent to them. The vast majority of them, not merely the poorest among them, were too risky as borrowers.

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A "solution" was found within US capitalism. The government would subsidize and guarantee private banks' loans to millions of homebuyers. This solution boosted profits in private banks' mortgage loan business. It indirectly subsidized all the industries producing for private homes. Yet it did not raise wages and salaries (something capitalists opposed). Many US workers became homeowners with large, long-term mortgages, making them more dependent on keeping jobs, not offending employers, etc. That experience also prepared workers to accept credit card, student loan, and other consumer debts. Expanding debt became the way most Americans bridged the gap between their incomes and the "good life" relentlessly advertised by capitalists needing buyers.

Government subsidies for housing took off in the last great collapse of US capitalism. The Federal Housing Administration (FHA) was created in 1934 and the Federal National Mortgage Association (FNMA or "Fannie Mae") in 1938 (the latter was split to form GNMA or "Ginnie Mae" in 1968). The Federal Home Loan Mortgage Corporation ("Freddie Mac") came in 1970. The goal in the 1930s was recovery of the depressed housing industry. Housing -- and the larger US economy dependent on it -- have both been increasingly dependent on government guarantees and subsidies ever since.

The 2007 crisis plunged the housing market into serious decline. Poor, middle, and richer homeowners defaulted on their mortgage debts. Banks turned for relief to the government guarantees and subsidies. Providing them has cost the US government outlays now estimated at $150 billion with possibly hundreds of billions more in this crisis. Defaults and falling home prices made banks refuse to provide mortgage loans to almost anyone without government guarantees and subsidies (thus, in 2010, the US government has guaranteed or bought 98 per cent of new private mortgage loans). Without government support, there would be virtually no market in US housing. Even the richest get subsidized: "The Federal Housing Administration agreed in March to insure mortgages for apartments at the 98-unit [New York City] Gramercy Park development, known as Tempo. That enables buyers to make a down payment of as little as 3.5 percent in a building where apartments are listed at $820,000 to $3 million."

Despite routinely endorsing government housing supports for years, Republicans have suddenly found it politically expedient to attack Democrats for those supports' impact on the US deficit (ignoring that Bush nationalized Fannie and Ginny Mae and their debts in 2008). Democrats know they cannot cut government supports without producing a deeper housing and general recession which the Republicans would then blame on them. Thus, Treasury Secretary Geithner promises little change in the basic housing subsidy and guarantee system: doing away with it, he says, risks even worse future recessions. For Geithner, no systemic issue exists; for him it's just a question of how much government support the housing industry needs.

The US housing industry's basic problem is the system in which it is embedded. The larger capitalist economy shapes the gap between the costs of privately produced homes and American workers' earnings. Over the last 75 years, US capitalism has bridged that gap by means of private credit guaranteed and/or subsidized by the government. This system provides incentives as well as opportunities for excessive home prices, diminished wages and salaries, and excessive quantities, risks, and costs of housing credit. The last 30 years have seen all three phenomena converge into a systemic crisis.

A systemic solution would include rethinking housing fundamentally. Consider, for example, a national program of building low-cost public housing (in various styles and configurations) owned and operated by local communities. Besides the job-creating virtues of such a program, it could yield high-quality, low-cost alternatives to and long overdue competition for private housing and its prices. Working people could then choose between them. A systemic solution could also raise wages and salaries relative to profits and thereby rebuild the finances of those who buy homes. These two steps would together reduce or remove the dependence on credit that has repeatedly and dangerously spun out of control among lenders and borrowers.

Republicans and Democrats will likely not mention, let alone debate, the systemic causes or solutions to the housing crisis and the mounting losses at the FHA, Fannie, Ginnie, and Freddie. They obey and enforce the ideological taboos of our time; they do not challenge them. Their minor "fixes" for the housing crisis, likely promoted as great reforms, may well worsen the crisis by provoking another symptom somewhere else. To address this society's systemic problems with systemic solutions will require new political formations without ideological taboos about questioning or changing the system.

This work by Truthout is licensed under a Creative Commons Attribution-Noncommercial 3.0 United States License.

Comments

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OR just(ly) BLEED the

Sat, 08/21/2010 - 09:46 — Vic Anderson (not verified)

OR just(ly) BLEED the "system" of Its GREED!

It is quite simple. When the

Sat, 08/21/2010 - 11:17 — RoyS (not verified)

It is quite simple. When the wealth of this country is depleted and the american worker learns to subsist on a chinese wage and standard of living,then jobs might come back. The systemic failure is the perverted belief anything other than farming, mining and manufacturing produces wealth. The new world order started at home by capitalists who have the industrialists by the shorthairs. Is there any wonder why the collapse of the co-joined insurance and banking 'industries' caused our predicament? Shouldn't be.

Capitalism is not a bad

Sat, 08/21/2010 - 12:43 — Anonymous (not verified)

Capitalism is not a bad economic system. Free market is not that bad either. It stimulates creation and competition. But when the Government intervenes to reshape the normal functioning of Capitalism, it fails. Non competitive, inefficient corporations run by incompetent managers and institutions should be let to fail. Favoring and protecting the privilege of a few is contrary to the “social responsibility” notion so heralded by neo-conservatism. Latin American countries are experiencing the arrival of thousand of Chinese products, motorcycles, computers, umbrellas cars and more. Simultaneously they the witness the arrival of US military opening bases. China uses the capitalistic oriented market to open markets for huge revenues. They are not affected (yet) by any recession or any economic crisis. We are. We do not invest, we do not open markets, and we spent, spent, spent without any return. The deficit is the by product of non-productive policies. I do not say bad policies. They may have some benefits. But so far these benefits are still to be seen.

I think this actually began

Sat, 08/21/2010 - 13:34 — John (not verified)

I think this actually began decades ago we people stopped buying houses to live in and started buying them with the idea of making a huge profit. I've heard plenty of the years of people buying houses to turn around in 6 months or a year and sell them for $50,000 or $100,000 profit. I think the rest of it follows from that.

This was a bubble. There

Sat, 08/21/2010 - 13:42 — Anonymous (not verified)

This was a bubble. There have been bubbles through history. They even had a bubble over tulips for goodness sake!
Just because you have limited funds does not mean you over indulge. I know people who didn't fall into this problem because they knew basic math. Unfortunately most of the middle class and the poor do not. Blame the education system.
http://www.commercialappeal.com/news/2009/aug/18/teens-at-loss-on-finance/
Teens at a loss on personal finance
http://www.prweb.com/releases/holiday_economic_literacy/CEEL_survey/prweb1788574.htm
Survey: Americans' Personal Finance Skills Earn Them a Big Lump of Coal in Their Stockings
A Holiday Economic Literacy Survey Shows That Many Americans Are Short on Basic Personal Finance and Math Skills
http://www.housingwire.com/2008/12/11/newsflash-majority-of-americans-dont-understand-basic-math
Newsflash: majority of Americans don't understand basic math

anonymous@17:43 The "normal

Sat, 08/21/2010 - 13:56 — Anonymous (not verified)

anonymous@17:43 The "normal functioning of capitalism" ? You mean the law of the jungle? An alpha predator in any free market system eventually devours everyone else, or whoever is left standing becomes a slave or a terrorist. Capitalists do not like democratic governments unless they can buy the lawmakers. Americans are so conditioned by consumerism they forget how at odds democracy actually is to capitalism. Which is precisely why anything the government attempts to do for society is crippled by the time it gets to the public.

The social democracies of

Sat, 08/21/2010 - 14:03 — Ken Hall (not verified)

The social democracies of Europe could be an example for the US if our greedy, capitalist leaders didn't foment panic attacks at the first mention of the "S" word. We do have socialism here in the US but it is used to funnel money to the rich. The Scandinavian countries are doing pretty well for their citizens, and I see they were all in the top ten in a recent study of countries which had the happiest citizens. Well, sure! What's not to like about, for examples, universal healthcare, free education through and including graduate studies, 6 weeks or more of vacation, gov't supported childcare? By returning progressive tax rates to pre-Reagan levels, these programs would be affordable in the US.

Did it help that Wall Street

Sat, 08/21/2010 - 14:20 — Anonymous (not verified)

Did it help that Wall Street declared how many housing STARTS were indicative of economic health when abandoned housing stock in the cities was not rehabbed. only new and shiny counted. silly us, we thought Harvard MBA's were intelligent, truthful, boyscouts. I wonder what steroids they are on?

18:42, what's your excuse

Sat, 08/21/2010 - 14:57 — Anonymous (not verified)

18:42, what's your excuse for being an uneducated fool. Sold your right hemisphere to FAUX? What you are describing did not happen, what DID happen is that banks ignored risk.

No kidding? Housing is a

Sat, 08/21/2010 - 14:58 — Anonymous (not verified)

No kidding? Housing is a debt trap for less wealthy folks, Wall Street dangles the promise of shelter in front of their next mark. This time 'round though, it is obvious they intentionally drove people into debt that would never be repaid. The only thing missing from the obvious violence is jet aircraft and gunfire. Huge swaths of vacant, foreclosed properties are more then enough evidence of what happened.

This article (yawn) is again

This article (yawn) is again ridiculous, our Government, and quasi entities like Fannie Mae were all in on the looting. Profits were soaring on a mountain of fraud and they were clinking brandy snifters and smoking cigars together. Stealth bandits like Chris Dodd and Barney Frank casually watched the profit taking.

Even with 1000s of people

Sat, 08/21/2010 - 15:01 — Anonymous (not verified)

Even with 1000s of people demanding prison time for Wall Street's creative swindle and some kind of FBI investigation of widespread mortgage fraud. US Agencies like the OCC, continue to aid and abet criminals - and nothing has happened, and nothing has changed. Expect housing prices, falling fast and the poor Guv'mint can't do anything about it.
The appalling arrogance of these folks must be because they are confident they can get away with driving people into the ground. Perhaps they will.

Conservatives have suggested

Sat, 08/21/2010 - 15:09 — Anonymous (not verified)

Conservatives have suggested you live in the street and go without if you don't have ample means to support yourself. This lunacy sells, it fits perfectly with that comfortable Puritanical vibe a successful gangster needs to tap into when he's ripping someone else off. One reason, that so many bankruptcies have occured and folks have lost their housing is not because they could do basic math as the asshole above mentions. It's because they were trying to buy shelter, and food or medical treatment in many cases. Since the past 30 years have included pushing all the tax inconveniences onto the backs of poor people, another windfall was to be had simply by placing them in debt they could never get out of. This is how Capital One makes their money, not from the wealthy snot who has enough money to indulge in any and all luxuries, it's the average joe working from paycheck to paycheck and discovers he has a flat tire. Once they slap him with a judgement for "getting in over his head" the fees and penalties shoot through the ceiling, This is also referred to as slavery, another idea the elite successfully camoflauges.

This article is nearly what

Sat, 08/21/2010 - 15:28 — Anonymous (not verified)

This article is nearly what Barney Frank was saying, and it is dead wrong. (Is this coming from an academic? )The author makes no particular mention of why the bubble happened. We're supposed to conclude that housing is out of reach for many, this is bad lie. Many, many houses sit vacant simply because the Greed of Investors is the priority in our particular form of Capitalism. We don't have a Capitlism, we have a plutocracy.
Read Paulson's Put :
http://courses.umass.edu/econ804/Ferguson_Johnson1.pdf
For a superior understanding,

Extinction is the real

Sat, 08/21/2010 - 15:39 — Anonymous (not verified)

Extinction is the real capitalist crisis. But, hey, it was fun while it lasted, right? At least for some people.

Bad boys use isms to take

Sat, 08/21/2010 - 16:04 — JadeQueen (not verified)

Bad boys use isms to take stuff. Copyright and patent laws have become instruments of slavery and torture. Software police pick at college bookstore cashiers. Corporations try to patent trees used for thousands of years by locals. Fine-print snitches enforce unjust laws the OT God would have sent floods about. Truthout and the HuffPost have outed behaviors of FDA/Monsanto's Michael Taylor, but we do not have critical mass about D.C. gangs. D.C. firms work for good guys and bad, at once. Blaming one ism does not cut it. It's not an amorphous blob. Pulling threads laboriously can un-ravel the gangs. If it's a pissing contest, good people have lost. That's their game; it's how they plunder.

This is a terrible article,

Sat, 08/21/2010 - 16:09 — Anonymous (not verified)

This is a terrible article, the houses that are being foreclosed on include many built during WW2 or in the 50s and 60s, Tract housing that was intended to serve low to middle class Americans.
These were built for the very same reasons the author describes, why are investors and Wall Street the first priority in our Plutocracy? Should we knock all those perfectly good houses down because bandits drove prices to insane levels? This parallels what became of a good idea - Robert Taylor Homes in Chicago.
Almost from the time the plans were off the architects drafting tables, a combination of oragnized crime, political corruption and nespotism drove the projects to their destruction. Even then the will of the people living their could not be destroyed.
What's next from our Business leaders ?- clean water is obviously too expensive for everyone and they should settle with road gutter collection?

@ anon 20:22. Does anyone

Sat, 08/21/2010 - 17:14 — Anonymous (not verified)

@ anon 20:22.
Does anyone know how to report an inappropriate comment to truthout. This is the 21st century and really nobody should have to see something as hateful as this comment.

Are you folks (the writers)

Sat, 08/21/2010 - 18:48 — Anonymous (not verified)

Are you folks (the writers) totally clueless? This was a problem created by SOCIALIST policies! Freddie/Fanny were REQUIRED to make high-risk loans to the uncreditworthy.....surprise, surprise when the folks who traditionally couldn't make their bills defaulted on their mortgages when times got hard!

We need to get these Socialist morons out of office and get back to an American work ethic instead of increasing the taxpayer-funded handouts!

Well said 23:48, we need to

Sat, 08/21/2010 - 19:12 — Anonymous (not verified)

Well said 23:48, we need to forget about the trillions we gave the Street because they were forced into hardship by ....Communists!

20:22's comment uses the

Sat, 08/21/2010 - 19:23 — Anonymous (not verified)

20:22's comment uses the term Jewbag, which isn't exactly politically correct. If Jewbag means vulture or zionist, then an alternative derogatory phrase could have been used. Thief, parasite, capitalist, loan shark, mobster - all those work,

Keep religion out of all of it- never seems to do the human race much good.

Capitalism is flawed because

Sat, 08/21/2010 - 19:38 — genierae (not verified)

Capitalism is flawed because human beings are flawed. When profit is the top priority, capitalism corrupts everything it touches. Greed guarantees that the rich get richer, and the poor get poorer. The solution is to put the common good first, and capitalism as the supporting system. We would have a society that would be the envy of the world! Every American would have a good job, a decent home, free healthcare, a good retirement, etc, etc, etc. For that to happen, the American people would have to unite, en masse, and demand that it happen. I don't think we'll see that anytime soon.

Our current system could not

Sat, 08/21/2010 - 19:52 — Paul Carey (not verified)

Our current system could not be further from capitalism. In capitalism entities can fail, there is not an unlimited supply of money and anyone can play. Try corporatism or fascism.

This is not a capitalist crisis. It is a crisis of corporations running our government.

The article lacks a credible

Sat, 08/21/2010 - 20:57 — Anarcissie (not verified)

The article lacks a credible analysis of real estate prices, which I think have a lot more to do with monetary policy than capitalism in general.

If the government can provide cheap cooperative housing, then the people can provide it for themselves without the government, but they can't do it if the government is constantly inflating real estate prices through money-printing and loose credit.

Why did Truthout allow the

Sat, 08/21/2010 - 21:22 — J Albers (not verified)

Why did Truthout allow the disgusting anti-jewish comment to be posted?

Why do you allow right-wing jerks to post comments that say nothing about the issue, but attack 'socialism'.

I have no problem debating these air-heads, but I don't believe that Truthout should be used as just another bathroom wall by these sophmoric fools.

There is a basic

Sat, 08/21/2010 - 21:39 — Mandrake (not verified)

There is a basic misstatement of historical fact in this article. Prior to the FHA, Fannie and Freddie, there were simply very few people who could obtain a mortgage in this country on any terms. Because the risk of default over a thirty year repayment period was too much for a fragmented group of lenders, banks preferred to lend privately to short term commercial parties, and not much at all to individuals trying to obtain housing. Congress enacted these quasi-government agencies to enable mortgage lending on the scale needed to more widely supply the housing people needed. The Market had not moved on its own to fulfill the demand. Yet another example of the failure of capital markets to develop naturally to supply the demand.

This is an interesting

Sat, 08/21/2010 - 23:53 — Anonymous (not verified)

This is an interesting interview with the economist Gerald Celente.....

http://www.newslook.com/videos/231765-gerald-celente-wall-street-boys-run-the-show

Something needs to be done

Sat, 08/21/2010 - 23:59 — billnbillieskid (not verified)

Something needs to be done about the usurious interest rates Credit Card Companies and the Banks are charging. THAT'S why they've been able to pay back the TARP money so quickly while the rest of us are running in place or falling behind. There is something terribly wrong with a system that allows business to reap insane profit at the expense of those of us who need their services/products. Profit? Yes. Outrageous profit? NO!

Undoubtedly capitalism is a

Sun, 08/22/2010 - 03:57 — Mulga Mumblebrain (not verified)

Undoubtedly capitalism is a system created,over centuries, by those who hate other people,who have no scruples over ruthlessly exploiting others and who are happy to live as literally insatiably greedy parasites. The 'neo-liberal' project,launched forty odd years ago,but prepared by the Mont Pellerin psychopaths for decades before, is basically a neo-feudal scheme designed to convert the world's population to the status of serfs ruled over by ruthless and sadistic neo-feudal barons of immense wealth. Unfortunately the psychopaths have no interest in the fate of humanity, particularly after their own deaths, so have paid no heed to the warnings of philosophers and scientists that the greed driven destruction of the planet's biospheres is unsustainable and suicidal.
Indeed, as recent events,eg. the record temperatures, the unprecedented deluges, the acidifying oceans, the disappearance of 90% of large fish, the fall in phytoplankton populations by 40% over recent decades, the increasing rate of greenhouse gas concentrations in the atmosphere, the melting Arctic summer sea ice, the venting of northern methane deposits etc, etc, show, the tipping-point is long past.Indeed the point of no return is almost certainly also past. I suspect that during our brief posterity the figure of Gorbachev, who surrendered to rank evil in the deluded hope that 'removing America's enemy' would lead to global amity, will loom large as a pivotal character, and the date, 1989, as a real turning-point on the road to perdition. In retrospect a global nuclear war, a real possibility when dealing with religiously zealous psychopaths like the Reaganites, at least had the advantage of ending humanity quickly and clinically,unlike the drawn-out destruction by a vengeful planet in the throes of rapid climate change and planetary ecological collapse that is currently unfolding.

a simpe fix could be had by

Sun, 08/22/2010 - 04:59 — rxgary (not verified)

a simpe fix could be had by abolishing the federal reserve. charging them under racketeering laws. they are racketeers, that way everything they have can be confiscated.then nationalize banks, abolish the credit rating system. rewrite all loans at 2% abolish taxes and voila, business would boom, people could afford basic necessities and the banksters could go to hell.

the 2% the nationalized banks would charge would pay for all legitimate government and pay for needed infrastructure improvements. there would be no need for taxes, so business could easily begin hiring again.

As a student of Oriental

Sun, 08/22/2010 - 09:13 — bioshaman (not verified)

As a student of Oriental Medicine, I couldn't agree more with this perspective. I thoroughly appreciated the assessment of our nation's situation in simple medical terminology: it instills in the reader that our nation is a massive organism with a severe health imbalance.

So of course big wigs and corporatists will refuse to view the problem as systemic; look at the system of medicine they propagate and say will cure all our ails. The medical crisis is intimately linked to the housing crisis, and it is no surprise that symptoms of their systems' failures reflect one another. From what I've learned thus far about medicine, there is always a systemic, root cause to every symptom, and once the symptoms are visible and particularly dramatic, it is evidence that a systemic imbalance has been festering for some time.

A well written article sir, I commend you for your pertinent use of the medical analogy.

you propose several good

Sun, 08/22/2010 - 09:55 — brian (@_teach4change) (not verified)

you propose several good reformist "systemic solutions" - why not the systemic solution of doing a way with capitalism altogether?

we can point fingers at lots

Sun, 08/22/2010 - 09:57 — lemme howdt (not verified)

we can point fingers at lots of places, but we all work from the same point of reference as taught by the western school system. Einstein stated that we cannot solve problems in the same frame of mind as we created them. The problem we face is a conflict between chaos and order, when order has choked howdt all chaos and everything is government managed to fit into the tidy capitalist box - a system that doesn't work and penalizes all of us - who never got a chance to vote for an economic system.

Now what is this right to vote crap. Vote by walking away from the economic system - quitting your 9 to 5 and having a bag lunch in the park all day while meeting your neighbors. Do this every day for a month and get 300,000,000 amerikcans howdt in the park eating, talking and communing with nature. Be like france - general strike time. what have we got to lose beyond our chains?

Local communities that are self-directed, self-forming groups can make decisions about things that affect their own livelihood. Concensus involves listening, the voices should be your neighbors and friends, rather than the talking heads. Question all information and answer your questions by thinking about how things really are. A good chaos will result in a large flush, then a new order will become apparent.

Thank you for reading truthout. Now question whether truth is what these pages tell you, or what your senses tell you. Chaos will go viral, for a short period of time. In the words of Douglas Adams - dpn't panic.

Homeostasis to live.

Sun, 08/22/2010 - 10:23 — Anonarcmous (not verified)

Homeostasis to live. Capitalism, as anything else should not be taken to extremes. The past decade it was. Many profited greatly & lured others into these DISHONEST possiblilities. & then there was the "readjustment"... Have to agree w/ poster who said houses went from dwellings of #1 purpose to shelter to become high yield"investments". This was not sustainable. There is no reason why this should be!! Credit was forced as the solution. All this to mask the problem of peoples withheld from earning TRUE LIVING WAGE. Perhaps we should have the concept of a "maximum wage & bonus" b/c those who earn them have really caused the problem & should be accountable. Easy ex: for the great extent that Walmart & Target are--their basic employees should make X2 what they earn now. It would not make any difference EXCEPT they could NOT provide fake -- charity, local support, donations, scholarship, etc. Let the people decide how they want to spend their income.

No Community Reinvestment

Sun, 08/22/2010 - 10:43 — Tom Cobbett (not verified)

No Community Reinvestment Act, no housing crisis. The CRA was a typically socialist concept: feel-good but with no thought for the inevitable outcome. Another example of socialists' inability to accept responsibility for the consequences of their actions, the greatest cause of misery and poverty throughout the world in the past 100 years.

Get off the socialist clap

Sun, 08/22/2010 - 12:59 — Ken Hall (not verified)

Get off the socialist clap trap! The general economic collapse is directly the result of three decades of conservative politics and "free market" economics. Here's what you get with "smaller gov't", deregulation of financial markets, leveraged to the max banks, commercial banks playing with depositor's money casino style. Blaming the results of unchecked capitalism on socialism is willful ignorance and intellectual laziness.

Tom Cobbett@15:43 "No

Mon, 08/23/2010 - 00:24 — Ken Hall (not verified)

Tom Cobbett@15:43 "No Community Reinvestment Act, no housing crisis." Just that simple? You must be a Limbaugh "Ditto Head" (hey, Rush, do my thinking for me!). The total US mortgage debt is not enough to bring down the entire world economy to the tune of hundreds of trillions, so please explain to me how that happened because of CRA. What really happened is the deregulation of financial markets so banks could bet on financial outcomes (and just about anything else) even if they had no standing, no money at stake. It is the right wing ideologues who are at fault for pushing for "smaller gov't" and allowing corporations to police themselves, that's how we got into this financial disaster, and I don't see them "accepting responsibility for the consequences of their actions". Think (if you are capable) of Enron, think of the savings and loan disaster, the housing bubble, think of NAFTA, and then think of the people responsible; Reagan, Gramm, Gingrich, Greenspan, Clinton, etc. Socialists? You, sir, are a danger to democracy, you step into a voting booth without having done your homework, and that's how people like Reagan, Gramm, Gingrich, the Bushes, and Schwarzenegger get elected.

There is a root cause to the

Mon, 08/23/2010 - 03:33 — johnb (not verified)

There is a root cause to the booms, busts, and bubbles and it is inherent to a debt based monetary system. We have been misinformed by our trusted institutions. I was told this by an insider to the system. He was my father and explained it all before his passing 5 years ago. He regretted spending his life working in a system that creates inequality. Truth out should do a article on what a debt based monetary system is to counter the tremendous lack of information in our society. If we call this a democracy, it should be up to the people to choose a money system that is fair and equitable. You don't need a degree in economics to understand it. In fact, the system is hidden by unnecessary complexity. This video is 46 minutes and explains it all. www.youtube.com/watch?v=mIIAvdJvCes&feature=related

Government staying out of

Mon, 08/23/2010 - 14:34 — MR (not verified)

Government staying out of capitalism sounds ideal, but in America what would happen, if government was prohibited from helping corporations, is said corporations would band together and form, essentially, a syndicate. It would be a trust, legally speaking. So, we'd all be under legalized mob rule.

Here's some common sense: don't EVER give the elite free reign. History has shown without doubt that they rape the system for everything they can and they destroy their own country.

The problem is not

Mon, 08/23/2010 - 20:58 — Anonymous (not verified)

The problem is not capitalism per se, which system happens to be the greatest wealth creating economic system ever created. The problem is our belief in eternal economic GROWTH as the solution. Even socialist systems believe in unending growth. Have you ever heard any political leader say anything other than, "We need to grow our economy?" Unending growth means unending greater demand on resources, both natural and man-made. Growth is inherently unstable. If you want to ultimately end the boom-bust cycle you have to have a highly regulated no-growth system. And that means zero population growth, too.

What is the one issue that

Tue, 08/24/2010 - 11:05 — FBuckley (not verified)

What is the one issue that is not mentioned by even one soul in these comments? Not one person. Energy costs rose almost three hundred percent during this time period.

The truth is that Energy is a TAX on the middle and lower classes that crippled people’s ability to pay their mortgage.  If it effected your bottom line then you are concerned about it.  Unfortunately, the commentors here seem to be immune to the cost of gasoline, diesel, or heating oil.

When the costs of war, the cost of health care, the cost of all the ubiquitous insurance scams, the cost of all the detention centers and prisons for profit (forgot about those didn’t you?), the Homeland Security and 24/7 Surveillance fraud, that is no more than extortion and racketeering legitimized are also assessed, then having a house is but a myth of borrowing to dig everyone deeper into debt.  With all those special little interests getting in there to check your private moments and thoughts, and every other intrusion, little wondereverything failed.

And the energy speculators laughed.  And are still
laughing.  So get ready for a second dip.

So, is it really Capitalism?  Or is it more like Corporatism.  Or is it actually Fascism, as Benito Mussolini corrected?  Companies run by individuals without an iota of reasoning other than greed, make the appropriate term Fascism.  When joined at the hip to the politicians, you can’t tell the difference between government, banks, insurance companies or ….telcoms. The consumer is not even a human being in that world.  Just an expendable soft asset that will be taken out with the garbage…one day.

The consumer is filched, beaten, robbed, raped, pillaged to pay for war, to pay for idiotic energy policies, to be cherry-picked and denied due to pre-existing conditions, to be sodomized by banks for their gain to cover their hopelessly inept and inadequate lending policies in the world of the Bushes, Rumsfelds, Cheneys and Roves. These are the people that commit war crimes and walk around bragging about it, waterboarding an innocent man 183 times, so they can have their prisons-for-profit, 22 Detention Centers housing 500,000, their Halliburton raping, and denials at every step of the way.  That’s fascism gang. Not a single one has been investigated, charged or brought in front of a jury. These are individuals above the law.  And with it comes the silence of oppression.  Capitalism is about ETHICAL Enterprise not criminal foray.  These people are engaged and continue to follow Ms. Klein’s Shock Doctrine to a degree that is eery.  Obviously, there are a lot of people taking paychecks from these people, that don’t realize they are just chattel, expendible but that the biggestreward is bringing these that are above the law to justice.

Not looking back to understand the failings in front of us is ignorance of history.  It is the ignorance of having no regulation, or no means of correction for an unruly child, or a murderous pathological teen. It has destroyed more companies than you can imagine. And without the correction, or guidance to learn from our collective mistakes, we are enslaved by the despotic and those bereft of sensitivity to the suffering they cause.  And we are at risk to total collapse.  But then, that is the goal of fascism.  Don’t get too strung up about it.

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Housing Crisis, System Failure

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