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>Financial Crisis

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Currently the campaign coverage has been dominated by the collapse of some financial institutions on wall street. Polls have shifted to Obama, as the first look at this crisis seems to favor the Democrats. A more closer look at the details of this mess, however, show how this situation’s blaim can be laid at the feet of several people including in the Bush Administration, but none more so than the Democrats. Bloomberg.com has an article detailing:

How the Democrats Created the Financial Crisis

McCain needs to sieze on this.

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Discussion

2 thoughts on “>Financial Crisis

  1. >”His tax cuts allowed people in the 2003-2005 period to invest money into the bubble even further.”We need to do whatever it takes to be sure that people can’t keep more of their own money and invest as they see fit.

    Posted by Jeff Wright | September 23, 2008, 1:40 am
  2. >The guy writing that is one of John McCain’s advisers.That doesn’t necessarily make it wrong as partisans from both sides can often get it right about the side they oppose.Nevertheless, this time around, the guy is wrong.The current economic crisis has its roots going back over ten years, but mainly has to do with Negative real interest rates during the 2003-2005 period. Negative real interest rates occur when interest rates are lower than inflation. If a person has money earning interest in a bank account, but if inflation exceeds it, then he is losing money.As a result, the 2003-2005 period saw people throwing money into any asset that exceeded inflation. Thus the housing bubble was born.The fault for Negative real interest rates lies with Alan Greenspan and the Federal Reserve Bank during that period. They kept interest rates too low and allowed the formation of an investment bubble.Ben Bernanke and the Fed have also presided over negative real interest rates in 2008.George W Bush’s tax cuts were also problematic. His tax cuts allowed people in the 2003-2005 period to invest money into the bubble even further.Wall Street themselves weren’t helping either. Very few Wall Street bigwigs publicly criticised Bush’s tax cuts or asked Greenspan to raise rates. Tax cuts and low interest rates make Wall Street richer, so they contributed to the problem by supporting it. The real culprits though are Bush, Greenspan and Bernanke.

    Posted by One Salient Oversight | September 22, 2008, 11:02 pm

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