Our economy isn’t fundamentally sound
Posted in Main Blog (All Posts) on September 18th, 2008 4:34 am by HL
Our economy isn’t fundamentally sound
For the last 2 1/2 weeks, John McCain and the Republicans have been riding the Governor Sarah Palin wave. They have said nothing of substance. They have put out a series of ads that can only be summarized as a pack of lies. Now, the Dow Jones industrial average falls 500 points on Monday. Republican candidate John McCain states that the fundamentals of our economy remains strong. Later on, yesterday afternoon, he decides to tweak his analysis and states that the fundamentals that he is referring to is the innovation of the American worker. Therefore, the American worker remained strong. Barack Obama and Joe Biden tied John McCain to the failed policies of the Bush administration.
This is an excellent opportunity for the Democrats to focus the attention of the American people on the economy. There is a reason that Lehman Brothers is filing for bankruptcy today. There is a reason that Merrill Lynch was bought out by Bank of America. The fundamentals of our economy are not strong. The economy over the last eight years has been built on the housing market. The economy required Americans to build and sell houses. We needed cheap labor to build houses. This is one of the reasons why politicians have talked about immigration reform but have done nothing. (John McCain originally proposed a reasonable immigration policy that he now opposes.) Then, we needed to sell everyone on the vision of a new home. We needed easy money and cheap mortgages. Say hello to subprime mortgages. This whole industry is relatively crazy where your loan money to people who would not normally qualify for loans. The only way the loans don’t default before the ink is dry is to have ever increasing home valuations. Your home value must increase in order for the loan not to implode. Mortgage companies and sell these subprime mortgages to other financial companies. These companies then bundle these bad loans and sell them in packages to other financial companies like Bear Stearns or Lehman Brothers.
This is where government regulation must step in and control the financial markets. As Americans, we’ve been sold a truckload of garbage that capitalism cures everything. It doesn’t. Controlled capitalism is great. Unfettered capitalism equals the robber barons of the 1920s, the Savings and Loan collapse of the 1980s and the subprime mortgage collapse. There’s only one candidate that is offered to rein in this unfettered capitalism. There’s only one candidate who has offered to stand up for the average American and that’s Barack Obama.