what do you think led to the economic crisis?

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Breakaway_republic

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I think it was human and corporate greed, combined with many other factors [IE: Mortgages given to unqualified people, Prosperity gospelers encouraging people to take out stupidly high mortgages that they couldn't afford, Outsourcing work to other countries, and a lot more].
 

BobW188

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That's it in a nutshell. Manufacturers, service providers, sellers and realtors forgot that capitalism is about providing products for a reasonable price, not the highest possible profit. We consumers started accepting that products were really worth what it said on the sticker; and that immediate gratification was worth crippling, long-term debt. Then we had experts from politics, business, industry, finance, etc tell us that a working economy had to be like this, and that it must always grow!
In short, everybody put their selfish interest, as opposed to their self interest, ahead of the common good. It has happened before, it will happen again. It will finally happen one last time, and I hope I'm dead when it does. I have every fear I may not be.
 
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OldWiseGuy

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All of the above.

All money economies are giant Ponzi schemes, needing a new generation of players to sustain itself. What we (they really) did was to add new debt too fast, before the next generation has even been born. Money economies do have to "grow or die" because accumulated debt has to be passed on to a yet larger group of players.

owg
 
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AMOG

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Allowing people (companies) to write mortgages without them having to worry about whether or not they could be re-paid.

In a larger sense it is the de-coupling of risk and reward without a regulatory framework to reign in the folks writing the mortgages. (because risk is the natural break. once you remove it from the equation, you have to regulate or the reward seekers will do anything they please. Someone else is holding all the risk.)
 
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CCGirl

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here is an apt analogy to the crisis..........


**Linda is the proprietor of a bar in Cork . To increase sales, she
decides to allow her loyal customers - most of whom are unemployed
alcoholics - to drink now but pay later. She keeps track of the drinks
consumed on a ledger (thereby granting the customers loans). Word gets
around and as a result increasing numbers of customers flood into
Linda's bar.**


**Taking advantage of her customers' freedom from immediate payment
constraints, Linda increases her prices for wine and beer, the
most-consumed beverages. Her sales volume increases massively. A young
and dynamic customer-service consultant at the local bank recognizes
these customer debts as valuable future assets and increases Linda's
borrowing limit. He sees no reason for undue concern since he has the
debts of the alcoholics as collateral.**


**At the bank's corporate headquarters, expert bankers transform these
customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These
securities are then traded on markets worldwide. No one really
understands what these abbreviations mean and how the securities are
guaranteed. Nevertheless, as their prices continuously climb, the
securities become top-selling items**.

**One day, although the prices are still climbing, a risk manager
(subsequently of course fired due to his negativity) of the bank decides
that slowly the time has come to demand payment of the debts incurred by
the drinkers at Linda's bar. However they cannot pay back the debts.
Linda cannot fulfill her loan obligations and claims bankruptcy.
DRINKBONDS and ALKBONDS drop in price by 95 %. PUKEBONDS perform
better, stabilizing in price after dropping by 80%. **

**The suppliers of Linda's bar, having granted her generous payment-due
dates and having invested in the securities, are faced with a new
situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor. The bank is saved by the government
following dramatic round-the-clock consultations by leaders from the
governing political parties (and vested interests). The funds required
for this purpose are obtained by a tax levied on the non-drinkers.**
 
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OldWiseGuy

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CCGirl,

You nailed it. And just as the global financial system is tied together so is the insurance business. Shortly after 9/11 my rental property insurance went up dramatically. The billions in insured losses was spread throughout the insurance industry. This bailout will be no different. Everyone except those responsible will pay the bill. The possible upside is that us sideliners who have some cash might take advantage of a stock market recovery, or some property bargains out there.

owg
 
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Silent Bob

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As a guy said back in 1848:

Karl Marx & Frederick Engels said:
Modern bourgeois society, with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells. For many a decade past, the history of industry and commerce is but the history of the revolt of modern productive forces against modern conditions of production, against the property relations that are the conditions for the existence of the bourgeois and of its rule. It is enough to mention the commercial crises that, by their periodical return, put the existence of the entire bourgeois society on its trial, each time more threateningly. In these crises, a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity -- the epidemic of over-production. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation, had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed. And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce. The productive forces at the disposal of society no longer tend to further the development of the conditions of bourgeois property; on the contrary, they have become too powerful for these conditions, by which they are fettered, and so soon as they overcome these fetters, they bring disorder into the whole of bourgeois society, endanger the existence of bourgeois property. The conditions of bourgeois society are too narrow to comprise the wealth created by them. And how does the bourgeoisie get over these crises? On the one hand, by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.

Well it seems the ways to overcome the crises are all but depleted. Major war (or "enforced destruction of a mass of productive forces") is next to impossible to do because all the major players now have nuclear weapons. After China there are no major new markets left to conquest and the jury is still out as to whether the West conquered China or China will devour the West. So that leaves "the more thorough exploitation of the old ones" which has already manifested itself with politians and employers telling the people that: More "flexible" employment laws are the way out. But even if the workers are turned once again into slaves there is no guarantee the market will find itself again in its former glory anytime soon.

I agree 100% that the market is little more than a complicated global Ponzi scheme. And the only way out it seems is to let the pyramid crumble, let those at the top walk away with the money and count on the greed of the rich to cause them to start investing once there is nothing standing but them.

Thats humanity unfortunately all economic and political systems look awesome on paper but we are just too greedy to follow the instructions right. That is true about every system out there including socialism, communism, capitalism and all their little denominations. We still have not tried anarchy... maybe if this crisis gets real bad and people revolt and bring down established order we can give it a go, if not we still have the next crisis to look forward to.
 
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ahiggs

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I think it was human and corporate greed, combined with many other factors [IE: Mortgages given to unqualified people, Prosperity gospelers encouraging people to take out stupidly high mortgages that they couldn't afford, Outsourcing work to other countries, and a lot more].

i think it was the whole idea that i want it, i can't afford it, but i am going to get it anyway...that is being continued in the government. most familys are in far more debt that they will be able to pay off anytime soon
 
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Breakaway_republic

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i think it was the whole idea that i want it, i can't afford it, but i am going to get it anyway...that is being continued in the government. most familys are in far more debt that they will be able to pay off anytime soon

Sadly, it is human nature to do such things.
 
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whereisthetruth

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It was the false and fatal belief by economists that debt - not savings - should be the driver of economic activity. This led to a deterioration in capital (ie. productive capacity) and a rise in consumer debt. This is like a farmer eating his seed-wheat. The unpayable mountain of debt in the world economy is causing an irreversible implosion that will most likely cause a destruction of our whole way of life.

A detailed (and slightly technical) article here explains that this philosophy is responsible for (according to the author) the inevitable destruction of our modern civilization.

I don't know if the current crisis hails the iminent return of Christ, but the bible does prophecy that his return would be preceeded by a total and irreversible collapse of civilization. We just may be witnessing the beginnings of this final phase of human history. Yet, it may take many years to work through. The indicators are that economically we are at the beginnings of a huge upheaval, and nothing that should be being done to deal with it is being done, but rather everything that could possibly make it worse is.
 
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