[quote=patientrenter]Why do I think the pols are mostly following the voters’ wishes? Do I have any examples?
Yes, house prices. Most people want house prices to be higher. Who benefits the most? If a home goes up by $500,000, who gets most of that? The homeowner. Yes, the real estate agents make 6% of that $500,000 more ($30,000), and the mortgage broker makes 2% ($10,000), and the banker makes another few %, and so on. But $400,000 or more goes to the owner. So sure, the RE and banker types really want the bubble reflated, but the bulk of the dollars go to homeowners, and the homeowners will scream if the pols don’t make every effort to let them hold onto the benefits they expect from past and future inflation of their house prices.[/quote]
That’s the best example you could find? Okay, so let me get this straight: Greenspan lowered interest rates to near-zero in order to please voters? Is that your thesis? You are telling me that Greenspan did not lower interest rates to avert a steep recession in 2000 that would have dragged Bush into irrelevancy much sooner? Come on, now. You know better than that.
PR, you are right that Americans wanted their home values to rise, but that was only because their steadily falling *real* wages and decades of creeping inflation had gutted all their other income-making opportunities. Our elected leaders have been pissing on this country for nearly 4 decades, and hapless Americans have been moving from one strategy to another just to keep up.
In the 50s we had good jobs and low inflation. Men worked, women didn’t and one income bought a house and a future for a family.
By the time the 60s rolled around (and we began packing on serious deficits from the Vietnam War), all that was coming to an end, and Americans began to realize that one income would no longer sustain them. Where to get more money? Fortunately, the women’s movement provided us with the opportunity to kick the can a little further down the road. It was a good deal for women – we finally got the chance to have careers, stand on our own and become independent. But it was an even better deal for our elected leaders, as they now had a way to keep potentially angry Americans at bay without focusing too much on the fact that the food and homes they bought now cost substantially more than the food and homes their parents bought.
And then the 70s rolled around. Facing near-bankruptcy, we left the gold standard – and for a brief moment Americans found out what the dollar was really worth: not much. But as inflation raged and Americans struggled to keep up, our elected leaders lucked into two more opportunities to keep the masses at bay: (a) we created the petrodollar (effectively backing the dollar with oil (instead of gold)) and (b) credit cards. Now, with two wager earners in a household armed with some plastic and a government armed with a built-in demand for dollars (anyone who wanted oil had to buy it with dollars), our government was able to kick the can down the road a little farther. Did they stop spending? Of course not. They just kept pushing the day of reckoning off a little longer, starting wars we couldn’t afford, funding social programs we couldn’t afford to *please* interest groups and secure re-election — always diverting attention from the dollar’s steady decline or the Fed’s role in making that happen.
By the time the 90s rolled around, Americans were just about tapped out. We squeezed a little juice out of the dot com bubble, but it wasn’t enough to feed the Beast. So Greenspan did Bush a favor and laid the groundwork for the housing boom that would sustain him for most of his presidency. Did Americans ask for low interest rates? Heck no. All they wanted was the life that their parents had – which they could have held on to if the dollar had not been steadily devalued by massive amounts of debt that our elected leaders funneled into all manner of covert wars and other shadow government operations and services.
To pin this disaster on Americans’ desire to have rapidly-appreciating homes is really missing the point. You are focusing on one frame of a film. This movie has been playing for 30+ years, and the story has remained the same throughout: elected officials have been passing the hot potato from one administration to the next, knowing the time bomb would blow on someone’s watch – hopefully not their’s. And they have danced and grifted as much as they possibly could to keep the ship afloat and keep Americans unaware of the damage they had really been causing to our real economy. Because if Americans really knew how badly both parties have been screwing them and their dollar, they would have revolted YEARS ago. But the truth remained hidden.
NAFTA, outsourcing – do you really think American voters asked for any of that nonsense? They didn’t ask to have their jobs sent overseas or their manufacturing base obliterated while witnessing the rise of utterly useless retail and finance sectors that produce nothing but paper debt. I know I was never consulted. Were you, PR? And now our government has left us in a pickle: with the mother of all recessions/depression and no fundamentals left for job creation that can easily pull us into recovery.
The bottom line is this: Americans have been running hard to stay in the same place for decades – and they’ve gotten really creative, you’ve got to admit. And credit card companies have been pimping their products to students who can no longer afford college and lower income workers who need them to make ends meet. We’ve been taught to work like dogs to buy s*** we don’t need for as long as I can remember. We’ve been encouraged to buy bigger cars and the next generation of iPod, and when we finally decide to close our wallets, WE get blamed for not spending. What the hell kind of economy do we have that collapses as soon as people decide they want to live within their means??
PR, if you really think that Americans were clued into where their government has been taking them for the past few decades, you are either extremely naive or are secretly working for the the Obama administration.
Because this f*****g game has been rigged for years. And most people are only just now realizing it.
