Dallas Fed Takes A Dump In The Punchbowl
A confluence of factors produced the December 2007–June 2009 Great Recession—bad bank loans, improper credit ratings, lax regulatory policies and misguided government incentives that encouraged reckless borrowing and lending.
What is intentional credit creation without any ability to pay? After all, we’ve pretty-well documented that the people who did this 1) knew they were making bad loans, 2) knew they were selling bad loans to others.
Hint: The word starts with an “F” and has more than four letters.
The worst downturn in the United States since the 1930s was distinctive. Easy credit standards and abundant financing fueled a boom-period expansion that was followed by an epic bust with enormous negative economic spillover.
Despite extensive reviews of the causes and consequences of the most recent financial crisis, there are few estimates of what it cost—the value of what society gave up. Such a figure would help determine the relative expense of policy proposals designed to avoid future crises. Any estimate of the toll exacted is bound to be incomplete—for example, there may be future expenses not yet recognized—so it’s useful to calculate a range of likely costs.
Oh no, we can’t talk about that!
Our bottom-line estimate of the cost of the crisis, assuming output eventually returns to its precrisis trend path, is an output loss of $6 trillion to $14 trillion. This amounts to $50,000 to $120,000 for every U.S. household, or the equivalent of 40 to 90 percent of one year’s economic output.
Let that one sink in for a bit — that’s from one to three years of the average American household’s earnings power!
And guess what? That’s not evenly-distributed either. The folks “at the top” (read: banksters) lost little or nothing. Guess what this means the average American lost?
The crisis resulted in a significant loss of trust in government institutions and the U.S. capitalist economic system.
That’s because theft was rewarded rather than punished — and it continues to be today, provided you’re a bankster. Go ask the people in Jefferson County Alabama about that.
Oh, and as for preventing the next one?
Forget it — if there has been one constant since 2007 it has been the daily demonstration that institutionalized theft, fraud and scams are more-protected than ever, whether it be in the form of hinky sewer deals or stealing people’s houses through bogus “foreclosure” proceedings when you don’t even legally own the debt you’re claiming to foreclose under!