Tuesday, October 23, 2012



Romey has a different vision than Obama - Look at recent history

I was talking with a friend and the question came up, "Why did the financial crisis occur?". Ok, forget about bad loan policy that came out of the Clinton admin, forget about poor oversight and inadequate policing of banking in the Bush admin. Why did it happen? This is what we came up with: Big banks began to collapse because their balance sheets were full of shoddy mortgage backed securities. When that happened, credit began to dry up. When credit dries up, employers who borrow to make payroll (this is very routine) and have lines of credit to fund their operations, such as home builders, cannot engage in operations and they begin to layoff. Suppliers, such as home depot, begin to sell less and they layoff. Manufacturers who sell to retailers sell less and they begin to layoff. Then, local, state, and federal govts begin to collect less in tax revenue and pay out more in unemployment benefits and they, too, layoff.

Now, that's what happened. Let's, as stated, forget about why it happened. Let's discuss what was done as a result. The Bush admin didn't want to do bailouts. They let Bear Stearns go under. They let Lehman Brothers go under. Then it hit them. We are looking at Great Depression, round 2. Then they got smart. The thing is....this recession we are in happened due to a number of root causes, but it could have been avoided if the bailouts had happened sooner and were larger. And that is pretty clear. We are where we are because govt did not act fast enough. Romney said he wanted GM to go through structured bankruptcy. But...there were no banks stepping up to allow that to happen. GM would have been sliced and diced for its break up value. That's what a corporate raider does. That's what Mitt Romney did for a living. I think the alternative of keeping GM alive was the better option. I think the employed workers and the people who work in the industries associated with GM would agree. So would the state of Michigan and the city of Detroit.

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