Who’s to Blame for the U.S Crisis?
Imagine yourself having a debt of over 2 trillion dollars, or maybe even a debt that is continuously rising? Imagine having a whole country to maintain and people continuously arguing about what you should do and that perhaps you are the blame for the deficit. Ever since Obama has come into power there was the need for change, the need for changing the way Americans think and trying to make the US better. But sadly in 2008, the largest recession ever known the American History rose. Many like to think it is the fault of Main Street, others like to think Wall Street, and others think old President Bush. Many have their opinions, but facts can only prove and point to one who is the cause of this entire problem. The CEO’s of the largest banks planned everything according to their benefit, and forgot the rest of the world, creating debt to Americans, and hoping that their plan would go accordingly, but nonetheless it failed, and those who have to pay are the citizens of the state.
The Obama Administration has long been working on a plan in order to salvage the economy and make it better, while the CEO’s are getting large bonuses and regular citizens are now asking for Food Stamps. Families were cheated, “the resulting stock market decline wiped out many people’s savings and retirement funds, and the values of homes dropped nationwide” (Johnson 138). Americans thought that by investing in homes and saving up money they would one day see it in progress, yet they were only cheated out of their money. The CEO’s had a plan instilled; a plan that would make them richer, yet as selfish as they were they forgot the rest of the nation and how to help them. In order to be able to purchase a house, one must be able to afford it, that’s typically the rule. But these banks were approving loans to people who would never be able to pay back what they received for the house. The banks were thinking that perhaps they would get more money out of the interest that the people had to pay rather than the loan itself. This is where they were wrong, how could a couple let’s say that just wanted to start a family that have never saved be approved for a maybe 500,000 loan and be expected to pay it back over a certain time working regular jobs? That in itself is an act of stupidity on behalf of the banks performing acts as such, ruining a whole country in its entirety.
These financial institutions have long been trading and performing transactions in large risks. These are what the banks are known for, more or less gambling and hoping for a large sum back, but this time that game failed on them, and Americans are ones having to pay. These are the ways that the banks have always done it, it seems like to me it was more a long luck stroke for them. But officially in the end all they actually received were large paychecks for themselves and Americans with no money in their bank accounts. How could a group of people or persons even think of doing such a thing? Risking people’s lives for themselves? Seems like a careless, selfish act to me, but one day they will pay for that they have caused. These banks functioned exactly like this:
“Structured finance that involved lending without using capital (money), enabling a small amount of money to leverage (control) bigger and bigger investments. Investors also embraced securitization: Banks would sell car loans, credit card debt, mortgages, music royalties, and other assets- all involving regular payments-by packaging them in trusts that pay bondholders principal and interest. Investors could opt for low risk and low returns or greater risk, potentially yielding the largest profits. Derivatives, contracts, based on stock, bond, or commodity and specifying the selling future cash flows, became another means to buy and sell risk. Derivatives and securitizations have been sold and resold around the world” (Johnson, 139).
These are exactly what the banks performed up until the recession and market crash of 2008. Having these banks literally gamble with people’s money putting on insurance for themselves so they would not lose money and when they did lose their money, perhaps that man that was really excited about his new car loan was actually worth nothing and ended up losing it not having enough to re-pay it.
Most would state maybe it isn’t that fault of the banks, it is actually the President of the United States who should be able to control and oversee the way these financial institutions are running. But many actually don’t understand is a President only has so much power. Generally there is the Senate that has to agree, as well as the House of Representatives. It shouldn’t be up to the President to truly overlook and manage these banks. There are laws and there are regulations, but obviously these banks did not follow them and landed us in a large hole of problems only having safety nets for themselves. “He [Bush] certainly presided over a widespread failure of regulation, and on his watch, the US authorities did little to prevent the sale of millions of mortgages to people who could never afford them” (Wood 2). These are the very arguments many seem to have about the Bush Administration causing this downfall upon the US, but many fail to see how the Bush Administration was caught up in other issues as well. How about the war with Iraq, the War on Terrorism right after September 2011? There were many issues surrounding Bush, though he had his defective ways of going about certain things, he still relied on the Banks to do their job correctly, and yet they failed causing a whole nation to fall.
Many would argue that Obama is to blame for the situation but as many the American people haven’t been educated enough about this problem enough to try to resolve it. They believe that we are just borrowing money we don’t have because of certain ideas, but that is not the case. In order to fix these problems we must change the laws against big CEO’s and change the laws against big corporations. As long as the tax code is, 80,000 pages including hundreds of thousands of loopholes for corporations that would be able to change our system for the better. Being able to raise the taxes for the rich and not allowing big bonuses for CEO’s to be continued. In order to fix this country we all must act together, or perhaps one day everything would really fall apart. It’s better to fix the problem now, then keeping the trench we are in until we are officially stuck. L
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