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View Diary: The Legitimacy Gap (20 comments)

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  •  Great diary, gjohnsit (4+ / 0-)

    I would add one cause of the crisis which is not paid enough attention to, income inequality and the Great Divergence (1979 to now) from the Great Compression (WWII boom) where incomes were more in line and kept up with. Like before the Great Depression and  farming became more mechanized taking away income from farmers forcing them into taking out credit to sustain their standard of living including real estate.

    This is exactly what happened over the last 35 years as manufacturing jobs gave way to a combination of mechanized overproduction but also trade agreements and the manipulation of trade law for the elites which left your average consumer with no where to go to sustain their standard of living than credit and real estate that was sold to them as a never ending ATM with a never ending raise in the price despite their NINJA status an then it all came crashing down for reasons you know and I don't have to go into. The point is the crisis could not have happened without years of income inequality so it is not just, "Oh gee isn't it a shame people don't get by anymore" it is a direct cause of this whole economic and financial crisis and the bust.

    As economists William K. Black and George Akerloff have laid out Control Fraud built up both housing bubbles. Without underwriting standards and punishment for straying away from the perpetrators that caused these economic calamities, there can be no legitimacy to the system; a system with no standards.

    I don't negotiate grand bargains with deficit terrorists!

    by priceman on Sat Feb 02, 2013 at 03:34:59 PM PST

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