So, I have never been the sharpest tool in the shed when it came to government and wall street. I could never figure out why everything seemed so illogical. I decided that I needed a little help to figure out the logic behind this mess we call the economy.
Fortunately, my uncle the plumber has a masters in economics and I decided to ask him what he thought about all this craziness. Well, he gave me a pretty good idea of what the hell was going on and I would like to share it with you today.
I gotta thank you uncle Joe for telling it like it is and in terms I can understand a little better. I guess I should have done my homework in Micro and Macro Econ but jeez, I was so damn tired of having to work full time and 21 credit hours at school.
The sky is falling.....laissez faire capitalism (no cops allowed in the market) has always been prone to panics caused by speculation.....where some asset is driven to untenable heights...it was tulips in the 1600s...stocks in the 1920s, real estate in the 1980s, dot com stocks in the 1990s and real estate again now....supposedly smart people (investment bankers) borrow huge sums by putting up $3 of their own money for every $100 they borrow (leverage) and then buy assets..but this time it was mortgages given to people who never could afford them...the poor who are(sub-prime)...and at interest rates that went way up to cover the additional risk....a really stupid idea since they could not even afford a low interest mortgage,,,,and then other institutions got involved by insuring (hedgeing ) the high risk mortgages in case people DID default on the mortgages...
this ponzi scheme will work as long as speculation drives up the asset price... which occured in real estate... and investment bankers make billions on the small (leverage) $3 original investment..... and even people in trouble (like Kim) could always sell the asset (house) and continue the Ponzi scheme....
music stops when enough people get so much debt that they start to lose their houses and the real estate bubble starts to burst....and housing prices actually fall....
Alan Greenspan was the republican "free market" ideology guru who rejected putting cops (regulations) in place several years ago when some saw the beginnings of the coming crisis...they even fired the head cop regulating Wall Street because he too saw the crisis and was replaced by another republican ideolog....and Phil Grammwho is McCains head economic advisor
(he is the one who said this recession is only Mental... and Americans are whiners)
put a law into place 5 years ago that actually PREVENTED regulation of this Ponzi scheme...
republicans only want cops to keep a lid on the inner cities and send as many minorities away as possible for even small time drug possession...the crack vs cocaine strategy//// it works....what do they teach in Law School????
Oops almost got ahead of myself, here is some visuals for you all that are like me and have a hard time understanding things
http://www.suburbanhousehunters.com/...
http://www.buymyshitpile.com/
UPDATE:
After getting the information from uncle Joe I decided that I needed a little bit more information and found a great web sit that I watched last night. I am not sure If it has been posted but I found it very helpful in understanding things. I realize that there are a lot of people that are very economic minded but as for me? Not so much. I guess it was just so damn hard to understand the logic behind all of this. I understand that, "shit" happens but I just dont understand how if people realized that this was an inevitable situation why they thought that they would get away with it. I guess we will find out sooner or later whether our representatives will actually do what is right for the American public.
Here is the link:
crash course