Monday, February 02, 2009

Somebody Could Anticipate

Since several times lately I have seen comments about Nobody Could Have Anticipated the present economic crisis, I have taken a little step backwards to an article I relied on in several posts in January, 2008. Here's one nobody who, along with many of us who posted on the subject then, predicted what was coming.

The economic bubble that lifted the stock market to dizzying heights was sustained as much by cheap oil as by cheap (often fraudulent) mortgages. Likewise, the collapse of the bubble was caused as much by costly (often imported) oil as by record defaults on those improvident mortgages. Oil, in fact, has played a critical, if little commented upon, role in America's current economic enfeeblement—and it will continue to drain the economy of wealth and vigor for years to come.

The great economic mega-bubble arose in the late 1990s, when oil was cheap, times were good, and millions of middle-class families aspired to realize the "American dream" by buying a three (or more) bedroom house on a decent piece of property in a nice, safe suburb with good schools and various other amenities. The hitch: Few such affordable homes were available for sale—or being built—within easy commuting range of major metropolitan areas or near public transportation. In the Los Angeles metropolitan area, for example, the median sale price of existing homes rose from $290,000 in 2002 to $446,400 in 2004; similar increases were posted in other major cities and in their older, more desirable suburbs.

This left home buyers with two unappealing choices: Take out larger mortgages than they could readily afford, often borrowing from unscrupulous lenders who overlooked their overstretched finances (that is, their "subprime" qualifications); or buy cheaper homes far from their places of work, which ensured long commutes, while hoping that the price of gasoline remained relatively low. Many first-time home buyers wound up doing both—signing up for crushing mortgages on homes far from their places of work.

Of course, the same Nobodies were talking about the impossibility of funding the wars off budget from 2003 on, and posting on the strain of diminishing contributions of jobs to the economy as companies offshored their offerings. The uptick in gas prices was a killer, and was duly noted as the same, as early as 2007. I particularly commented on my shock at having to pay over $3 a gallon on a trip to New Mexico in September of 2007.

From this blog, January 3, 2007:
There seems to be a new ethic among the crooks in high office that simply ignores the laws - and dares the mechanics of law enforcement to enforce them.

From this blog, February 24, 2005, the very first post;
I think if things in this country continue the way they have for the past few years, the underground economy is going to be very helpful in keeping things afloat.

Wingers were idealizing war expenses back in the early days, harking back to WWII industries that were prosperous because of that war, idealizing free trade for giving U.S. industry access to other markets, and idealizing oil company profits as prosperity for the whole country. Those of us who didn't get with the program back then were critiqued for our lack of vision, not complimented for prophetic warnings.

The same right wing insisted taxes on businesses needed to be cut in 2001 because we had a surplus. The same right wing still insists that taxes need to be cut to induce businesses to produce jobs and profits in the U.S. The same right wing is talking now about cutting social programs in the stimulus package that attempts to get us out of the hole they insisted we had to dive into - for national prosperity.

Guess what, the right wing has been wrong all along, and it's wrong now.

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Anonymous Anonymous said...

This whole crisis--financial/credit etc--could be viewed as a carefully orchestrated program to provide the 'rulers' with the excuse they need to finally bring about Grover Norquist's dream of reducing (social) government to a size caable of being drwoned in the bathtub...

Prez.O is more and more reminding me of the young 'libertarian' folks. I'd bet real money that, inside four years, he tries to gut Social Security to "shore it up."

9:15 AM  
Anonymous Anonymous said...

Elaine called it about 4 years ago, but then again , she's shrill.

6:23 AM  
Anonymous Anonymous said...

Guess what, the right wing has been wrong all along, and it's wrong now

Yeah, the 'right wing' has definitely been the 'wrong wing' for many years now. Yet they still get the most press attention & the least amount of scrutiny. I for one am getting pretty damned tired of it...

7:51 AM  
Blogger Ruth said...

Actually, there have been a lot of us on the left who have been aware that deregulation wasn't working out...the reason for the regulation was that we learned this before, about 1929.

8:52 AM  
Anonymous Anonymous said...

Ah, but deregulation has worked nicely, at least for the few at the top, just not for the 99.9% of us [strike]suckers[/strike] citizens. Where's Robespierre now that we need him?

12:09 PM  
Anonymous Anonymous said...

Congratulations for your C&L link, Ruth! Here's a great David Kay Johnston article in Mother Jones that gives context to how the greedheads have been gaming the system for years, and what to do about it.

Have also started reading Will Bunch's Tear Down This Myth which helps document how this mess began, and why.

8:59 AM  

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