Glen Beck article on the financial crisis
mammasan
Posts: 5,656
"When one gets in bed with government, one must expect the diseases it spreads." - Ron Paul
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By placing the blame squarely on subprime lending with his overly-simplistic Tickle Me Elmo analogy, he is once again trying to package complex political concepts into a dumbed-down, useless metaphor that the massess will no doubt buy into for the simple fact that they don't know any better.
Subprime lending is just the tip of the iceberg in terms of understanding what went wrong.
There are many factors that play into the economic meltdown we are now witnessing, but most notably is the destructive long-term interest rate cuts that Alan Greenspan and the Federal Reserve instituted shortly after 9/11.
That combined with interest-only and negative amortization lending superficially stoked the economy and created the housing bubble.
Other than just plain old ignorance of fundamental economics, the reason why those issues aren't talked about is because nobody wants to see interest rates rise, and nobody wants to lose what little equity they still may have left in their home.
What they'd rather do is blame big, bad financial institutions for lending to "irresponsible" people. It sounds much better to peoples' ears because it creates a scapegoat -namely greedy lending institutions and short-sighted homebuyers who think they're going to make millions "flipping houses."
The simple truth is that the US is no longer an economic power house. It imports more than it exports. Approximately 90% of technology goods sold in the US are from foriegn producers.
Add to that the cost of war and the exportation of jobs, and doomsday economy scenarios are not a figment of the imagination.
In an attempt to keep everyone from realizing what was going on, Alan Greenspan dropped interest rates to dangerously low levels, and kept them there for several years.
If it wasn't Glenn Beck's agenda to package the cirumstances into a "cute" fairy tale with a pompous and condescending lesson in morality, then he would've explained everything I've said above.
If you don't believe me, here it is in the word's of Nobel Prizing winning economist Joseph Stiglitz
...completely flies in the face of Glenn Beck's article, and I don't even think Beck has an economics degree, let alone a professorship and a Nobel Prize in said field.
http://forums.pearljam.com/showthread.php?t=272825
I didn't say I agreed with Beck. He is simplifying the reasons of why this happened. I have stated a few times on this board that this day was soon to come because the foundation of our economy is debt. It's no longer manufacturing but simply the ability of the American consumer to purchase more than they could afford. I think his article is a good way of explaining what happened with the housing bubble and how it was a bad idea to believe that it would prop up our economy instead of seeing it for the short term trend that it really was. I personally place a lot of blame on the Fed. If after 9/11 the Fed just allowed the market to self correct, instead of trying to revitalize it by adjusting interest rates, we probably could have avoided the housing bubble which was the major catalyst for the crisis we are in now.
Why? I believe the article does a good job in explaining, in layman's terms, how the sub-prime mortgage fiasco occurred. I disagree with beck's assessment that it is the sole reason for the financial crisis but that should take away from the rest of the article.
Let me be the first to say that it WAS a good article and I enjoyed reading it. I find it interesting that people on this board bashed the article, when Glenn Beck himself even stated...multiple times...that his article wasn't perfect.
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It's not just imperfect, it is terribly misleading.
People read that article and walk away thinking that if subprime lending didn't happen, the economy wouldn't be in the shape it's in right now.
That couldn't be further from the truth.
http://forums.pearljam.com/showthread.php?t=272825
I'm sure if the article was written by Keith Olbermann or Rachael Maddow most on this board would be praising the article.