why is the American economy deteriorating?

[Heinsbergrelatz]

Hello guys, i have been studying economics for 2years now, and i am really interested in how the economy of the world goes around. Recently i have been reading news on CNN, and i read about how the US has problems, and i see the word default, cutbacks, US losing power by 2025. What is happening?? i certainly know that the american economy is number one right now, but what issue suddenly puts the american economy on the decline, so much that it will collapse??

 

can anyone please give me a detailed information on this, if not good sources or video links???

 

thank you, i will appreciate any help offered.

Edited July 31, 2011 by Heinsbergrelatz

[iNow]

i read about how the US has problems, and i see the word default, cutbacks, US losing power by 2025. What is happening??

Let me begin by reminding you that you're likely going to get a lot of really silly responses to this thread which aren't entirely coherent and which aren't entirely grounded in reality. For that reason, I'll summarize some of the highlights as I see them. I don't know what you know and what you don't, so sorry if any of this is way too basic.

 

First, money has been spent by the US congress for several years, and not all of that money being spent was accompanied by new income or revenues. It was borrowed, much like you do when you obtain a mortage to buy a house. There is something you need which is important (like a home), so you agree to go into debt to get it, try to get a reasonable interest rate, and make payments until you ultimately pay it off, wherein some portion of the payments go to interest and some other portion go to principle. The government largely works the same way. There are things it needs, so it pays for them with the money it takes in and borrows the rest. When they borrow, they try to get a low interest rate, and they contract with the lender that the money will be paid back within a certain amount of time. If they don't pay it back in time, then they are penalized, seen as untrustworthy for future lending, and have a negative impact on the quality of credit they are given.

 

The US had a budget surplus at the turn of the millenium, wherein we were taking in more money than we were spending. We had a lot of cash on hand, were lowering our debt, and had limited need to borrow more money to pay our existing bills. Then, the country made some poor decisions and enacted laws which erased that surplus. Some examples are agreeing to pay for more pharamceuticals for the elderly (Medicare part D), engaging in two wars at the same time, and in parallel cutting taxes for the wealthy. In short, our congress simulataneously decreased our revenues at the same time they were increasing our spending, and in a very big way.

 

The negative effect of this wasn't immediately noticeable because the stock market was performing well, and the cost of housing was very steadily rising. Lots of money was being made by building and selling houses, and even more so from the interest on mortages taken out by people like you and me to pay for those houses. Banks began approving mortages for people who were high risk because there was a lot of money to be made with every mortage signed. Those high risk mortages (mortages taken out by people with unsteady income, no money down, other large bills to cover, bad credit, etc.) were packaged into large bundles of mortgages and traded between large banks.

 

The large banks were selling the bundles of risky mortages (later known as troubled assets) to one another, and they kept going back and forth selling them at a higher price. So, Bank A sold a bundle to Bank B for 100, then Bank B sold it back to Bank A for 200, then Bank A sold it to Bank B for 300, and on and on and on like this for several years, and that's what you hear called the "housing bubble." It was a bunch of hot air, but people were making millions and millions of dollars in a very short amount of time. It was made possible in large part due to the deregulation and rules removed from the system while Alan Greenspan was in charge. However, to make the risky mortages more attractive between the banks, they had to take out insurance on them (since they were, after all, risky mortgages wherein the borrower had a high likelihood of being unable to continue making payments). With that insurance in place, the risky mortage bundles didn't look quite as risky, because if any of the home owners failed to pay... or if they defaulted on their mortage... there was insurance for the banks to cover that loss. So, the banks kept trading in these risky mortages, and kept swapping out the risk of credit default by buying more insurance for those troubled assets. Not only were the banks doing well, but so were the insurance giants like AIG.

 

My point is that lots of people were making lots of money, and this is part of the reason the huge delta between outgoing government expenditures and incoming revenues was not as immediately obvious. All of those people making all of that money paid taxes on that money, so government revuenues were also relatively inflated when this was going on. Everyone seemed happy. However, then homeowners started defaulting on their mortages in large numbers, and the risk caught up with the system. People were going into foreclosure en masse. This led to the banks starting to collect on their insurance policies all at once. There were making large numbers of insurance claims to cover these credit defaults from the homeowners who failed to pay their mortage. A significant amount of this all happened at the same time, though, and the insurance companies were being asked to pay out enormous sums of money all at once. They essentially ran out of money, and didn't have the reserves to cover those claims, so the banks lost all of that money, and so too did the insurance giants. That's a rough sketch verstion of what was happening when Lehman Brothers failed and AIG needed to be bailed out by congress (AIG was the primary insurer for a lot of these risky mortages). I've oversimplified and left out a lot of details, but the point is that everyone was borrowing more money than they had available to pay back, didn't notice it to be a problem since there were making so much money bending the rules, leveraging every 1 dollar into nearly 40 dollars, and then a few small activities led to a titdal wave of breakdown. Things went bad here on Wall Street in a big way, and it spread throughout the global market.

 

The market crashed, and we had the Great Recession which we're still feeling today. Companies shrank, laid off workers, projects were suspended, and all non-essential spending was drawn in. However, this was a self-reinforcing cycle, and people who were suddenly out of work then stopped spending money too. This means they bought fewer items (so less manufacturing was needed to produce those items, and manufacturing workers lost their jobs), they ate out less (so more restaurants went out of business and food staffs lost their jobs), and every sector was negatively impacting, because when people don't spend money then other people don't earn money... so even more people lost their jobs and even more decreases in spending occurred... lather, rinse, repeat. The self-reinforcing downward spiral of the economy was felt by everyone.

 

The government jumped in and inserted a huge amount of cash into the system, both inside the US and in other countries (like China and several in the European Union), but in the US most of that money spent went to unemployment benefits and food stamps for all of the people who suddenly had no money to survive or feed their kids. Money also went to save a few jobs of local government (like police, firefighters, and teachers), as state governments were also slashing thier budgets and laying people off. Without that government spending, even more people would have been out of work. With that government spending, fewer people were out of work, and thanks to the social safety net programs of the government and that extra spending those people who found themselves in the worst positions could at least still feed themselves. Even with it, though, times have been very tough for many.

 

Ultimately, the market picked back up while the government spending was occurring, as jobs were being created, and commerce was still happening, and this led to more jobs and more commerce (in the same way the economy spiraled downward, it tends to spiral upward... that construction worker getting paid goes and buys lunch from a store, and that store owner then takes that money and buys school books for his kids, and that bookshop owner buys medicine for their grandmother, etc.... the economy is all interwoven). The stimulus had a visible effect on the economy, but reached it's peak output in mid-2010 and has been fading away since then. Without that government spending, the economy is noticably shrinking again, and the problems we face with joblessness are being exaccerbated. Jobs are not being created quickly. Most of the major companies are still facing lower demand for their products because people are still out of work and not spending money on goods and items, so they have no need to invest in more tools or more people. They are holding on to their cash instead of spending it, because there is little demand for their products, so there is also little need to hire more workers to build more products. Companies have also gotten better at doing more with less, and automating functions, which means even fewer workers are needed, which means the economy keeps getting worse as fewer people are at work.

 

--------------------------------

 

Now, with all of this going on, there has been a group of people who have been changing the focus away from jobs and on to the deficit. They keep talking about how much the government has grown and how much debt we have, and it's caused this huge uproar across the US about the scope government should have in our lives. There is a group of people who think government is too big, and that it's now bigger than ever. However, that's really not true. Most of the spending (as I mentioned above) has been on unemployment benefits and food stamps... basic safety nets for a populace struggling to survive in a depressed economy. Further, these same people didn't seem to care so much about the deficit when we had a Republican president lowering taxes at the same time we were spending billions on wars.

 

Another interesting point to consider is how a major reason the deficit is so large is due to the reduction in government revenues which stems from the high unemployment. In short, when people lose their jobs, the taxes collected by government are reduced. The income tax and taxes on services and materials all go down. So, what has happened is that the government has increased it's spending on providing basic aid and survival... helping people who are out of work to obtain food and not suffer the worst forms of poverty... and this spending on social safety net programs has gone up at the same time revenues have gone down... because people are out of work. This makes the deficit look huge, when in reality it has less to do with our long term trajectory of the country and more about the short-term circumstances we're facing right now.

 

Yet that's not what we hear from our politicians. They keep implying that the deficit is huge due to social security programs or investments in education or infrastrucure, and that's simply untrue. This has all blown up into a big ideological battle about whether government should spend money on education and medical care for it's people, or if it should only pay for a navy and little more. People are spinning the situation we're in with the debt ceiling to push forth their ideology, changing our focus from jobs and employment and instead on to deficitis. They're trying to remove social security and medical care for ideological reasons, even though much of our defecit is a direct result of unemployment, and unemployment is a result of low demand, and government is the primary source of demand possible in this situation. Yet, instead of spending on roads, and infrastructure, and other projects which would put people back to work and have a self-reinforcing feedback effect, we're talking about further slashing our deficits and lowering spending... becoming more austere and further impacting jobs in the negative at a time when that can only make matters worse.

 

And, here's the kicker. None of this has anything to do with the debt ceiling. The debt ceiling is little more than a self-imposed limit on our ability to pay on bills for things we've already spent. The debt ceiling is a self-imposed limit on how much money the government is allowed to pay out. The spending has already been done. Everything we owe is based on previous congressional actions and agreements already made... in the past. We contracted to pay certain amounts, and now we just need to vote to act like grown ups and pay our bills. The debt ceiling has nothing to do with future expenditures, but it's been hijacked to implement ideologies. The reason people talk about economic collapse is because that's what would occur if the US suddenly stopped paying it's bills. Just like when Lehman Brothers failed and banks started losing money when they couldn't collect on the insurance they'd bought for risky mortages, the US not paying it's bills will impact countless others expecting that income and that money, and the self-reinforcing spiral will repeat itself, only this time several orders of magnitude larger than what we saw a few short years ago. You think Lehman Brothers was big? Try seeing what happens when the US government doesn't pay it's bills. It's disturbing that we've become so much of a banana republic that we're even at this point.

 

The arguments just don't make sense, so if you're watching the news and trying to figure out what's happening, don't worry about it. It's utterly crazy and you'll go crazy, too, trying to make sense out of it. What we keep hearing... the basic argument they're making... is that if we don't address our long term deficit immediately then our interest rates on borrowing will skyrocket and the economy will suffer. However, the markets have rates lower than they've been in decades. The evidence simply doens't support the rhetoric. Right now, we should actually be borrowing as much as possible and getting people working, much like we did in WWII when we had huge government investments into manufacturing for the war. We should take advantage of the supremely low interest rate, it's like less than 3% right now which is just unheard of. It's the best time ever to be borrowing more, investing it in big things... things we need... things which will put people back to work in a big way... then allow us to get a huge ROI. We should be borrowing and spending more right now to put people back to work, and when they start working it will increase tax revenues, thus allowing us to pay down the debt even faster. And we can do this for an incredibly low interest rate. But nope... we're focused on problems we don't really have, and we're repeating the mistakes of our great grandparents in the 1920s.

 

Really, all we need is for our congress to agree to pay bills they've alread racked up. That's all this is. We contracted in the past for services and goods, and we agreed to pay on a certain timeline. Now, we just need to stick to that agreement from the past. However, it takes a vote to do so... to raise the debt ceiling so we can pay our already existing bills. This is a vote which has taken place successfully like 70 times in the last 30 years with no issue. Bipartisan support, super majority in agreement. However... Instead now it's being held up, and our economy is being held hostage until we pay the ideological ransom demanded of those who wish to repeat the mistakes of Herbert Hoover in the Great Depression era, those who wish to dismantle the social programs, and those who wish to decrease taxes further on the wealthiest of the wealthy. And if we don't pay our bills which we've already contracted to pay, then the US is seen as a credit risk and our interest rates all go up, which means all americans pay more for less, and the world economy tries to find a way to minimize the impact of a US government who fails to pay on it's obligations.

 

I probably left some stuff out. I'm tired, and frustrated. If it weren't for the toddlers we have in the US congress, the economy would be fine. We'd be making decisions based on evidence and reason, not on ideology and misguided slogans.

Edited July 31, 2011 by iNow

[Heinsbergrelatz]

Thank you very very much, i understood your explanation well, and i think i get it now. I really appreciate it. Man you know how the economy rolls, i guess it was a good choice to move the forum afterall.

 

 

Btw are you under the name "inow" in another forum? cause i recognize your avatar,

[jackson33]

I probably left some stuff out. I'm tired, and frustrated. If it weren't for the toddlers we have in the US congress, the economy would be fine. We'd be making decisions based on evidence and reason, not on ideology and misguided slogans. [/Quote]

 

Not bad iNow and some things in that essay I might agree with, your outline is basically correct but your explanation slightly slanted.

 

Since that current bunch of "toddlers" is talking about adding 3T$ to the ND, on top of 5T$ since the 2006 Democratic Congress began, I would like to understand what bills were previously run up to require that much funding, over the next 18 months. Keep in mind all major New Deal and Great Society programs were proposed and passed as "Self Sustaining" after short periods, including SS/Medicare/Medicaid...

 

swansont, I might suggest you waive the authors 30 post requirement (has a track record elsewhere) and talk the staff members into reinstating iNow, with warning if needed, before what you normally already would have done, locking the thread or moving it to where it obviously was intended to be posted....Since it smell of an agreed to scheme of some sort, up front, I am not involved...

[swansont]

!

Moderator Note

Politics goes in the politics section. Moved. OP can contribute after reaching the threshold of participation.

swansont, I might suggest you waive the authors 30 post requirement (has a track record elsewhere) and talk the staff members into reinstating iNow, with warning if needed, before what you normally already would have done, locking the thread or moving it to where it obviously was intended to be posted....Since it smell of an agreed to scheme of some sort, up front, I am not involved...

Waiving the 30 post limit is not within my power, and actions regarding iNow are not my decision to make nor am I at liberty to discuss the matter. I don't know what you mean by an "agreed-to scheme"

[Brainteaserfan]

Hello guys, i have been studying economics for 2years now, and i am really interested in how the economy of the world goes around. Recently i have been reading news on CNN, and i read about how the US has problems, and i see the word default, cutbacks, US losing power by 2025. What is happening?? i certainly know that the american economy is number one right now, but what issue suddenly puts the american economy on the decline, so much that it will collapse??

 

can anyone please give me a detailed information on this, if not good sources or video links???

 

thank you, i will appreciate any help offered.

Hard to pinpoint the cause. IMO, two big things that have hurt us as a country is not using more nuclear power and the addition of social security, Medicare, medicaid etc to the govs role. The gov does not manage money well. Let us save our own money.

 

On stimulus etc, this is an awesome music vid IMO

 

@swansont maybe you can discuss the two issues that Jackson brought up with someone who does have the authority to do something? (Maybe you have, I don't know)

[swansont]

@swansont maybe you can discuss the two issues that Jackson brought up with someone who does have the authority to do something? (Maybe you have, I don't know)

 

Everyone has the ability to contact admin people via PM or email (email address is on the rules page). If one wishes to vouch for another user in petitioning for a waiver of some sort, it's probably best not to have a middleman in such a discussion.

[JohnB]

Damn but that was a good post iNow, easy to read and informative.

 

While I'm probably not as Keynsian as you are, your arguments make sense and I'd like to see them expanded and debated.

 

The only (minor) quibble I see is the bit about paying for more pharma for the elderly. Isn't the problem there that Medicare (Medicaid?) isn't allowed to negotiate for cheaper bulk buying prices? Or do I have that wrong?

[Greg Boyles]

Hello guys, i have been studying economics for 2years now, and i am really interested in how the economy of the world goes around. Recently i have been reading news on CNN, and i read about how the US has problems, and i see the word default, cutbacks, US losing power by 2025. What is happening?? i certainly know that the american economy is number one right now, but what issue suddenly puts the american economy on the decline, so much that it will collapse??

 

can anyone please give me a detailed information on this, if not good sources or video links???

 

thank you, i will appreciate any help offered.

 

 

Partly because of your grossly unsustainable immigration intake (legal and illegal).

 

All those additional poor espanics increase demand on government social programs which therefore requires increased government spending.

 

Also due to your military interventions around the globe.

 

The US is equivalent to the Roman Empire and it is only a matter of time before you implode resulting in a new dark ages in many parts of the world.

[swansont]

Partly because of your grossly unsustainable immigration intake (legal and illegal).

 

All those additional poor espanics increase demand on government social programs which therefore requires increased government spending.

 

Also due to your military interventions around the globe.

 

The US is equivalent to the Roman Empire and it is only a matter of time before you implode resulting in a new dark ages in many parts of the world.

 

Perhaps you could rephrase this, as it's not obvious the poster is from the US. Are you sure these issues are "his" or "his country's"?

[Greg Boyles]

Perhaps you could rephrase this, as it's not obvious the poster is from the US. Are you sure these issues are "his" or "his country's"?

 

No can do. I don't seem to have edit access to that post of mine for some reason.

Edited August 3, 2011 by Greg Boyles

[swansont]

No can do. I don't seem to have edit access to that post of mine for some reason.

You do have the ability to post, though.

[Greg Boyles]

Partly because of the USA'a grossly unsustainable immigration intake (legal and illegal).

 

All those additional poor espanics increase demand on government social programs which therefore requires increased government spending.

 

Also due to the USA's military interventions around the globe.

 

The US is equivalent to the Roman Empire and it is only a matter of time before it implodse resulting in a new dark ages in many parts of the world.

[CaptainPanic]

Partly because of your grossly unsustainable immigration intake (legal and illegal).

 

All those additional poor espanics increase demand on government social programs which therefore requires increased government spending.

 

Immigrants: they either cost too much money because they're unemployed, or they steal all the jobs. It's difficult to do it right if you're an immigrant.

 

Anyway... as iNow explained in his post, the costs of the social programs are a symptom of the current bad economy, not so much of the immigration. Immigrants actually come to the USA to build a future and get rich - not to sit in a small apartment getting a very marginal amount of money for free from the government. The majority would just get a job, if there were jobs.

If the economy picks up, it is a good thing to have 'cheap labor'. In the 60's and 70's, European countries actively invited cheap laborers to come and work, and that gave a huge boost to the economy.

[Greg Boyles]

Immigrants: they either cost too much money because they're unemployed, or they steal all the jobs. It's difficult to do it right if you're an immigrant.

 

Anyway... as iNow explained in his post, the costs of the social programs are a symptom of the current bad economy, not so much of the immigration. Immigrants actually come to the USA to build a future and get rich - not to sit in a small apartment getting a very marginal amount of money for free from the government. The majority would just get a job, if there were jobs.

If the economy picks up, it is a good thing to have 'cheap labor'. In the 60's and 70's, European countries actively invited cheap laborers to come and work, and that gave a huge boost to the economy.

 

All immigrants expect a nice house like the locals. This lead to pressure on governments to provide social housing programs. This lead to the subprime mortgage crisis, the collapse of the housing market and the USA's current ecconomic problems that lead to high demand on social programs.

 

 

Thererfore it is reasonable to conclude that the USA's huge immigrataion intake is in part resposible for the downfall the USA's economy.

 

 

 

The issue of unsustainable population growth is above the immigrant blame game. The same economic crisis would have resulted if the USA's population growth was caused by increased local fertility.

[CaptainPanic]

All immigrants expect a nice house like the locals. This lead to pressure on governments to provide social housing programs. This lead to the subprime mortgage crisis, the collapse of the housing market and the USA's current ecconomic problems that lead to high demand on social programs.

 

 

Thererfore it is reasonable to conclude that the USA's huge immigrataion intake is in part resposible for the downfall the USA's economy.

Wow!! You jump to a couple of conclusions based on that first remark. But is there any truth in the first sentence?

Where I live, immigrants who come to do cheap labor (often East Europeans) share houses, and generally don't even have half the living space per person as the locals. Some even live on campings! Sure, they all dream to become rich eventually... but that's not what you wrote.

 

Then you jump to another conclusion where you link the entire mortgage crisis to the government's housing programs... which is false.

The crisis was caused by individuals who couldn't pay their mortgages anymore, and by the banks who wrongly evaluated these mortgages as not so risky and profitable, causing a bubble.

 

It's sad that you use a series of fallacies (or lies?) to blame stuff on immigrants that isn't their fault at all.

It's one thing to have different political ideas, but it's another altogether to use a fallacy to make a point. I'm afraid that I have reported this post, as it goes against forum rule #4, which explicitely forbids the use of fallacies.

 

The issue of unsustainable population growth is above the immigrant blame game. The same economic crisis would have resulted if the USA's population growth was caused by increased local fertility.

You seem to link population growth and fertility to a lot of problems. You're all over the forum on this topic. But, in fact there are plenty of examples of a booming economy going hand in hand with a booming population.

[Greg Boyles]

Wow!! You jump to a couple of conclusions based on that first remark. But is there any truth in the first sentence?

Where I live, immigrants who come to do cheap labor (often East Europeans) share houses, and generally don't even have half the living space per person as the locals. Some even live on campings! Sure, they all dream to become rich eventually... but that's not what you wrote.

 

Then you jump to another conclusion where you link the entire mortgage crisis to the government's housing programs... which is false.

The crisis was caused by individuals who couldn't pay their mortgages anymore, and by the banks who wrongly evaluated these mortgages as not so risky and profitable, causing a bubble.

 

It's sad that you use a series of fallacies (or lies?) to blame stuff on immigrants that isn't their fault at all.

It's one thing to have different political ideas, but it's another altogether to use a fallacy to make a point. I'm afraid that I have reported this post, as it goes against forum rule #4, which explicitely forbids the use of fallacies.

 

Immigrants don't come to the USA and Australia to spend their rest of their lives as virtual slave labour to the locals and to remain in those over crowded dog boxes. They all aspire to have their own house and slice of the wealth pie.

 

I believe the subprime mortgage scheme was in part encouraged by the Clinton administration to provide social housing to a large proportion of former espanic immigrants.....with the precitable result.

 

I actually said that unsustainable immigration into the USA was a significant cause, but not the only one, the economic collapse.

 

If there wasn't the number of immigrants flooding into the USA then there would not have been the fuel to drive the expansion of sub-prime mortgages.

 

And thefefore Fabulous Fab (or what ever title that cretin gave himself) would not have packaged them up as dud investments and spread them all over the US and the globe.

 

So it is undeniable that unsustainable immigration played a signficant role in the US and global economic crisis.

 

You seem to link population growth and fertility to a lot of problems. You're all over the forum on this topic. But, in fact there are plenty of examples of a booming economy going hand in hand with a booming population.

 

Without exception.......all booms eventually bust.

 

There is one fundamental truth within all biological systems......and that is that monotonic growth of anything at any level is ultimately unsustainable. That includes the human population and our economies.

Edited August 3, 2011 by Greg Boyles

[swansont]

I believe the subprime mortgage scheme was in part encouraged by the Clinton administration to provide social housing to a large proportion of former espanic immigrants.....with the precitable result.

Since you are arguing that this objectively true, what you believe is far less important than what you can show. So before you draw any more conclusions, how about backing this up. Were loans preferentially made to immigrants, for example? At what point does one lose the "taint" of being a "former immigrant"? Most of us are former immigrants or descendants thereof.

[CaptainPanic]

Immigrants don't come to the USA and Australia to spend their rest of their lives as virtual slave labour to the locals and to remain in those over crowded dog boxes. They all aspire to have their own house and slice of the wealth pie.

Yes. That kind of attitude might just as well support an economy.

 

I believe the subprime mortgage scheme was in part encouraged by the Clinton administration to provide social housing to a large proportion of former espanic immigrants.....with the precitable result.

You believe it, but can you back it up with some numbers?

Also, wouldn't that make Clinton responsible for the mortgage schemes rather than the immigrants who got a place to live?

 

I actually said that unsustainable immigration into the USA was a significant cause, but not the only one, the economic collapse.

Watering down your argument doesn't make it less wrong.

 

If there wasn't the number of immigrants flooding into the USA then there would not have been the fuel to drive the expansion of sub-prime mortgages.

 

And thefefore Fabulous Fab (or what ever title that cretin gave himself) would not have packaged them up as dud investments and spread them all over the US and the globe.

 

So it is undeniable that unsustainable immigration played a signficant role in the US and global economic crisis.

Ah, so now immigration "plays a role". Sure... immigration plays a role. It would be hard to deny that.

But earlier in this thread, you made them responsible ... and that's not the same. That was a fallacy. There still are a couple of fallacies left (one of the biggest coming up right here).

 

Without exception.......all booms eventually bust.

 

There is one fundamental truth within all biological systems......and that is that monotonic growth of anything at any level is ultimately unsustainable. That includes the human population and our economies.

But that's not what you said. Earlier you linked the population growth to the bursting of the economic bubble... which is not necessarily true.

While it is true that two individual bubbles will eventually burst, you claimed that the growth of one bubble would cause the bursting of another.

 

In this latest point, you make two statements which are both true. And then you seem to suggest that this should prove your previous point... which it does not.

Edited August 3, 2011 by CaptainPanic

[Greg Boyles]

Since you are arguing that this objectively true, what you believe is far less important than what you can show. So before you draw any more conclusions, how about backing this up. Were loans preferentially made to immigrants, for example? At what point does one lose the "taint" of being a "former immigrant"? Most of us are former immigrants or descendants thereof.

 

Thankyou swansont. I read this as a reasonable questioning of my interpretaton without dismissing it entirely.

 

 

Of course I acknowledge that a signficant proportion of subprime mortgages will have gone to african americans who have been amercians for generations.

 

 

The label of immigrant is not important in this however. What is important here is population growth, that has been driven largely by espanic immigration, that has then driven demand for subprime mortgages.

 

 

Espanic and other immigrants are probably largely low income earners that seek such loans so you would expect them to be signficantly represented in subprime mortgages along with african americans.

 

I will attempt to find some data to support this.

 

 

 

My link

 

Conclusions. The lack of a significant relationship is contrary to past research, perhaps explained by the explosive growth of the subprime mortgage market in the United States; the increasing recognition by financial institutions of Latino immigrants as a largely untapped, yet emerging, market in the mortgage industry; the availability of alternative forms of identification; and the institutionalization of unauthorized immigration in Los Angeles

 

 

 

My link

 

At the same time, blacks and Latinos remain far more likely than whites to

 

borrow in the subprime market where loans are usually higher priced.

 

2 In 2007,

 

27.6% of home purchase loans to Hispanics and 33.5% to blacks were higherpriced

 

loans, compared with just 10.5% of home purchase loans to whites that

 

year.

 

 

 

http://www.vdare.com/rubenstein/070505_nd.htm

 

">My link">My link“Homeownership rates among immigrants surged in the first half of the decade, making their prosperity an economic success story. Now it is becoming apparent that many people managed to buy homes in an inflated real estate market by turning to unusual new mortgages only now receiving scrutiny from regulators and legislators. Many of these loans start with attractive low ‘teaser’ rates but feature payments that can increase suddenly.

 

“Unfamiliar with the U.S. mortgage market, unable to speak or read English well and vulnerable to the blandishments of real estate professionals who told them property values always rise, many immigrants are struggling to deal with high mortgage payments as their homes sag in value, making it harder to escape the loans by selling.” [Wave sinking immigrants first By Kirstin Downey, The Washington Post, March 30, 2007]

 

 

 

 

 

Edited August 3, 2011 by Greg Boyles

[CaptainPanic]

african americans who have been amercians for generations.

LOL

I am pretty sure that swansont not just meant african americans and hispanic people, but also all other immigrants - which include all those of European descent (white people).

 

Many Europeans also once arrived in the US completely broke and empty handed, hoping for a better future.

[swansont]

Conclusions. The lack of a significant relationship is contrary to past research, perhaps explained by the explosive growth of the subprime mortgage market in the United States; the increasing recognition by financial institutions of Latino immigrants as a largely untapped, yet emerging, market in the mortgage industry; the availability of alternative forms of identification; and the institutionalization of unauthorized immigration in Los Angeles

“Homeownership rates among immigrants surged in the first half of the decade, making their prosperity an economic success story. Now it is becoming apparent that many people managed to buy homes in an inflated real estate market by turning to unusual new mortgages only now receiving scrutiny from regulators and legislators. Many of these loans start with attractive low ‘teaser’ rates but feature payments that can increase suddenly.

 

“Unfamiliar with the U.S. mortgage market, unable to speak or read English well and vulnerable to the blandishments of real estate professionals who told them property values always rise, many immigrants are struggling to deal with high mortgage payments as their homes sag in value, making it harder to escape the loans by selling.” [Wave sinking immigrants first By Kirstin Downey, The Washington Post, March 30, 2007]

color emphasis added

 

This tells me financial/real estate institutions were being predatory and it was not government policy driving the issue.

[CaptainPanic]

Reading all this, I would call the poor people "victims", rather than the responsible for the economic collapse.

[Greg Boyles]

LOL

I am pretty sure that swansont not just meant african americans and hispanic people, but also all other immigrants - which include all those of European descent (white people).

 

Many Europeans also once arrived in the US completely broke and empty handed, hoping for a better future.

 

We are talking about recent history and subprime mortgages here. We are not discussing the total history of the USA. But I have little doubt that there were similar booms and busts through US history, contributed to by population growth (immigration or fertility).

 

And recent population growth in the US has been driven overwhelmingly by immigration from Mexico.

 

Immigration from Europe would amount a tiny blip on the graph.

 

color emphasis added

 

This tells me financial/real estate institutions were being predatory and it was not government policy driving the issue.

 

 

And latino immigration faciliated it. If were no hordes of naive latino immigrants over the past decade or so then the instutions would not have had so many victims to exploit and there would not have been a global financial crisis.

 

Again this is not about who is to blame and who is not to blame. This is a simple matter of cause and effect.

The supply a large numbers of naive immigrants gave opportunity to unscrupulous business people to exploit them through their (immigrants) pursuit of the american dream. Those unscrupulous americans were then given opportunity to bring down the amercian and the global economy.

Edited August 3, 2011 by Greg Boyles

[jackson33]

Heins; Out of curiosity, did you know iNow has recently spent time in Singapore and was pleased with your Political/Governing system? For myself, you being a student and one with a couple years in economics, presumably knowledgeable in your own system, I will be looking forward to your contributions....

 

As for what's happening in the US, I do have a different take on our problems, to those of iNow, but would like your viewpoints for Authoritarian Capitalism, which is probably what your being taught. In the US, Capitalism is practiced from the individuals right to ownership and success and that would be my first question. I know China is in the top three for new Millionaires or as some say around here Billionaires but can the average person without the proper support or heritage, make out under your system? Think your economy is still growing at near 10% and we could surely use a few years of that....

 

 

Reading all this, I would call the poor people "victims", rather than the responsible for the economic collapse. [/Quote]

 

CP; I agree "for the economic collapse", but it certainly illegal immigration has not helped or where there is little control over migration. Then "victims", people all over the world generally don't migrate without a reason, currently in the Middle East from unrest or in Europe and North America from basic poverty in most Mexico, Central America and a good share of Northern South America. I hardly think bettering your own life style, no matter the degree, makes the person a victim.

 

This tells me financial/real estate institutions were being predatory and it was not government policy driving the issue. [/Quote]

 

swansont; "Financial Institutions" or "US Congressional Regulations, via Fannie/Freddie" and supported by many States or City Law? However this not only involves immigrants, but the less wealthy people, who for some time after about 1996, were not required to have jobs, prove citizenship or show a means to pay on the notes they agreed to. I've verify this later, but I'm thinking you already know about this....by the way there is a hidden answer to a previous question, in my opening comments, this post.

 

The US is equivalent to the Roman Empire and it is only a matter of time before you implode resulting in a new dark ages in many parts of the world. [/Quote]

 

Greg; In a strange sort of way, your basically correct, but US Governments are short lived and things can turn around on a dime. I'm personally seeing this daily, at least away from this forum or "main stream media" and expect the trend to keep on rolling.

 

The troubling issue, in my mind, is if the US did fail and no other Nation took up the slack, you could be talking hundreds of million deaths, as necessary items (food/water/Medical/etc.) infrastructure breaks down. As mentioned above, in the Middle East or parts of Africa, people flock to safe spots, from unrest, and that infrastructure (not all American) supports those people.