Republicans Unfairly held accountable? NO. This is the Republican's economy, they built it, they safeguarded it and they should be held accountable for it. And that is only the start of the Mis-characterizations of this article.
American consumers not saving--while this is true, the operative question is why not? Couldn't have anything to do with Government Policy? How should we as a people respond to 9-11? Go Shopping says the Republican President. What do we do about ENRON? Set up a set of Psuedo-Regulations, then continue the same regulatory malfeasance of the 70's,80's and 90's---Allow the new Calvin Coolidge and Herbert Hoover (Reagan and Bush) to push Predatory Capitalism and encourage speculation--but not directly on the stock exchanges ;t;his time--FDR made it hard to do that in secrecy'' NO, this time lets do it in Private Hedge Funds and use "securitization" to disguise the risks from the regulators and the public--and just to be sure that nobody catches on--let's repeat the mantra "government is bad" so that we can appoint idiots to the regulatory agencies because they really don't matter anyway--and government is the problem not the solution.
A wise man said--"those who ignore history are doomed to repeat it"--here's a piece of history for you...take a look at the British Empire in the 1930's---that's America today.
We are transferring our wealth to our enemies and a few marginal friends...all to prop up a society where reality is ignored and conspicuous consumption lionized....where SUV's for a single driver are considered sheik and living modesty is assumed to indicate hidden character flaws. Add together the deficit from this moron president's war of choice, his lunatic tax cuts for the wealthiest 1% and his criminal neglect of the rich American dream that he inherited...and you have in play the single worst leadership failure in the history of America...and not just by Bush and Company, but by the DLC led Democrats too....don't forget that the House and Senate ALLOWED THESE ACTIONS--and refuses to impeach.
It is clear that it is time for a new NEW DEAL....what isn't clear is whether EITHER of these political parties is capable of dealing with the reality. I think that this may be the election where America stands up and says "A POX on both your houses" and engages in an "anyone but these guys" anti-incumbent tsunami.
‘Crunch’ Time for the GOP
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• Pretax corporate profits decline 2.1 percent, the first decrease since 2001.
Let it be said: this economy—if it materializes—isn't a calamity, but neither is it much to brag about. And Global Insight thinks there's a 35 percent chance that the predicted slowdown will turn into a recession. Two threats loom. One is oil. The forecast assumes that prices will fall from about $90 a barrel now to $76 in 2008. Every $10 above that is reckoned to raise gasoline prices 19 cents a gallon and cut employment by 100,000. The second threat is an aggravated credit crunch.
What we call "crunch" is merely a new label for the old credit cycle. In a strong economy, borrowers and lenders feel optimistic. People think they can handle more debt. Lenders relax credit standards. Sooner or later, the process reverses. Heavy debt payments oppress borrowers. Lenders react to rising delinquencies by tightening lending. Housing's recent boom and bust adheres perfectly to this script.
But elsewhere, the credit crunch's effects are muted. Other consumer debt (credit cards, auto loans, personal loans) is growing at about a 5 percent annual rate, says Susan Sterne of Economic Analysis Associates. Although corporate bond issuance has declined, the main consequence seems to have been a drop of mergers, acquisitions and private-equity buyouts. These have relied heavily on bonds for financing. Business investment in new machinery, software and buildings seems barely affected so far.
Lending hasn't collapsed in part because the subprime losses, though large in billions, are still small compared with the financial system's total capital. Brian Bethune of Global Insight figures that American investors have so far lost $50 billion. By contrast, stockholders' equity in U.S. banks alone exceeds $1 trillion. Still, the crunch is the first major crisis for a new financial system that has taken shape slowly since 1980. Loans that were once made and held by banks are now increasingly "securitized." That is, they're bundled into bondlike financial instruments and resold to other investors (pension funds, mutual funds, insurance companies, hedge funds, other banks). Two major problems have emerged.
First, because banks and other loan "originators" didn't keep all the loans they made—and earned fees for making the loans—they got careless and greedy. They relaxed credit standards; weak borrowers got mortgages or were persuaded unwisely to refinance existing mortgages for higher amounts. That triggered the surge in mortgage defaults, up about 75 percent since 2005, says Moody's Economy.com.
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