Posted by jj on March 23, 2008 at 20:50:57:
In Reply to: re: re: why there is some loan trobles in the usa posted by Tractor Tom on March 22, 2008 at 21:47:00:
Not sure you can blame George W Bush for the subprime and financial instability currently experienced in the US (and in the World to be honest).
G.W. Bush and most of the Republican party are in favour of "laissez faire" when it comes to most parts of the economy and especially the financial market. But the Bush administration has reacted swiftly and decisively to the financial crisis (There is a huge moral hazard to this - later). Hard to say they have had the experience of Northern Rock in the UK or whether it was good judgement. But they reacted quickly to the Bear Stearns dibacle instead of the UK government which dittered while Northern Rock went under. Be under no illusion, without Government intervention (led by G.W. Bush) Bear Stearns, Lehmans and potentially others would have failed.
The moral hazard is another issue which potentially we will suffer from in the future. But I personally believe the Government (and Government agencies) where correct to intervene. It is the lesser of two evils (and that was all the options - let a financial institution fail and undermine the financial stability of the financial, and in turn, the world economy; or give US tax payer money as subsidies to (GLOBAL) financial institutions to compensate for poor judgement calls by these financial institutions).
I use G.W. Bush as the person responsible, as many on this site believe the "buck has to stop somewhere" and good judgement by his appointees, ultimately reflect on him.
The reason for the crisis is simple - and is very relevant still today - people taking credit, they can't afford, for products that are not neccessary.
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