Wednesday, November 23, 2011

Recessions are Made by Poor Handiwork

Folks are constantly misled by the media and by politicians.

An economics lesson: Economic cycles are normal, but excesses have man-made causes.

The current financial meltdown started as a result of a concerted government policy of making home mortgages available to those who could not afford to have those mortgages.

Government pressure, and threats of law suits from “do-gooders,” in addition to the opportunity for profit by banks, who collateralized the mortgage obligations (CDOs) facilitated mortgage sales the world over.

Government-licensed rating agencies gave these CDOs the AAA ratings that assured the global sale of the securities.

A bubble resulted from this man-made series of pressures, until, like all bubbles, it burst.

To add to the bad psychology that accompanies any bust, the government came in with a series of disastrous man-made steps. ( See the Earl J Weinreb NewsHole® comments.)

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