jlf1961
Posts: 14840
Joined: 6/10/2008
From: Somewhere Texas
Status: offline
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I find it strange that everyone looks at just one part of the economy, in this case banks and loan institutions.
The economic crisis we face today is not limited to just those two parts of the economy, but the entire economic structure. Banks and Loan Institutions invest money to make more money, those investments are not limited to just home loans, but business loans, industrial investment, community investments (bonds) as well as other investment vehicles.
When the housing lenders begin to show excessive strain and pending collapse, you can be assured that the rest of the economy is following closely behind.
Historically, the US has had a wartime economy, i.e the economy grows exponentially during wartime. The economic boom during the years of WW1 and WW2 funded the financial markets in the years immediately following the two wars, however, that period has always been short lived, the economic boom that followed WW1 ended with the great depression, and the boom that followed WW2 began to wain in the early sixties.
While there was some resurgence in economic growth during the Vietnam conflict, it was short lived, and ended in the early seventies with the first fuel crisis.
At present, it would seem that the economy should be booming, considering the amount of material that is being supplied to the troops over seas, but clearly this is not the case.
The reasons are many, but examples in a few areas of critical economic areas will show the problems.
Starting in the 70's, american steel mills began closing at an alarming rate, unable to meet production or prices of imported steel. During the 80's, 90's up to the present, American firms have been moving production overseas, the reason is the fact that it is easier to pay someone $1 an hour than it is to pay someone $6+ an hour, cutting domestic jobs deeply which in turn impacted the housing industry and the banks.
Even with the various 'Economic Recovery' plans that have been a part of every administration since Carter, the impact has been too short lived and too limited.
In the broader picture, the world economy has become so interlinked that one country's financial crisis directly impacts everyone else. The present crisis has roots in the economic problems in Japan, Europe, Korea which began in the late 90's and has continued until the present.
When you consider that a large amount of American banks and financial institutions have invested heavily overseas, you can see that eventually there had to be a collapse.
The problem is that in the modern world, an economic collapse that rivals the great depression could very well cause a complete breakdown of the social structure. People tend to get a bit upset when they cant afford to buy food for the family.....
And people wonder why I keep a stockpile of food and ammo at the house....
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Boy, it sure would be nice if we had some grenades, don't you think?
You cannot control who comes into your life, but you can control which airlock you throw them out of.
Paranoid Paramilitary Gun Loving Conspiracy Theorist AND EQUAL OPPORTUNI
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Some historical footnotes on the financial crisis - 
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Hmmm, No kidding cloudboy, I haven't seen Jerry Teasley on C-SPAN lately or hanging out with Bernanke. Seriously dude. 
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