Political theory does not begin with the Daily Show and end with Colbert and just because you've ever held a dollar in your hand does not make you an expert on the financial crisis.
So I'm reading Jezebel this morning and I come across this cute little quote:
The banking crisis was touched off by the mortgage crisis and both contributed to the financial crisis that most economists had been predicting because of everyone's willingness to spend money they didn't actually have.Oh for fucks sake, this crisis was not caused because people spend $3 at Starbucks everyday or own more pairs of shoes than they can wear and put it all on their credit cards. We spend less of a percentage of our incomes on food, clothing and electronics than we did 50 years ago. Consumer goods are cheaper than they used to be. We may have more of them, but we spend less money on them than our parents did. That's why poor people can afford to spend $200 every 5 years or so on a new TV but can't afford $1000 a month for health insurance.
We don't have savings now because we don't have the incomes to support them. Wages have been stagnant for damn near 30 years while inflation keeps going up. And inflation is greatest in housing, education and healthcare. So if wages are stagnant, people find ways to make up for the lack of income. They invest in something that is useful to them both now and in the future, like their homes. Homeownership and equity have been the only things making people able to live a middle class life since their wages aren't keeping up.
(As a kind of aside- isn't it funny that two of the major areas of inflation, health care and education, are things that the government could provide easily to everyone if we weren't afraid of the big bad socialist label. Universal health care and universal education from preschool to grad school would have gone a fuck of a long way towards mitigating the need pay for those things through housing equity).
But that's all local. People's desperate need to fill in the gaps between wages and cost of living did create the housing bubble. If you buy a house and want to keep the resale value up, you spend $40k on a new kitchen or replace all the floors with hardwood. Eventually it gets to the point where you have to keep improving your house because all your neighbors have and your home value will go down if you don't keep up with the Jones. Ergo- housing bubble.
But the housing bubble alone is not what caused the banking collapse. The banking collapse was caused by a combo of deregulation, Alan Greenspan's douchebaggery, and opaque bundling practices that left investors in the dark. None of those things are the fault of the individual home buyers who just wanted a piece of the American dream.
Anyways- now that I have ranted and raved for a bit, let me point you to 2 people who do know what they are talking about economically.
First- Niall Ferguson (who is responsible for the title of this post)
And then Joseph Stiglitz on Democracy Now talking about how Obama has missed the mark on the stimulus and isn't actually fixing any of the problems that caused the depression.
“There will be blood, in the sense that a crisis of this magnitude is bound to increase political as well as economic [conflict]. It is bound to destabilize some countries. It will cause civil wars to break out, that have been dormant. It will topple governments that were moderate and bring in governments that are extreme. These things are pretty predictable. The question is whether the general destabilization, the return of, if you like, political risk, ultimately leads to something really big in the realm of geopolitics.
Go forth and learn my little chickadees. And then feel free to punch any Republican or libertarian in the eye until they spend at least 5 minutes reading something factual.