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I think the problem is the USA is trillion of dollars in debt, we are experiencing a housing bubble burst and the credit crunch. The Fed is trying to bail everyone out, which seems to me like a little socialism and someone will pay for this.They are really pronlonging the inevitable (recession) The Fed also is reducing interest rates which really means they are printing more money therefore thing get more expensive.

Here is a good web site for the market.

http://bigpicture.typepad.com/

we all have had a couple of decades of continuing “Good Times.” So, people get sloppy, they want to live like the movie stars, they build huge houses (much larger than in the 1970s, by the way), filled with the latest toys (in a couple of years EVERYONE will have HDTV; it seems that EVERYONE already has several cell phones, etc etc.

But there are a couple of other things, aside from the personal debt issue. I think people are ‘hard-wired’ to worry, so that we are all ready to deal with a famine, or a polar bear attack. Now that there is not much to worry about in North America, well, we have plenty of time to worry about global warming and cancer and falling off our bicycles and breaking our heads if we don’t wear helmets. Economic doom is just another reason to worry..

And then…the punditry work in an industry that is ‘restructuring’ (like the car biz in Detroit a few decades ago). Really, no wonder the dark night of gloom lies over the newsrooms. Being C-level intellectuals, newsroom employees don’t know how to stop projecting their own dilemma onto that of the USA. I mean, everyone KNOWS that being a New York Times Reporter is a sure road to excitement and wealth. Don’t they???

Part of the problem is that people including reporters project from their city to the country/world. Since so many news organizations are in NYC, this is a BIG problem — to them! Why did the Dallas Fed vote against a cut in interest rates? Probably at least partly because here in Texas, there’s no recession, just a little slowdown in housing.

Who caused the subprime mess?

You’d start well by looking at the left’s leaders who insisted no discrimination (including soulnd financial judgement) be allowed in determining who is denied a mortgage.
Then move toward the right (but not too far)and you ‘ll find a Republican “compassionate” president that ran around talking about his great -”ownership” society.(we wont mention his open borders and illegal immigrant mortgages)

As Obama’s great pastor and guru says – well the chickens have come home to roost.

“But I’ll bet you a nickel that political pressure to “open up” the lending process played a part, too.”

How right you are:

“Jesse Jackson came to Wall Street two years ago preaching the gospel of economic inclusion and racial diversity. But rather than appealing to the nation’s money men on moral grounds, Jackson is instead invoking their Holy Grail: the bottom line.

As Jackson sees it, it’s good business for Corporate America to invest in the nation’s underserved inner cities and rural communities; to include more women and minorities on their boards; and to cut deals with minority and female-owned advertising, law, money-management and other firms.

It was a theme also sounded by President Clinton, who today addressed the annual conference of Jackson’s Wall Street Project, calling on business leaders to take the lead in investing in the nation’s “new markets” — the poor communities that have been largely bypassed by the nation’s record economic expansion.” (Washington Post, 01/16/99, page E01, by Michael A. Fletcher)

“Sen. Phil Gramm, the new chairman of the Senate Banking Committee, last week proclaimed that the Community Reinvestment Act was resulting in banks being compelled to make ‘kickbacks and bribes’ to [minority] activist groups — a process Mr. Gramm said ‘is little more than extortion.’   Mr. Gramm’s denunciation could open the door to the exposure of some of the worse bureaucratic abuses occurring across the land.”

“The Community Reinvestment Act of 1977 was supposed to prevent banks from taking deposits in one neighborhood and making loans in other neighborhoods.  But since President Clinton took office, the federal government has largely ignored the law and instead relied on massive threats against banks to force them to loan more to favored groups.  As former Assistant Treasury Secretary Paul Craig Roberts observed, ‘The Justice Department is simply trying to establish by consent decree [also known in the Clinton administration as 'Alternative Dispute Resolution', or ADR] a system of racial quotas in lending regardless of credit risks.”  (Washington Times, page A16, by James Bovard, 01/19/99, no link available.)

answering letter to the editor:

The Community Reinvestment Act has worked for homeowners and lenders

What James Bovard calls “shakedowns” in his outrageous attack on the Community Reinvestment Act (”Urban bank loan shakedowns targeted,” Commentary, Jan. 19), is actually the flow of much needed credit to communities long denied by discrimination. The “payoff” dollars he refers to are mortgages for credit-worthy lower-income and minority first-time home buyers . . .”

Another interesting source:

According to the Joint Center for Housing Studies of Harvard University, “Accounting for nearly two-thirds of household growth in 1995 to 2005, minorities contributed 49 percent of the 12.5 million rise in homeowners over the decade.” . . . “Without the sudden expansion of subprime lending, most of these homeowners would have been denied access to credit.”

Subprime growth from $210 billion in 2001 to $625 billion in 2005 represented 20% of the dollar value of loans and 7% of originations of outstanding mortgages. [$35 billion in 1994, $125 billion in 1997]

The Harvard study reports that in 2004 high-income minority communities (more than 50% minority) have about 19% of all mortgages as high-cost mortgages compared to 7% for predominantly white. They have 25% vs. 12% in moderate income communities and 28% to 18% in Low-income areas.(http://www.jchs.harvard.edu/publications/markets/son2006/index.htm)