I did not read the book you provided in the link. But, I did want to add that sub-prime was not the only thing that caused this mess. It was part of it, but not the only thing. You have to remember, go back to that time, that when things started going crazy, what happened? Well, bubbles started to burst. The job market bursted. Companies had hired so many employees that could have been done by less people. That bubble broke open during this crisis. The oil bubble broke open when gas hit $4, and nobody could afford it. I remember how people were deciding whether to get food or gas for the week, how do you expect them to pay their mortgage, electricity or water bill? Then the housing bubble broke open. I knew 20 people on my street who sold houses for a living, sometimes to each other. The prices got way too high, and who can afford to pay a mortgage for them? If you get sick, don’t have health care, you probably would have to file for bankruptcy, which is another bubble that broke open.
We can blame politicians for these problems, in reality, we all played a role. Our egos got huge, and then BOOM!!! It all crashed at once. I am sure we all had friends who had big homes, new cars, big TVs, latest electronics, and so on. People just lived outside of their means. They lived like their was no tomorrow, and when tomorrow came, they were in trouble. We were leading a life that allowed us to get whatever we want, and not worry about the costs. The problem is that we did not have the jobs to live that style of lives.
A backbone of every economy should be manufacturing, my belief. If you are not making anything, you really have no position in a global economy. In the USA, we have almost no manufacturing. If I buy a product, it is probably made overseas. It is cheaper to buy a new product if it breaks, than to have it fixed. Why should I pay someone to fix it, when it is cheaper to buy a new product?
You will hear many people say this is what caused the economic crisis. They will be partially correct. The real answer to that question is that many bubbles went at the same time. How do you stabilize the economy? That is a great question. Do you give tax cuts? Do you provide government jobs to fix roads, infrastructure, and schools? Yes, yes, yes, and yes. The government steps up and tries to get those people jobs, get money in their pockets so demand is still there for products. Then, they find out the root of the problem, and try to fix it. Now, you could offer other ideas, and they could work too. But, we cannot depend on government to do everything. We as citizens need to step up and take blame, and make changes too.
Companies should be called “Too big too fail.” These are monopolies, and should be broken up. Bigger is not always better. It is like Wal-Mart, they come to a town, they destroy all small business. They bring low paying jobs, and we wonder why we cannot find a job that pays a livable wage. Think about it for a change.
This crisis occurred for numerous reasons. Things could be much much worse, but things are slowly improving. We will be recovering for years. There is no quick fix, just slow steps.