Whose Fault Was It? Reagan? Greenspan? Someone Else? Everyone?

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I really like that Jordi posted that first quote regarding history and those who do not know it are doomed to repeat it.  In fact, when it comes to the Great Recession as a whole, I’m not really concerned all that much about learning exactly what happened during the crash.  I think everyone is pretty well aware, having lived through it, what happened.  Moreover, as we fix everything over the next half a decade, people will be paying attention to what regulations are set in place and what other measures are taken to “prevent” this from happening again — or at least try to. 

I am much more interested in what precipitated the entire event.  There is plenty of blame to go around, and really don’t think it all lies with one or even a couple people.  That is not to say, however, that there aren’t a couple people in the past that weren’t large contributors to the problem.  But who?  Well, that is the hard part because, unlike the actual event or the aftermath where attentions were focused, no one was paying attention to what was happening.  Things were relatively good in this country — especially through the mid to late 1990s and VERY early 2000s.  And when things are good, people are happy enough accepting the fact that the right people are making sure things don’t go wrong.  Well, bad idea — because we are all paying the price.

For this reason, I am much more interested in discovering the events that most likely led to the Great Recession.  And it is likely that there is no consistent consensus.  For this reason, my paper will be based much on informed and educated data from which I form opinions.  While I found the sources that Jordi provided interesting and thought provoking, I sourced the origin of my topic from my own records this time.  I tend to scan and keep interesting articles from major news publications that I come across that I think may predict the future.  While I cannot take credit for archiving this article (NYTimes1999) personally, I did have it in my archives since it was given to my by a friend a few years ago.  It basically talks about (from 09/1999) how Fannie Mae was under great pressure by the Clinton Admin. to “make sure everyone has the opportunity to own a home.”  I tend to think it goes back to the Reagan Admin.  when he let a lot of regulations expire and subsewuently allowed the Glass Stegall Act to expire in Nov of 1999.

In any case, this and much else will be the thesis of my study.  My goal is to come to an educated conclusion about who was (were) to blame for the terrible situation we have gone through and must now repair.  For if we do not understand why it happened, we will not be on the lookout for when it DOES happen again.  And it will — I promise you that.

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5 Responses

  1. I really like your approach to this topic. I think that it is important to learn from history and understand where it went wrong. I know that when researching for this blog post problems in thinking about housing were traced all the way back to the Great Depression. It is difficult to evaluate events such as the Great Recession because so many problems were the result of multiple problems building on one another. I am not sure you will find one individual to blame. Also, in the end I feel that in many ways we are to blame for being so stupid as to believe that if things are good then we don’t need to be paying attention to what is going on. There will be instances where people were purposefully cheated and other instances where people just acted without thinking, so it will be interesting to see how you approach those two different situations.

  2. I also really like how you are approaching this topic. I believe you illustrate well the point that placing blame for the recession is not going to prevent other downturns in the future, and that what we really need to do not is focus on learning from out mistakes. It seems that people are far too often willing to place blame on others rather than admit system wide mistakes and overall poor practices. Yet, that alone is not enough; for as you pointed out this will happen again, and if we want to be prepared for downturns in the future we need to learn from this recession.

  3. I like how you brought up how the “good” times in the mid-to-late 1990s and very early 2000s caused people to assume that “the right people are making sure things don’t go wrong.” I think this illustrates the lack of scenario planning on the part of a number of institutions in our country regarding our financial condition. Just because things are going good does not mean that they are going to remain on that track. We need to be prepared for every possible scenario in order to avoid situations like the Great Recession.

  4. I obviously agree with you when you say that there is plenty of blame to go around. Who do you think deserves the most blame? In my opinion it is the banking industry for taking on way too much risk in an effort to make short-term profits, while creating many long term problems.

  5. I found your NY Times article very interesting and helpful in regards to my own thought processes for this paper. The pressures to make home ownership available to all citizens certainly overlooked the problems that could arise with the necessary deregulation to make this possible.

    In regards to your focus on learning from our history, which I think is a valuable approach to this paper as well to life in general, Fannie Mae was also under a build up of decades of government pressure to lower credit restrictions. Herbert Hoover stated in 1932, “As a people we need, at all times, the encouragement of home ownership.”
    http://online.wsj.com/article/SB124631486277570583.html?KEYWORDS=us+housing+bubble%29

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