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Who started the financial crisis?

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I dont know, actually. Im not sure the factoids I know really answer the question. The answer may belong to the future, when a better historical view is available.

A lot of people blame an administration and Congress with a preference for less regulation and/or a laissez-faire attitude toward the markets. However in the context of the history of this decade Im not sure how much sense this makes.

The last meltdown during 2000-2002 was based on the collapse of a number of large telecom and internet firms. The collapse was primarily fueled by two things unrealistic business plans, and improper accounting intended to cover a more dismal truth than technology companies had forecast to investors. The exposure of the outright chicanery at Enron, WorldCom and others further undermined the whole economic segment.

This collapse occurred at the beginning of the Bush administration (what a set of economic bookends.) But improper financials had been rife in many high-tech corporations during the last years of the Clinton administration and regulators were doing little or nothing about it. So long as the incorrect financial statements continued, painting a picture rosier than truth, stocks continued climbing and everyone was happy.

Within a few months of assuming office Bush replaced lax regulators with a more stringent crew who began taking on the problems. THAT is why Enron, WorldCom and others went down when they did, during the Bush administration, not in the previous Clinton administration.

So which is it that the Bush administration represents stricter enforcement of the laws on the books, or less new regulation? Not sure it even matters - public perception rarely takes a broader historical view. Just one of those things.
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  1. kelly7874's Avatar
    "Who started the financial crisis?" According to TV/newspapers, it's those evil mortgage brokers. My hubby and I chuckle every time we hear that on TV because he IS an "evil" mortgage broker. I sometimes point and yell, "It's all YOUR fault Breyers are more expensive!" Not to make light of our country's awful mess, but I gotta laugh once in a while. BTW, hubby agrees with your post!
  2. Mahi's Avatar
    The crisis must truly be lightening up, the pundits seemed to have more time today to post-mortem the last 30 days, with a machete. Instead of reeling from the disaster du jour. Today it is all because the Feds didn't bail out Lehman. Of course at the time (4 weeks ago) it was very American to let the free market take its toll and not bail out extravagantly over-paid executives.