The Truth....It's Bush's and Govt's Fault...among others
Everyone talks about subprime and mortgages being the issue....it is only a small part of the problem.
Under the Bush administration...Federal Debt doubled from about $5 Trillion to $10 Trillion. It doubled because no responsibility was taken for spending versus revenues coming. Now the interest expense for Americans have doubled at the federal level. What took America over 200 years this administration accomplished in just eight years. Now we all have to pay.
In addition to Federal debt, State and Municipal Debt has also skyrocked growing by billions and billions for each state and municipality. These debts are now deteriorating and on the brink of defaulting as tax revenues are evaporating from the slowdown.
Just the shut down of 12 Heard Car Dealships will result in over $100 million of reduced state tax revenues. As more and more businesses shut, the more taxes shrink. The more we borrow, the more money will crowd out business.
Then we have over a trillion of private equity debt which leveraged up hundreds of American corporations which are now on the edge of bankruptcy.
Add in trillions of commercial real estate debt that is now starting to smell and the numbers are getting HUGE.......giving $700 Billion to Wall Street doesn't even get us out of the starting gate.
We need to figure out a way how to restructure the above debt at the debtor level. Giving money to Wall Street does nothing to solving the default issue which is only going to get worse. We can't lend any more money because the debtors can't even afford the current debt levels. Restructuring is the only way to go.
If we pass the current plan and borrow even more money.....the problems will only get much much worse as Bush and Paulson run for the hills. The above analysis did not even include residential mortgages, HELOCs, and credit card/auto debt.