Top 7 Reasons for the Failed Economy

P.S. There's a hot girl at the bottom of the page. Not the chik in the suit...but like way down at the bottom.

By Analyst: Joe Taylor
September 16, 2009 | 2:59PM

THE CULPRIT: CONGRESS

THE CONSEQUENCE: AN UNSUSTAINABLE HOUSING MARKET

Why should we expect members of Congress to make smart decisions when it comes to the housing market? Most of them live in a nice house that is subsidized by the tax payers. They figure that since they can live anywhere they want, why shouldn't their constituents be able to live in a nice house, too.

Have you looked at Nancy Pelosi? You're going to trust this woman, the U.S. Speaker of the House, to get you hooked up with a house? Maybe you could get a reference to someone with a Botox connection, but that's too close to the health care debate. Anyway, Rep. Pelosi and many of the other Congressional Fat Cats want everyone to own a house. Rumor has it Congress is looking to build a housing community on the White House's front lawn, because that is prime real estate space. But the Clintons had that land rezoned for manufactured housing and the current administration isn't going to do anything that might tarnish the Clinton legacy. Under current guidelines you can use wood, brick or stucco. Boy, could you ever get stuccoed!

For the most part, Congress has done everything in its power to build a homeowner class via tax credits, allowing interest payment deductions, and other incentives to prod consumers toward owning a home. And now that they can't make those payments, Congress is going to take care of that, too. But no penalties are allowed; maybe they'll get a "timeout." Like the old saying goes, "If it's free, it's for me."

THE CULPRIT: THE FEDERAL RESERVE

THE CONSEQUENCE: LOW INTEREST RATES MADE MONEY TOO EASILY AVAILABLE

Alan Greenspan was once called the most powerful man in the world as he presided over the booming economy of the 1990's. Now he looks like a crazy old uncle who blabbers on about the good, old days. ("CDs? In my days we had phonograph records and they were scratchy and they would stick and they would warp, but we liked them! CDs are for sissies.") There's talk in Hollywood that he may play the villain in the next Batman movie. Even Christian Bale is scared of the Green Spanner, whose secret power ray can shrink the rate of return on any investment.

Greenspan made credit readily available by keeping interest rates low, and following the early 2000's recession, he lowered rates to rock-bottom levels yet again. Greenspan's era of easy money afforded the possibility of the housing bubble. But perhaps his true legacy is that never ending stream of easy credit commercials you see on TV and hear on the radio. "Now YOU have a friend in the loan business." Hey, we might lose our home, but at least we got some catchy jingles out of the deal. Maybe the Green Spanner wasn't the monetary policy sage we thought he was.

THE CULPRIT: THE WHITE HOUSE

THE CONSEQUENCE: DEFICIT SPENDING HAS MADE U.S.INTO A PERMANENT DEBTOR NATION

Ronald Reagan was too busy worrying about imaginary Soviet soldiers storming the beaches of California to worry about the burgeoning deficit. (Nancy told him it was possible with Sagittarius rising.) Bill Clinton was too busy fending off his indiscretions to put the surplus to use by paying down the debt. (Hilary told him that Sagittarius was not rising.) Both Bushes were busy bees running up the bill for their vacations in Iraq. Obama is ready to double-down at the table and he's not exactly showing a couple of face cards.

Guess what? Vito the Loan Shark is standing at the door of the White House wanting to know when Don Corleone can expect to have the first installment in his hands. The official White House horse is keeping the stable door locked at night at the risk of losing his head.

Of course, the 800-pound elephant in the room, when it comes to deficit spending, is healthcare and social security, the two most important issues that no President has addressed with any semblance of a plan for reigning in costs. But looking for fiscal responsibility in Washington D.C. is like looking for Bigfoot or the Loch Ness Monster. Of course, you might actually have a chance to find Bigfoot or the Loch Ness Monster. A plug for the debt is just fantasy.

THE CULPRIT: CORPORATIONS

THE CONSEQUENCE: "TOO BIG TO FAIL," TARP, HOUSING BUBBLE

Corporations do their very best to squeeze every nickel and dime out of us because it's all about growth. The quest to improve sales and margins, and to capture market share contributed to the crisis. That's why they're only putting 1.75 quarters in the ice cream box instead of a full half gallon, a boondoggle first exposed by Rosie O'Donnell, who realized she was a couple scoops short and still paying full price. Hell hath no fury like a Rosie scammed!

The foundation of the housing collapse has been tied to the bursting housing market bubble in the United States. Trumpeted as the investment class of the future, gluttonous financiers gobbled up housing properties like Pac-Man. The endless search for realty investment gains drove up home prices to unsustainable levels, and the resulting bubble hit the economy like a shotgun shell to the chest. After all, you can't buy property on Baltic Avenue and expect to get Boardwalk prices.

Homebuilders built too many homes. Banks gambled on risky securitized instruments and bankers handed out loans to unqualified buyers. Financial institutions of all shapes and sizes were responsible for accelerating an explosive situation into a powder keg waiting to blow. Sen. Phil Gramm led the charge to break down the much-needed wall between bank holding companies and other diversified financial centers with the Gramm-Leach-Bliley Act, and the rest was history. At last report Gramm was vice chairman at UBS and making big bucks by exploiting his old business relationships. Alas, his effort to market Gramm Crackers never took off.

Taxpayers stepped in to save mega-corporations to stave off financial ruin, and now they are back at it trying to squeeze us for every available dollar. Sounds like a great deal.

THE CULPRIT: RATING AGENCIES

THE CONSEQUENCE: High risk investments were saddled onto unsuspecting investors

Like a Kindergarten teacher handing out gold stars to every child, rating agencies like S&P, Fitch, and Moody's gave new meaning to the blind leading the blind. Wouldn't it have been easier to get everybody a participation trophy and have a representative from the SEC hand them out? Maybe that's the problem, the SEC in charge of the money was the Southeastern Conference instead of the Securities and Exchange Commission. Same initials, shouldn't they do the same thing? On the other hand, the football teams at Fitch and Moody are much improved this season and could end up playing Southern Cal for the national championship.

Rating agencies charged with assessing the risk of companies and their array of financial derivatives failed to do their job. They saw overleveraged companies and didn't blink an eye in slapping their good housekeeping seal of approval on it. And why wouldn't they? Rating agencies are oftentimes paid by the same company they are being asked to evaluate. Wouldn't want to upset the golden goose, would we? As the boys in the Monty Python troupe used to say, "Wink wink, nudge nudge. Say no more!"

THE CULPRIT: REGULATORS

THE CONSEQUENCE: Lax regulatory oversight prompting call for possible over-regulation

Regulatory agencies let financial institutions ruin the economy like a puppy soils carpet. But puppies eventually learn from their piddle, while regulatory agencies seldom learn and always look for other people to clean up their mess. (On a side note, shares of Bounty paper towels have increased tenfold.) While financial institutions should be held accountable in their own right, those charged with overseeing financial markets - like the Securities and Exchange Commission (SEC) and the CFTC - have been asleep at the wheel.

The man at the helm of the SEC during the financial crisis of 2007-2008 was former Rep. Chris Cox, who was definitely on snooze control. Rather than guzzling a few Red Bulls and staying awake, he supported the move toward less regulation - such as removal of the uptick rule - and failed to recognize the massive frauds of Bernie Madoff and Allen Stanford. Those who defend Cox say he was just the wrong SEC chairman at the wrong time and that he would have flourished under a different situation. Cox refutes critics by saying he was led to believe that he was going to be in charge of the Southeastern Conference and that his changes would have really benefited the league's football teams.

THE CULPRIT: CONSUMERS

THE CONSEQUENCE: Financial crisis

In the end, the biggest culprit is each and every one of us; the consumer. We want everything, we want it now, and we don't care about the consequences. We want iPhones and surfboards, cars and expensive steaks. We want to smoke cigarettes and then complain about the cost of healthcare. We want to go to the movies and go on lavish vacations. We want the gold digger, no matter how much she costs. We want it all and now we're paying the price.

It would be a great idea for people to save more of their money, delay the purchase of items until they can pay in cash, and put that impulse item back on the shelf. At least that's OK for the rest of you. We're meeting Nancy Pelosi, Alan Greenspan and Chris Cox at Wal-Mart this afternoon and we're going to fill the buggy! You know we're good for it, right?