HOw did we go from "BOOming economy" to such an unhealthy economy so "suddenly"?

Question

It seems not long ago, even in the last election cycle of 2006 that certain people were going around telling us how the economy was "booming" and how great things were cause they were making money, but now suddenly those people are very quiet as it is generally accepted now that the economy is not doing well at all.

All along while some were saying there was a boom, there were in fact those that spoke out and said that no, there was no boom or that it was only a boom for some but not most. It seems those that spoke out back then have been proven to be the truth speakers. What then were the "boom spreaders"? were they liars? and if so, what do you think they had to gain by painting an overly exaggerated impression of an economy that was booming and telling people that even if they felt economic pain, that in fact things were going great? Or,maybe you don't think the boom spreaders were capable of lying, maybe, cause they have a history of being such great honnest and open minded citizenship?

Answer 1

Ask you democrat congress if you can get them back off vacation that is!

Answer 2

The signs were very clear but no one in the administration (and few in Congress) had the guts to say that "the emperor had no clothes" i.e., that folks could not keep signing mortgages they could not possibly pay all the while depending on increasing value of their real estate to bail them out, that we could get hung out to dry by oil producers (and would), that we could not continue to borrow to pay for a "war" which was a bald-faced invasion of another country who did not in any way threaten our security, that tax cuts to the wealthy and corporations do not "trickle down" to the middle class, that consumers could not continue to lean on borrowing to keep the economy expanding, that wall street firms could not continue to sell shaky mortgages grouped and called "securities", and that the value of the dollar would plummet as a consequence of all these things.  It was not sudden at all just as the depression of the thirties did not suddenly happen.  Avarice, greed, and "buy now and pay later" is not a good basis for a sound economy.

Answer 3

Some will blame the Democrat controlled Congress but will these same people blame the 6 prior years to Bush & the Republicans?  I still blame Bush & his administration & all that Republican spending prior to 2006

Answer 4

The actions of the Republican party and Bush.

Even through according to Wall Street Journal , Forbes, and 70% of  the top economist we are in a recession, Republicans are still trying to say we are not.

Maybe it is part ignorance and some deceitfulness.  Not sure which.

Answer 5

The sub prime market is responsible for a great part of it. Easy credit was granted to those who were unable to pay. That was irresponsible, and it did not happen overnight, the bubble had been growing for quite a while. The rising food prices are due to America's appetite for energy and how crops are being used to produce biofuels, in lieu of them being used to feed people, producing a worldwide scarcity. American economy is heavily depending on oil as well, and Americans now need to do their share to stop harming the planet and the environment and other nations. Right now they don't like the gas and food prices, and have adjusted by doing away with their big guzzling suv's, while their government promises to do something about cutting greenhouse gas emissions in half by 2050! Way to go! Let the American people pay for their government's erroneous policies. Auto makers promise to have a hybrid car available many years into the future. Way to go! That can can hardly be called commitment.

Answer 6

The economic boom that many referred to only a few years ago came about due to many mortgage lenders creating and selling subprime loans.  These loans broaden the types of borrowers who can qualify for home purchase and refinance loans, but at much higher interest rates and closing costs.  Due to this, many people who usually wouldn't be able to get a home loan were now allowed to apply for one.  However, the borrower is trusting the mortgage lender's word that he/she is capable of paying back the loan.  The loan officer said they did, the appraiser said the property value checks out fine, the lender said their credit is OK for the type of loan their getting.  On top of that, the loan officer encourages the borrower to refinance the loan later to avoid higher interest rates.  However, the borrower doesn't control whether or not he/she will get a prepayment penalty for refinancing the loan or selling the house before a certain time period has lapse, how much the penalty costs, nor do they have control over when the penalty period is over; the mortgage lender chooses this.  The borrower also can not control other factors that can cause them to default on a loan, such as loss of employment; we have had several layoffs from large corporations over the last three years or so.  The prices of gas and other necessities went up considerably, which in turn, cascades into other financial problems to borrowers and communities as a whole.

Another major factor in why the economy is no longer "booming" is that our national deficit is increasing.  The longer the War in Iraq lasts, the more money taxpayers send to fund it.  We also lose wealth through lost American lives.  Each time a soldier dies, we pay for his/her funeral and burial; he/she is no longer available to support their family or to be a productive citizen.  To wrap it up, the mortgage boom was a big trick to get people to buy and refi houses, the Iraq War is a big excuse to gain control of oil in another country and rising prices of food, gas, mechandise, etc. (not an increase of consumption of those things) gets us to spend more money, thus adding to the "booming economy".

Answer 7

After the bust of the Dot com business the economy slowly began to fall...and then the govt required lenders to be more lenient on loans to promote home ownership..that back fired big time when banks started giving loans to people who couldn't afford one conventionally. Eventually it will stabilize and we'll get back o track. The other problem is people tend to panic and make decisions that could affect the stock market. Sure the stocks fell but people panicked and began a sell off...these were from mostly people who are in it for quick buck. Long time investors such as myself will just sit and wait it out.

Answer 8

the price of gas went up a lot

our economy is dependent on the price of gas.  when it oes up quickly our economy plummets when it goes up slowly or down our economy booms

this is why we need to get off of foreign oil and acheieve energy independence

Answer 9

Bush and his conservative controlled congress spent the first 6 years spending more money then we pay in taxes. he thinks it's good for our credit score.

Answer 10

It's not really a party issue. The blame goes where which party was in power the longest during the econmical down turn and that is obviously the Republican party. There was never a boom in our economy for the past 8-10 years our economy has traded water or is sinking. The people saying that the economy is doing well or the same people who lied about World Com, Enron, the housing market, Bear Sterns etc etc, obviously none of these people are trust worthy sources. They lie because they need to sustain the incomes they are making.

The rest of the people who say the economy is doing great are just party zombies who are more interested in saving face than facing the truth.