One of the problems with how the “financial crisis” is being handled is the false notion that their is only one solution- one which expands the government’s involvement in ways that will create a bigger government and less personal accountability.
Financial Advisor Dave Ramsey lays out a different solution, which makes sense to those of us who want smaller government (and less corruption). In 2004, the conservatives tried to address these problems but leading “progressives” like Barney Frank told us that “there was no evidence of financial unsoundness”, and that it was a hatchet-job on a Clinton advisor. Why trust people like Frank to fix a problem they ignored for years? Anyway, follow the link to Dave Ramsey’s Common Sense Fix since the WordPress editor keeps messing it up.
Saying that the conservatives seriously tried to fix this problem in 2004 is a complete whitewash and total denial of reality. I’ll be the first to admit that the Democrats had their hands deep into the cookie jar of corruption, but if you are being honest, the Republican party had control of both houses of congress for 8 year prior to 2004 and held that control until 2006, when the Democrats won a slight lead, but not enough of a lead to pass any legislation without significant support from the conservative side of the aisle.
Dave Ramsey is absolutely correct when he says that our addiction to debt is out of control, but that addiction is largely fed by the deregulation of financial services, credit markets and corporate accounting practices.
Democrats are as guilty of Republicans if you look at this objectively, and the American people as a whole are guilty of taking the “you need this now” bait.
As far as some of the fixes proposed, I do agree with a few of them, however I know of not one person who would “flood” into the markets simply because of lower capital gains taxes. That is a marketing pitch and nothing of substance. The only people who stand to gain significantly would have hundreds of thousands of dollars invested in the market. The oil of this economy comes from every day citizens with an average income of $47,000. per year for a family of four. That is the MEDIAN income and where most of the consumer spending comes from.
You will notice that I did not use the terms Republican and Democrat. Not all Republicans are true conservatives. Though the Republicans had a majority, enough were not consistently conservative (I also think that Bush is not consisently conservative).
The oil for the economy is investment- not consumer spending. Investment provides new jobs which then increases consumer spending. So, the ‘rich’ that many love to hate are the ones upon which the economy rests.
William Buffett is one of the people who has already dumped money in the market finding bargains to invest in.
Come back for the post when I explain how the economy works in more detail.