Large companies (click here) generally do business with many other companies for
supplies and services. If a large company fails, the companies that rely
on it for portions of their income might be brought down as well, not
to mention the number jobs that would be eliminated. Therefore, if the
cost of a bailout is less than the cost of the failure to the economy, a
government may decide that a bailout is the most cost-effective
solution.
It is a good definition, but, this phenomena in the USA is a larger scope than simply one company.
In realizing most of the players in 2008 had been long standing financial institutions is to understand the very basis of how tragic The Great Recession was. Putting 2008 into perspective it has to rank the worst financial collapse in the USA's history. It is greater than the Great Depression. It didn't have the same characteristics, but, the monies are far larger.
The monies drained from the USA economy was $1.9 Trillion US. These funds was why the Nobel Prize winner Paul Krugman called for a far high Recovery Act when President Obama took office.
During the years of "W' the debt load in every aspect of the private sector grew out of control. I have to laugh when the Republicans state hands off to the private sector to do as they please. Another chuckle occurs when they state "W" spent too much money and it is a threat to the USA Dollar. The fact of the matter is under "W" private debt grew much faster and in larger numbers than the federal government did.
"W's" culture of economic growth wasn't real. It was based in "that feel good feeling" and the delusion being a millionaire was in the reach of every homeowner. It was nuts. But, it happened and it was very, very real. The economy of Republicans is based in bubble and bust. It isn't based in sound economic principles. It is based in government spending and government deregulation. Ronald Reagan has been the worst in providing false economic growth by enormous numbers of deregulation. It is all artificial.
The graph above is a dramatic depiction of "Bubble and Bust." Every sector of the economy grew to very high levels in a very short period of time. When the economic 'system' no longer could continue the disillusion it imploded. The banks were enormous; still are; and the electorate was engaged in thought exercise of 'Let's be millionaires.'
What really got me about the "W" Bubble is that people actually believed they were underestimating their own wealth. It was all a lie. A homeowner came to the understanding of the untapped assets in their dwelling and how investing monies from loans would actually result in wealth greater than they already had accumulated.
Huh? Let me get this right. As a homeowner the asset value that THE MARKET accumulated was to be borrowed and reinvested into the vacation home or better yet a third home that was the ski chalet. The asset value of their home was gone. They owned the burden of two to three homes. There was no profit to reinvest; the investment came directly out of their home in 2nd asset loans. Amazing.
It wasn't simply a foolish few that carries on about this untapped bounty of wealth, it was the a majority of Americans. They threw caution to the wind, which was nothing Americans believed in previous cultures, and decided decades of awareness and knowledge starting with the Great Depression was wrong. Every aspect of private financial standing was all wrong. Saving was wrong. Owning a home rather than owning a mortgage was wrong. Every idea an American had about financial security was wrong. It wasn't 'the wealth economy,' it was the "W"rong Economy.
And the Republicans still today state regulation is gigantically "W"rong.
Did any of them learn a lesson? Not that elected officials should learn lessons, but, did they? Maybe. But, they don't care about it. They care about their cronies and the appearance of their success into wealth, but, they don't care if it happens all over again and the poverty rate continues to escalate.
Rick Perry states, "Income inequality, I hear you." No you don't. The Texas economy has run on vapors since 2005 and it's only real part of the GDP is oil. Rick Perry is more than willing to "Do the "W" all over again.
When the Democrats say "We have to expand the Middle Class and return upward mobility," they are stating we have to return the culture of the Middle Class with no delusions. The Middle Class is the Middle Class and has the opportunity of upward movement to greater comfort in life and in retirement years. Please think about the FACT that the Middle Class BRINGS stability to every economy. It is the Middle Class that has disposable income to buy the widget.
Here is how it goes:
The Poor have a subsistence economy that HOPEFULLY pays the bills of food and shelter, but, have no residual income to GROW an economy. The best example of The Poor Economy is the southern states which are considered Red States. When one examines the GDP for these states they don't come close to states such as Pennsylvania, California or Illinois. Why? Because there are large numbers of impoverished Americans in these states. It is one thing for the electorate in these states to elect a person that understands their plight, shares their cultural/religious views and quite another thing to elect someone willing to make the investments and appeals to the federal government to begin an upward moving economy.
The Middle Class is where the wealth of THE COUNTRY lies. The Middle Class has disposable income. They are purchasing real estate. They seek financial security in very practical ways. They design budgets for their income so they aren't running up large amounts of debt that could cost them their security. They see WORK as the method to PROFITS that will lead to a better quality of life. The Middle Class understands the investment of PROFIT better than anyone in the Upper Class, especially upward movement. WORK for the Middle Class is PROFIT.
The Middle Class fails when they can't work and suffer adverse impacts. The biggest consistent case for bankruptcy in the Middle Class has been health care. Health care insurance is the only way the Middle Class can completely avoid financial disaster. Addressing health care insurance IS the best method to expand economic growth in the USA. Eliminating the cause of bankruptcy to the Middle Class IS growing the economy.
The best way to bring the Poor out of poverty, besides education, is to provide better quality of health to allow them to realize the impact of work in their lives.
Now. The Upper Class.
Sure they have life easier from the stand point of work. They have exceptional pay rates when they do work, but, it has come to them because of the infrastructure investments of the USA.
The Upper Class in the USA are frequently well educated and can draw on that education to achieve PROFITS in their lives that turns into upward movement. However, the number of Upper Class is far smaller than in the Middle Class and have far, far less economic impact. Their economic culture is found in specialty markets and those that marginally exist to hire workers. The best example of the contributions of the Upper Class is the boating industry. The Upper Class does contribute to a segment of the American economy, but, that percentage of the USA economy needs government subsidies. The boating industry needs government subsidies within the tax structure otherwise it would fail.
Let there be no doubt. The economic engine to the USA is its' Middle Class. Every aspect of the Middle Class should be understood and supported through government policy and YES, that means financial regulation. So, the idea the private sector works best when deregulated and 'on their own' is a huge myth. It is a political myth and it is dangerous. The Middle Class can be most successful when a local economy is vibrant and primarily self containing.
This is not rocket science. Sure, sure there are sophisticated math formulas that result in insight to the DOLLAR AMOUNT of economic growth from the Middle Class, but, the GOVERNMENT role in protecting these folks is fairly simple.
The "W" economy was a lie. It was immoral and it caused the worst financial collapse in the history of the USA.
It is a good definition, but, this phenomena in the USA is a larger scope than simply one company.
In realizing most of the players in 2008 had been long standing financial institutions is to understand the very basis of how tragic The Great Recession was. Putting 2008 into perspective it has to rank the worst financial collapse in the USA's history. It is greater than the Great Depression. It didn't have the same characteristics, but, the monies are far larger.
During the years of "W' the debt load in every aspect of the private sector grew out of control. I have to laugh when the Republicans state hands off to the private sector to do as they please. Another chuckle occurs when they state "W" spent too much money and it is a threat to the USA Dollar. The fact of the matter is under "W" private debt grew much faster and in larger numbers than the federal government did.
"W's" culture of economic growth wasn't real. It was based in "that feel good feeling" and the delusion being a millionaire was in the reach of every homeowner. It was nuts. But, it happened and it was very, very real. The economy of Republicans is based in bubble and bust. It isn't based in sound economic principles. It is based in government spending and government deregulation. Ronald Reagan has been the worst in providing false economic growth by enormous numbers of deregulation. It is all artificial.
The graph above is a dramatic depiction of "Bubble and Bust." Every sector of the economy grew to very high levels in a very short period of time. When the economic 'system' no longer could continue the disillusion it imploded. The banks were enormous; still are; and the electorate was engaged in thought exercise of 'Let's be millionaires.'
What really got me about the "W" Bubble is that people actually believed they were underestimating their own wealth. It was all a lie. A homeowner came to the understanding of the untapped assets in their dwelling and how investing monies from loans would actually result in wealth greater than they already had accumulated.
Huh? Let me get this right. As a homeowner the asset value that THE MARKET accumulated was to be borrowed and reinvested into the vacation home or better yet a third home that was the ski chalet. The asset value of their home was gone. They owned the burden of two to three homes. There was no profit to reinvest; the investment came directly out of their home in 2nd asset loans. Amazing.
It wasn't simply a foolish few that carries on about this untapped bounty of wealth, it was the a majority of Americans. They threw caution to the wind, which was nothing Americans believed in previous cultures, and decided decades of awareness and knowledge starting with the Great Depression was wrong. Every aspect of private financial standing was all wrong. Saving was wrong. Owning a home rather than owning a mortgage was wrong. Every idea an American had about financial security was wrong. It wasn't 'the wealth economy,' it was the "W"rong Economy.
And the Republicans still today state regulation is gigantically "W"rong.
Did any of them learn a lesson? Not that elected officials should learn lessons, but, did they? Maybe. But, they don't care about it. They care about their cronies and the appearance of their success into wealth, but, they don't care if it happens all over again and the poverty rate continues to escalate.
Rick Perry states, "Income inequality, I hear you." No you don't. The Texas economy has run on vapors since 2005 and it's only real part of the GDP is oil. Rick Perry is more than willing to "Do the "W" all over again.
When the Democrats say "We have to expand the Middle Class and return upward mobility," they are stating we have to return the culture of the Middle Class with no delusions. The Middle Class is the Middle Class and has the opportunity of upward movement to greater comfort in life and in retirement years. Please think about the FACT that the Middle Class BRINGS stability to every economy. It is the Middle Class that has disposable income to buy the widget.
Here is how it goes:
The Poor have a subsistence economy that HOPEFULLY pays the bills of food and shelter, but, have no residual income to GROW an economy. The best example of The Poor Economy is the southern states which are considered Red States. When one examines the GDP for these states they don't come close to states such as Pennsylvania, California or Illinois. Why? Because there are large numbers of impoverished Americans in these states. It is one thing for the electorate in these states to elect a person that understands their plight, shares their cultural/religious views and quite another thing to elect someone willing to make the investments and appeals to the federal government to begin an upward moving economy.
The Middle Class is where the wealth of THE COUNTRY lies. The Middle Class has disposable income. They are purchasing real estate. They seek financial security in very practical ways. They design budgets for their income so they aren't running up large amounts of debt that could cost them their security. They see WORK as the method to PROFITS that will lead to a better quality of life. The Middle Class understands the investment of PROFIT better than anyone in the Upper Class, especially upward movement. WORK for the Middle Class is PROFIT.
The Middle Class fails when they can't work and suffer adverse impacts. The biggest consistent case for bankruptcy in the Middle Class has been health care. Health care insurance is the only way the Middle Class can completely avoid financial disaster. Addressing health care insurance IS the best method to expand economic growth in the USA. Eliminating the cause of bankruptcy to the Middle Class IS growing the economy.
The best way to bring the Poor out of poverty, besides education, is to provide better quality of health to allow them to realize the impact of work in their lives.
Now. The Upper Class.
Sure they have life easier from the stand point of work. They have exceptional pay rates when they do work, but, it has come to them because of the infrastructure investments of the USA.
The Upper Class in the USA are frequently well educated and can draw on that education to achieve PROFITS in their lives that turns into upward movement. However, the number of Upper Class is far smaller than in the Middle Class and have far, far less economic impact. Their economic culture is found in specialty markets and those that marginally exist to hire workers. The best example of the contributions of the Upper Class is the boating industry. The Upper Class does contribute to a segment of the American economy, but, that percentage of the USA economy needs government subsidies. The boating industry needs government subsidies within the tax structure otherwise it would fail.
Let there be no doubt. The economic engine to the USA is its' Middle Class. Every aspect of the Middle Class should be understood and supported through government policy and YES, that means financial regulation. So, the idea the private sector works best when deregulated and 'on their own' is a huge myth. It is a political myth and it is dangerous. The Middle Class can be most successful when a local economy is vibrant and primarily self containing.
This is not rocket science. Sure, sure there are sophisticated math formulas that result in insight to the DOLLAR AMOUNT of economic growth from the Middle Class, but, the GOVERNMENT role in protecting these folks is fairly simple.
The "W" economy was a lie. It was immoral and it caused the worst financial collapse in the history of the USA.
