Mike, is the current recession a result of the past 8 years policies?
Answer Hi Fred, First keep in mind that there are many different opinions and interpretations about the causes of the current financial situation. So while I am happy to give my opinion, there could be many who disagree. Recessions are a common occurrence in a free market economy. Investments and production gets ahead of demand and the surplus results in an economic pullback. Government policies can reign in the booms and busts, but doing so is difficult and often politically unpopular (since it means slowing down a booming economy). The current recession can actually be traced back to the New Deal, when the Federal government created institutions to buy and resell diversified mortgages. This increased bank liquidity and diversified risk, allowing for more people to get home loans, but it also helped to inflate home values and to separate lenders from the risks of lending. Over the following decades, these policies allowed home values to increase steadily. The diversification of risk m
