We, the People, are to blame. We lack the sophistication to make decisions that are in our interest, but instead allow ourselves to be manipulated by ideological appeals via propaganda and public relations. We have allowed ourselves to be split into (we/they) blocs and rendered ineffective on the important issues of commonality. Legitimate information is easily dismissed under the we/they scenario as political maneuvering. Add to that the rapid pace of change referred to as hyper-culture and the reality that because of communications, for the first time in history, the entire world is changing at once, and we have a prescription for failure. The incestuous nature of the Government/Business oligarchy has rendered us both unimportant and ineffective. We allowed it to happen on our watch and are now frozen in inaction by fear and confusion. Despite your perceptions, in reality, your democracy has been stolen.

In addition to the comments by Awi, don’t forget that the lending institutions were forced in many ways to make the undeserved loans that when they collapsed initiated the crisis we find ourselves in. One example of this is in Chicago when ACORN required Bank of America to make loans that they knew wouldn’t be repaid in order to open branches in Chicago’s south side. In addition, Congress also required Fannie Mae and Freddie Mac to guarantee these loans. Companies like Countrywide and many others took advantage and made many more of these loans, thereby inflating the housing market and driving up prices. When the bubble burst, people that were trying to flip houses for a profit found themselves in possession of a house worth less than their mortgage and were unable to finance.

I guess what I’m trying to say is that if the free market had not been manipulated, we would not be in the position we are now. Of course, there have to be regulations to protect the consumer, but the government should let the business cycle operate. It’s been proved time and time again that centralized economies just don’t work.

While government stupidity, deliberate lack-of-oversight, and personal lack of sophistication into financial matters are certainly serious causes of the economic meltdown, other high-level reasons are every bit as important to the causes.

Financial institutions of every stripe (banks, brokers, hedge & other funds, insurance companies, and their inventive investment vehicles) have been allowed (even encouraged) to grow to ginormous proportions – so big that they – acting in concert – are capable of manipulating virtually any event they choose.

Witness the repeated responses by Wall Street to the election events, and those to all of the financial bills & machinations in the fall of 2008; even more so to the “stimulus” ideas & bills of 2009. These firms are blatently directing the functions of government, in addition to their decades-long control by lobbyists.

There can be no solution to corporate control of governments without some form of control over the size of these institutions, and the amount of influence over the markets & government (daily, as well as overall) that they are able to exert.

It would be interesting to know whether the public, in general, recognizes this influence, and to what degree.

Our economy is made up of so many variables. No one person, party or business to blame; it is a combination of things, but the insanity that developed when banks were forced to lend money to people that could not afford homes was the catalyst. I truly believe that credit became too easy to obtain. Credit was once a privilege; if you had good credit, you were offered a credit card. Now credit is what you have if you don’t have any money. The mortgage crisis broke the camel’s back and the amount of debt that Americans have accrued created a disaster; there are too many people living from paycheck to paycheck and from credit card to credit card. The banking industry lost focus when age old policies of lending only to people that could pay back a loan were voilated; adjustable rate mortgages became all the rage. Interest rates were low for too long and the market bubble grew. Banks became creative and tried to make a profit off of these potentially bad loans by packaging them and selling them. That was when the “exotic instruments” were born; the market, whose job is to make money, found ways to make money off of the bad credit industry. Then the bubble burst. Now, we are in trouble. Whose fault is it? There is plenty of blame to go around. Is anyone else out there as tired of the finger-pointing as I am? Politicians are at the root of the problem and some of the very ones pointing the finger were part of the problem. Our politicians need to stop playing political games with the crisis and let everyone calm down; stop proclaiming that we are on the verge of another great depression. Lets stop and take a deep breath; we’ve had several years of high living, now we have to pay the price. It is not going to be easy and there is no easy fix.

The less the government has a hand in the economy, the less culpable it is.

The more the government has its hand in the economy, the more culpable it is.

The contemporary government is responsible, not “the previous administration” or “the other party” or “that President back so-many-number-of Presidents ago” – but the current, sitting government, the Senators, Congressanians, President, and where they are involved the Justices.

That’s understandable, given that today their political morality rivals that of Boss Tweed.

The entire responsibility for the current economic condition falls on government regulations whether they are called “deregulations” or not. The so-called deregulations were actually new regulations that encouraged lending institutions to ignore their responsibility to maintain a profitable, viable business. Even the more responsible lending institutions that attempted to resist approving loans that had been customarily being denied in the past because of questionable ability to repay or risky locations could not continue denying those loan applications because they had more aggressive competitors who would not hesitate to chance the increased risk in light of promises by the government to make them whole in the event of default. The condition worsened after nearly the entire industry became involved and more guarantees from quasi-government guarantors like Fanny Mae and Freddie Mac… and lately from the FDIC were made. All this on top of regulations that encourage and remove the negative consequences of increasing fractional reserve banking accompanied by artificially manipulated unreasonably low interest rates — add up to a monetary system designed to fail.

When a government sets out to remove the consequences of risk, most business’ and individuals will take risks they wouldn’t ordinarily think of as rational. Who can blame them?