by Tara Jenkins

Created on: October 24, 2008

Housing bubble burst, mortgage meltdown, wall street wreck. What ever the buzz phrase of your choice, the economy is in crisis, all factors failing. deregulation of the free market equals self-regulation. People are not all all honest and spending time to better the world , this might have worked. There are those who will do whatever the can for their own gain, regardless of the ethical violations. Bailout, regulation, the government buying overextended debt is not socialism, it is an intervention for a country who's economy in crisis.

What entities or practices led to the current collapse of Wall Street, and the overall panic of U.S business? The adoption of miss advised margin buying of investors. During the 80's and 90's Buying on the margin was a loophole was as an investor could buy stock with collateral, instead of cash holdings. The gambling of personal assets led to the downfall of several individuals trying to strike it rich in the market.

For reasons that remain to be seen, in 2002 the Mark to Market act was passed. Mark to market requires companies and small businesses. To price there products buy assessing them at the lowest liquid value. In a good economy it creates price wars that create a wider customer base. In a bad economy the system feeds the recession beast and decreased values domino to a devastated stale state.

What is the cut and dry of this affect? Businesses cut prices, profits are lost, and jobs are cut. The smaller the job market, the weaker consumer confidence. The fewer consumers spend, the more profits are lost, and the circle continues. This circle also took effect in the housing boom, but contractors kept building anyway, driving values down. Mortgages were sold to people could not afford them, with absurd balloon rates, and liar loans.Were gigantic mistakes have been made, massive intervention is required.What action can put the economy back in black? first reversing mark to Market. Next putting caps on the alloted amount of speculative homes each contractor is allowed to leverage. instead of bailing out more banks. revert all arm an balloon loans. to 30b year basic fixed at the current 7.2 percent APR. reset foreclosed homes to reasonable rates more closely related to the true relative value of the property. Bush is to blame for many things how-ever the mark to market, and the balloon APR. were set during the Clinton administration and blame for the current state of disaster belongs to many. NewtGingrich and Senator Forbes have been loud and strong.t about the flaws they saw. Democrats, and republicans alike chose not to listen as the whole country played with inflated values we did not own. This country needs and deserves a bipartisan apology and plan of action to fix this rejection.

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