Greed and Stupidity (Or the Crackdown of the U.S. Economy)

Lately there has been a breakdown in the economy of the United States of America. Many financial, banking and insurance institutions got broken. Economists and analysts say that there is just one factor responsible for this problem to arise, crisis in the housing sector.

To me there are two main factors which caused this economy crackdown in the U.S.; GREED and STUPIDITY

GREED

All started years ago when the price of houses started to grow up due to a housing boom in the U.S. There were low interests and the government supported the idea of housing for everyone.

Housing is very important in the U.S., one out of eight people work directly or indirectly because of the money moved by the housing market, from carpenters or architects to loan or sale agents.

Credit is also a very important if not crucial factor that supports the economy of the U.S., the backbone of the economy of almost every family is built around loans from financial organizations. No one can access to a house unless he can be trusted and only the people who can be trusted will be able to receive a credit to buy a house. But in this lately housing boom everyone was been able to get a loan and even people who did not fully qualify were able to get a mortgage for a house, something that they later would regret because they would not be able to afford.

In the U.S. it's hard to find people buying a car or a house in cash because nobody can afford to have such big amounts of money on their hands nowadays, so credit has always been the only mechanism through which people can own a house or a car.

Many people that obtained a loan or in simple terms, a credit to buy a house (to be paid in 25 or 30 years) started to use the title of the house, of which they were not really the owners, as a deposit or guarantee to buy other goods like a car, LCD/Plasma TV screens, motorcycles, boats, etc.

This is how the housing crisis began because people started to put their houses, with just a few monthly payments, as a guarantee to buy other stuff. And the companies that accepted this form of payment acted irresponsibly mostly guided by GREED. That's how people, that finally were not owners of their houses, could not afford the same standard of living for many years because they started to pay interests here and there and in some point that got out of control and they just had to stop making payments.

GREED made that the prices of houses increase year after year and after a few years this had to change, they could not go up eternally, so the price started to drop to reach the real price level. When this happened, the banks realized that the market prices of the houses were in such a low level that they were worth less than what was owed for each of them. This is because houses were a guarantee for several other goods and suddenly the market price of the house could not cover the entire amount owed to financial institutions.

Why did this happen? In one word because of GREED. People and companies got used to earn money the easy way, speculating and inflating prices. And when there is no responsibility, when there is no regulation or laws these things can happen easily. We think that the United States is a country where these things can't happen but that's not true, GREEDY people is everywhere and when these people can find a way to break the system, without breaking any laws or rules, these are the painful results.

STUPIDITY

There is one more thing to say about the economy of the United States. The country has spent around 1 trillion of dollars (that is around one thousand billions or a number '1' followed by 12 zeros) during 6 years in the war in Iraq. Nobody is talking about this now but all this money wasted in bombs could have been used to solve many of the economic difficulties from today.

To give an example of how this money could be used; the government policies of the U.S. have allocated additional 2.75 billion dollars over 10 years to buy fruits and vegetables for the country's nutrition assistance programs, including school lunches and breakfast programs.

Do you have an idea of how 2.75 billion dollars for food over 10 years compare against 1 trillion dollars for bombs over 6 years? If you can compare these numbers you will get an idea of how stupid is the government. All the money spent in the war in Iraq could save not only the economy of the U.S. but of other countries as well.

And Mr. Bush gets into national TV to say in a speech that he is very concerned about the economy of the country? Is he really thinking about what is saying? Are the people of his country listening to him?

There is no point of comparison, right? How can a president of a big nation like the U.S. can be such a dumb to allow this to happen? The reasons is simple, stupidity.

Greediness and stupidity, the two main factors, the root cause of the problem.

The U.S. is paying high the price of putting money as the only important value in life and regretly this will affect a lot of other countries all over the world.

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