When asked "When will the economy turn around?", President Bush replied, "I'm not an economist but I do believe that we're growing. And, uh, I can remember, you know, this press conference here, people yelling "recession this, recession that" as if you're economists. And, uh, I'm an optimist."
I have been keeping myself busy with the history of the mortgage crisis for the past few weeks. Evidently, our economy received several "shocks" [the mini-recession, 9/11, the war on terror, the housing bubble and the dot-com bubble] prior to the dilemma we are currently facing which could be to blame for the severity of the crisis. Obviously, subprime mortgages and adjustable rate mortgages given to high-risk borrowers combined with liquidity issues exasserbated the situation. Some argue that the situation is not severe; we are overreacting.
If there is no situation, why would the Fed have cut interest rates? Why did Congress pass the Economic Stimulus Act of 2008? Both were attempts to passify a recession.
The blame is being placed on anyone remotely involved with the crisis: the borrowers, the lenders, Wall Street, Rating Agencies, the Fed. The ethics in all participants' decision making is fuzzy. The government is unable to point the finger at one person specifically and say, without question, "you are the reason that this crisis occurred and you need to fix it." Dr. Brat says that it is not my job to find who is to blame; it is an impossible task. I am going to be examining the situation as a whole and the ethics [or lack thereof] in general. What I find most interesting are the fates of the CEO's of the major financial institutions; why are they having to testify now? They were behaving "unethically" prior to their companies losing billions of dollars.
To be completely honest, I am brand new to the idea of a "blog." Similarly, I am brand new to the economic issues plaguing us at the moment, so please bear with me as I drag you along. Terms like the market, subprime loans, ajustable-rate mortgages and possible recession never resonated with me until a few weeks ago when I began the initial work on my S.U.R.F. project; friends now jokingly ask if I have "successfully saved the economy yet." The answer to that would be no. No way. And luckily, that is not what Dr. Brat is expecting of me this summer.
So why is an English major exploring the mortgage crisis? I tend to ask myself that, too, when I am up to my eyeballs in balance sheets and possible economic solutions. I feel as though I am learning a new language; speaking "economy" is harder for me than Old English. Once the lingo is mastered, however, my project can begin. I will be focusing mainly on the ethics behind the mortgage crisis, the questionable behaviors of the borrowers and lenders, and the inevitable responsibility of someone to clean up the mess. Any ideas?