It’s official. Mark your calendars. The economy of not only America, but many countries around the world, has gone begun to collapse.

Every morning I monitor the news over a cup of strong black coffee. Then I blaze a trail of fury on my way to school for my second period class. One such morning I asked one of my friends, “Did you see what the DOW closed below?”, they promptly asked, “What’s that?”

It’s vitally important for everyone, especially teens, to understand what is going on in terms of our economy. On Wednesday, June 13, 2007, Washington Post writer, Steven Pearlstein wrote an article entitled, “The Takeover Boom, About to Go Bust” which concerned the extraordinary amount of debt vs. operating profits of companies currently subject to leveraged buyouts.

In language remarkably alarmist for the usually ultra-bland pages of the Post, Pearlstein wrote, “It is impossible to predict when the magic moment will be reached and everyone finally realizes that the prices being paid for these companies, and the debt taken on to support the acquisitions, are unsustainable. When that happens, it won’t be pretty. Across the board, stock prices and company valuations will fall. Banks will announce painful write-offs, some hedge funds will close their doors, and private-equity funds will report disappointing returns. Some companies will be forced into bankruptcy or restructuring.”

So what has really happened? Back in the nineties, a significant amount of House Democrats pushed for direct lending, urging banks to lend money to people who could not afford to buy their own house. Back in the old days, loans were given to those who could prove a steady, paying job, good credit history, and trustworthy character. If people couldn’t afford to buy the house, why lend them the money? Disregarding custom and common sense, loans were lent out easily to millions of people who couldn’t make the payments.

There’s the trouble. When millions of low-income individuals couldn’t pay the exhorbitant payments on these loans, the banks defaulted. If people don’t pay back the loans, the banks don’t get their money back, and can’t fund Americans who keep their money in those banks.

The chairman of the House Financial Services Committee, Rep. Barney Frank, D-Mass., and Frank, his Senate counterpart — Senate Banking Committee Chairman Chris Dodd, D-Conn., were leading the forefront of this crisis. These men pushed for the loans, stating that they were “helping the poor” and at the same time gained a generous amount for themselves. It was basically selfishness that drove these men.
On July 14, 2008 Barney Frank stated, “I think this is a case where Fannie and Freddie are fundamentally sound, that they are not in danger of going under. They’re not the best investments these days from the long-term standpoint going back. I think they are in good shape going forward. They’re in a housing market. I do think their prospects going forward are very solid. And in fact, we’re going to do some things that are going to improve them.”

Well, this statement is obviously NOT TRUE. It misled the public and many Americans lost money due to this, seeing as the housing market has just recently bottomed in the last two weeks and stocks have plummeted.

Several years ago many Congressional Republicans, including John McCain, saw that the housing market was failing and proposed a reform legislation. Consequently, many Democrats who were benefiting, blocked it, voting against the bill.

And since the market has plummeted, Congress proposed the 700 billion dollar bailout bill, which appeared to be a weak attempt from a frightened and shaken Wall Street to patch up the mess. The bill was oozing the money and tax cuts, with no one knowing where the money was going. This bill was turned down.

The bail out bill was cleaned up, polished, and then filled with pork, tax cuts for various parties who would not vote for the bailout bill without these selfish provisions. Wall Street is full of selfish and foolish people.

So if anyone still believes that the economic crisis is due to the Bush administration, think again. Just because something has begun and escalated under a certain administration, does not mean that it is at fault. Firstly, the President only possesses 1/3 of the government power, and he is set upon by an entire cabinet of advisors. Secondly, the Senate, who passes the laws, is currently run by the Democrats, who are a majority. Thirdly, we know that reform was proposed, and the Democrats blocked it.
So what would I encourage? I’m not encouraging any particular candidate. I’m voting for McCain. But I would encourage you to snatch up houses. They are cheap as dirt at the moment and once the economy is running smoothly again, selling them or renting them out would be genius.