President Clinton repealed the Glass-Steagall Act which had prevented the coupling of investment banking and lending. Following President Clinton, George W. Bush proved to be very pro-business, but at a high cost to the average consumer. Intelligent Americans realized consumer spending and risky lending practices would come with a very high price. The full impact was not felt by baby-boomers and those age 50 and over. Our children will pay the high price of folly for a long time.
As parents encouraged their children to get a good education banks encouraged young Americans to buy homes, even on their lower annual salaries. Impluse items like new cars and televisions soon became the norm, and the new impulse items were homes and vacation homes. The U.S. non-export economy looked dangerous to those old and wise enough to know the truth. Meanwhile Bush strenghtened bankruptcy laws, weakend Sarbanes-Oxley, and set the stage for disaster. Lenders bought lender-paid mortgage insurance, which is the same as buyer-paid mortgage insurance. But what happens if insurers can’t pay? Those old and wise enough to know the truth understand what will happen – another round of huge losses and write-downs!
Before the Clinton years if a person had poor credit they couldn’t even buy a car. Credit was important. During the Bush years young people could buy anything from cars to homes, even with poor credit. The fact remains that the elderly rely on Social Security, which relies on jobs and incomes, and America is losing both. A new generation of young Americans expect instant gratification with little regard for the ultimate cost. Micro and macro economics mean nothing, but nobody – and I mean absolutely nobody – likes having something taken away from them. From repossessions to foreclosures to losing part of your belongings in bankruptcy, it simply leaves a sour taste. It is embarrassing, humiliating, and makes one angry.
Some argue that Clinton set the stage. A stronger argument is that George W. Bush is the enabler, selling America to business cronies while duping Americans with the greatest story ever sold – that the American economy was doing well. If it were not for the war in Iraq, which I reluctantly suggest is a sideshow distraction, more of Bush’s aides, appointees, and business cronies would be in prison or out of a job. On the world stage we have no statesmen, just politicians, as evidenced by Bush’s appointment of Ameriquest’s Arnall as ambassador to The Netherlands. Ameriquest settled a nationwide predatory lending settlement so Arnall’s nomination could get congressional approval. In the real towns and cities of America predators get approval for one place – jail or prison. Therein lies the problem.