EconomicCrisis.US

Blame China, Saudi Arabia and, yes, Canada.

Much of the fault of the financial crisis has been heaped on Wall Streeters, unscrupulous mortgage lenders and weak regulators. But in a new research paper, economist Ricardo Caballero says there is another major group of contributors to America’s monetary mess who are not getting the blame they deserve: foreigners.

“There is no doubt that the pressure on the U.S. financial system [that led to the financial crisis] came from abroad,” says Caballero, who is the head of MIT’s economics department. “Foreign investors created a demand for assets that was difficult for the U.S. financial sector to produce. All they wanted were safe assets, and [their ensuing purchases] made the U.S. unsafe.” (See the financial crisis after one year.)
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Sales of existing U.S. homes in November rose to the highest level in almost three years as first-time buyers rushed to take advantage of a government tax credit and lower prices.

Purchases increased 7.4 percent to a 6.54 million annual rate, exceeding the highest estimate of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. Another report showed the economy grew a less-than-forecast 2.2 percent in the third quarter as companies cut stockpiles, pointing to manufacturing gains at the start of 2010.
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A new New York Times/CBS News poll offers a glimpse of the devastating human impact of the US unemployment crisis.

As massive bank bonuses are due to be announced this month, millions of people have been thrown out of their homes, find it impossible to pay for basic necessities, have depleted limited retirement savings or have lost their health care due to the unemployment crisis.

The survey of over 700 unemployed adults was conducted between December 5 and December 10. Accompanying the survey on the Times web site were self-made computer videos of unemployed workers discussing their problems.
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Enough of the silly slogan that “government isn’t the solution, government is the problem.” Government, in fact, is the solution to a national economic calamity not seen since the 1930s.

Today’s painful conditions would have been more disastrous had Washington not stepped in with massive business bailouts. The remedy prescribed by ultraconservative Republicans—more tax cuts—would have healed nothing. In fact, tax cuts favoring the wealthy enacted during the George W. Bush years plus the voracious borrowing to pay for Iraq and Afghanistan wars accelerated today’s misery.
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