Ronald Reagan.
That administration began a war against working people that has continued to this day. Art Laffer, his main economic adviser, came up with the theory of “trickle-down” economics. That theory has it that if you give tax breaks to the wealthiest people, they'll spend that money in a way that will put more people to work, and everyone will be better off. Seems logical, except for one detail.
The rich don't spend their money that way.
There's another problem with that theory, too, and it has to do with how our economy was set up during and right after the Second World War. What ended up being implemented was what we came to call the consumer economy, and it depended on lots of people having enough money to buy the goods and services that economy produced. What Reagan, Laffer, and company did was to attack unions, encourage employers to take the high-paying jobs overseas, where the going rate was lower, and to fire the people in this country. That, too has continued to this day, and the result of that is that our consumer economy has had its legs kicked out from under it.
What that all means is this: The problem isn't with a bunch of recently-written bad mortgages. It's not about banks at its care, at all. Yes, it involves banking, and loans, but the problem is deeper and much simpler than the financial pundits would have you believe. It can be summed up in three words:
Nobody has money.
What happens when someone has a decent job and buys a home with a mortgage? He pays his bills (no sexism intended here, by the way, it's just that “his” is a nice, short way of saying “his or hers”), and, eventually, owns the home outright, if he hasn't traded up in the meantime. What happens when that person who's been paying the bills suddenly goes from a decent job to, say, stocking shelves at Walmart?
He's not paying those bills anymore, that's what happens. Maybe it doesn't happen right away. He's trying to make ends meet, and going deeper into whatever savings he has. Things are getting really tight for him, and any cost that goes up is going to hurt, and hurt a lot, even if it goes up a little. Sure, he can cut back on things, but he still has to buy food, clothing, and fuel. What happens if, say, the price of fuel suddenly rises dramatically?
Well, now we know what happens, don't we? There will be a lot of talk about how this all came about, and it'll go on for a long time, but I'm willing to bet that nothing is going to solve this dilemma until someone recognizes the issue that I just told you about, and is willing to commit the blasphemy of telling everyone that what we need to do to fix the economy is to start paying people for their work again.
