You Can't Handle The Truth (Part I)

Everyone is asking: why is our economy so bad? Is it going to get better or worse? What can we do? Who is to blame? While all legitimate questions that need to be asked, no one really wants to hear the answer. All people want is, in the words of Kenan Thompson of SNL, "FIX IT."

However, just in case you want to know what happened with this economy, the answer is fairly simple. At first we have to understand that no one thing caused this economy to collapse. There was no magic wand that was waived and ruined it, so there is no wand that can fix it.

One thing that was a significant part of this collapse is that the U.S. does not make products anymore. If you had walked in a room anywhere in America thirty years ago, almost everything you could see was made in the United States, today's room is anything but. Even "American" products like American cars are made outside the U.S. for the most part. The entire economy of this key country is based on services not products, numbers on a computer and not products in a warehouse.

Another issue that factored into this collapse is the deflation of the housing market. Throughout the nineties all the way up to the earlier part of this decade, homes were increasing in value tremendously every year. Houses were going up as much as 10-15% a year. This caused a large number of people to buy houses they cannot afford on the hopes that if they squeeze their budget a bit and pay the mortgage for a year or two, the value increase would make it easy on them. The only issue with that is the housing market needed to reset and correct itself, so homes' value was either staying the same or going down for a couple of years so the houses' real value would catch up, but that causes all of those budget squeezers to have their homes foreclosed.