The Bush Tax Cuts & The Republican Cult of Economic Failure

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    Nov 10, 2010 7:15 PM GMT
    There's no such thing as a free lunch, and there's no such thing as an honest case for extending the Bush tax cuts. Ten years of hard data prove they were a complete failure. They did not work while Bush was in office and they did not work during the first two years of the Obama administration. No wonder the Congressional Budget Office says that the GOP's proposed extension of tax cuts to the rich will reduce future economic growth.

    To recap: In terms of promoting economic growth, the Bush tax cuts were a complete failure.

    Under George W. Bush, U.S. GDP growth averaged about 2.1 percent a year. Since the end of World War II, the country has never experienced such low economic growth during an eight-year period. And if you exclude the war demobilization of 1946, when U.S. government spending fell by two-thirds and the GDP fell by 10.9 percent, Bush had the worst economic record since Herbert Hoover. During FDR's first two terms, when the country remained mired in a Depression, GDP growth averaged about 6.3 percent a year.

    There is no way to make Bush's performance look good. Even if you cherry-pick the data, by excluding fiscal year 2008, when GDP growth was zero, economic expansion was anemic. During Bush's first seven years, it averaged about 2.4 percent, the worst rate in half a century. And what was the source of most of that economic growth? Homeowner equity extraction. Bush could point to one sector where growth outpaced that of all prior administrations: Residential mortgage debt. It almost doubled, from $5.1 trillion to $9.8 trillion, between 2001 and 2006.

    Average Annual GDP Growth
    Bush 2001-2008: 2.1%
    Clinton 1993-2000: 3.9%
    Reagan/Bush I 1981 - 1992: 3.0%
    Carter 1977 - 1980: 3.2%
    Nixon/Ford 1969 - 1976: 2.8%
    Kennedy/Johnson 1961 - 1968: 4.8%
    Source: Bureau of Economic Analysis

    Of course, these numbers understate the magnitude of Bush's failure, since the full effects of the 2008 financial meltdown were not felt until 2009 and later. Though Bush has left the White House, his tax cuts have remained in place. What's completely missing is any evidence that his tax cuts did anything to boost the economy.

    After Clinton raised taxes on the rich, GDP growth spiked. His eight-year average was about 3.9 percent, close to twice what it was under Bush.

    In terms of promoting job growth, the Bush tax cuts were a complete failure.

    By the end of eight years of George W. Bush's economic stewardship, 1.1 million jobs had been added to the economy. Measured against any of his predecessors, Bush was a complete failure. Clinton added 22 times as many jobs. Reagan added 16 times as many jobs. Eisenhower added three times as many jobs, when the U.S. economy was a fraction of its current size.

    Even prior to the financial meltdown, Bush's record of job creation was dismal. The economy started hemorrhaging jobs in June 2008, but from the end of January 2001 through May 2008, the U.S. economy created five million jobs. That's less than 700 thousand jobs a year, the worst performance, over a seven-year stretch, since the early 1960s.

    Number of Jobs Added [millions]
    Bush, Feb. 2001- Jan. 2009: 1.1
    Clinton, Feb. 1993- Jan. 2001: 22.7
    Reagan/Bush, I Feb. 1981- Jan. 1993: 18.7
    Carter, Feb. 1976- Jan. 1981:10.3
    Nixon/Ford, Feb. 1969- Jan. 1976: 11.3
    Kennedy/Johnson, Feb. 1961- Jan. 1969: 15.7
    Source: Bureau of Labor Statistics, Seasonally Adjusted Nonfarm Payrolls

    Of course the job losses that began in 2008 accelerated into 2009 and onward. You can ascribe the blame to Bush or to Obama. But you can't point to any evidence that the Bush tax cuts actually added jobs in the past two years. The reasons are obvious to anyone who understands how companies make their hiring decisions. They hire because they expect their business volume to grow, or because the current workforce cannot handle the tasks at hand. Does anyone really think that a small business owner who nets more than $1 million a year -- say, a plastic surgeon, or a hedge-fund manager, or (Justin) Bieber Time Touring LLC -- would hire more employees simply because the tax rates were slashed after the end of the Clinton Administration?

    By the way, the Clinton administration created about three million more jobs than the administrations of Ronald Reagan, Bush I, and Bush II combined. In terms of fiscal prudence, the Bush tax cuts were a complete failure.

    Guess what happened after the U.S. economy came out of a mild recession that ended in November 2001? U.S. tax revenues plummeted. They plummeted at a rate that was unprecedented since the demobilization after World War II. And they plummeted during a time when Bush initiated a war that would leave us mired in Iraq for more than seven years.

    Historically, U.S. income tax revenues have always grown, year after year. The problem was that government expenditures always grew more. So when revenues started falling, the relationship, between what the government took in and what it spent, really got out of whack.

    Government revenues fell three years in a row, well past the end of the last recession, while government outlays increased at twice the rate seen under the Clinton administration. Again, Bush set a record for modern times. We also know that the burst of revenues from 2005 onward was traceable to asset bubbles, which were not sustainable. In the last budget he submitted to Congress, Bush assumed that the cost of military operations in Iraq and Afghanistan after 2009 would be zero.

    Bush's failure was masked by a sleazy accounting trick that Bill Clinton had tried to stop in 1999, when the government's operations approached break-even.

    The Social Security surplus is supposed to be invested in Treasuries, which generate compound interest to build up a nest egg for the day when baby boomers start retiring. Of course a real Treasury instrument is a legal promise to pay. So Bush took the cash paid out by you, me and our employers into the Social Security "Trust Fund" and used it to reduce his current operating deficits. Instead of exchanging the cash for real Treasuries, the Trust Fund bought "Special Treasuries," which the government can change at will.

    USA Today said it best: The Bush administration opposes including Social Security and Medicare in the audited deficit. Its reason: Congress can cancel or cut the retirement programs at any time, so they should not be considered a government liability for accounting purposes. Scam artists like Mitch McConnell justify their talk about "reforming" Social Security by pointing to "unfunded liabilities." This nonsense about unfunded obligations is one of the biggest frauds of the 20th and 21st centuries.

    By: David Fiderer
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    Nov 10, 2010 8:00 PM GMT
    southbeach1500 said
    B787 saidScam artists like Mitch McConnell justify their talk about "reforming" Social Security by pointing to "unfunded liabilities." This nonsense about unfunded obligations is one of the biggest frauds of the 20th and 21st centuries.



    Ah, yet another thread bashing former President Bush who has been out of office for almost 2 years now.... and bashing Republicans / conservatives.

    How refreshing to see another one of these... icon_rolleyes.gif


    BTW... your comrade Metta8 has a different view of "this nonsense about unfunded obligations" re: Social Security....

    http://www.realjock.com/gayforums/1227351

    metta8 saidPlease note the "MANDATORY" outlays required by law in the chart at the bottom of the original post. And it is important to recognize that the government actually owes money into the social security fund because they have been taking out (so called excess money) out of it for years in order to make the budgets not look as bad. They are required to also eventually make up for that. And with baby boomers going into retirement age, the demand for more funds for social security will go up as well.




    It's actually not "bashing Bush" so much as putting the lie to the idea that keeping the Bush tax cuts will improve the economy.

    They won't, and the deficit commission's "plan" is even worse.

    The only answer to our issue is to raise taxes on the wealthiest Americans, close loopholes and cut spending on the military and other non-domestic issues.
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    Nov 10, 2010 11:53 PM GMT
    Your analysis is lacking critical information. You fail to discuss all of the factors that detracted from the apparent effectiveness of the tax cuts. The beginnings of the economic crisis that occurred during Bush and even now have their roots in Clinton's presidency -- by the end everything was falling apart and it was apparent as soon as Bush took office. While I agree that Bush was a bad president (because he did go along with a lot of left-wing economic government intervention strategies in addition to a bad war), we also were attacked on 9/11 and we became involved in an extremely expensive war, this coupled with the housing crisis were obviously not going to make tax cuts appear effective for job growth. To say that tax cuts do not work because of that is just plain misleading and stupid.
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    Nov 10, 2010 11:55 PM GMT
    southbeach1500 said
    Christian73 said
    The only answer to our issue is to raise taxes on the wealthiest Americans, close loopholes and cut spending on the military and other non-domestic issues....


    ... says the liberal.

    The other "only answer" is to cut Federal spending across the board to bring it in line with revenues.


    Nope. The reason revenues are down so far, apart from the recession, is because of the tax cuts for the rich. And the biggest driver of overspending is defense. So raise the former and decrease the latter.
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    Nov 10, 2010 11:57 PM GMT
    Christian73 said
    southbeach1500 said
    Christian73 said
    The only answer to our issue is to raise taxes on the wealthiest Americans, close loopholes and cut spending on the military and other non-domestic issues....


    ... says the liberal.

    The other "only answer" is to cut Federal spending across the board to bring it in line with revenues.


    Nope. The reason revenues are down so far, apart from the recession, is because of the tax cuts for the rich. And the biggest driver of overspending is defense. So raise the former and decrease the latter.


    When will you just forget about taxes as a way to get revenue for programs that will never stop thirsting for more.
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    Nov 11, 2010 12:02 AM GMT
    mocktwinkie saidYour analysis is lacking critical information. You fail to discuss all of the factors that detracted from the apparent effectiveness of the tax cuts. The beginnings of the economic crisis that occurred during Bush and even now have their roots in Clinton's presidency -- by the end everything was falling apart and it was apparent as soon as Bush took office. While I agree that Bush was a bad president (because he did go along with a lot of left-wing economic government intervention strategies in addition to a bad war), we also were attacked on 9/11 and we became involved in an extremely expensive war, this coupled with the housing crisis were obviously not going to make tax cuts appear effective for job growth. To say that tax cuts do not work because of that is just plain misleading and stupid.


    And, yet, your analysis is even worse. The rampant deregulation began in the Reagan administration. WAs pushed during the Clinton Administration by Republican Senator Phil Gramm and, of course, corporate lobbyists. Also, please name one "left-wing economic government intervention strategy" that Bush "went along with..."

    Yes. We were attacked on 9/11 and responded by going into Afghanistan. But, Iraq, the more expensive of the two, was completely unnecessary for American security. And that doesn't take into account the degree to which these two wars were privatized including sweet heart deals to contractors for services that cost 3 to 10 times the amount it would for our military to have done. Further, in every other war, taxes were raised to pay for the war, and, yet, Bush cut taxes twice while prosecuting two wars.

    The biggest beneficiaries of the Iraq War are four Western oil companies, all of which have had record profits. Perhaps they need to be taxed to pay the country back for liberating the oil.
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    Nov 11, 2010 12:04 AM GMT
    mocktwinkie said
    Christian73 said
    southbeach1500 said
    Christian73 said
    The only answer to our issue is to raise taxes on the wealthiest Americans, close loopholes and cut spending on the military and other non-domestic issues....


    ... says the liberal.

    The other "only answer" is to cut Federal spending across the board to bring it in line with revenues.


    Nope. The reason revenues are down so far, apart from the recession, is because of the tax cuts for the rich. And the biggest driver of overspending is defense. So raise the former and decrease the latter.


    When will you just forget about taxes as a way to get revenue for programs that will never stop thirsting for more.


    When I stop living in a country that was founded on the idea that government's role was to ensure "life, liberty and pursuit of happiness" with a Constitution that states government's role is to ensure "the general welfare."

    If you don't like our countries founding principles, you are welcome to move somewhere they doesn't have them.
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    Nov 11, 2010 12:11 AM GMT
    Christian73 said
    mocktwinkie said
    Christian73 said
    southbeach1500 said
    Christian73 said
    The only answer to our issue is to raise taxes on the wealthiest Americans, close loopholes and cut spending on the military and other non-domestic issues....


    ... says the liberal.

    The other "only answer" is to cut Federal spending across the board to bring it in line with revenues.


    Nope. The reason revenues are down so far, apart from the recession, is because of the tax cuts for the rich. And the biggest driver of overspending is defense. So raise the former and decrease the latter.


    When will you just forget about taxes as a way to get revenue for programs that will never stop thirsting for more.


    When I stop living in a country that was founded on the idea that government's role was to ensure "life, liberty and pursuit of happiness" with a Constitution that states government's role is to ensure "the general welfare."

    If you don't like our countries founding principles, you are welcome to move somewhere they doesn't have them.


    Your ideas about the role and extent of government involvement are grotesquely different from how our founding fathers thought -- so it's safe to spare the references. The "general welfare" can be anything from military protection to law and order for a safe society. It doesn't mean endless safety net programs that end up robbing future generations like social security or medicare.
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    Nov 11, 2010 12:22 AM GMT
    mocktwinkie said
    Your ideas about the role and extent of government involvement are grotesquely different from how our founding fathers thought -- so it's safe to spare the references. The "general welfare" can be anything from military protection to law and order for a safe society. It doesn't mean endless safety net programs that end up robbing future generations like social security or medicare.


    No. They're not. I studied the readings of our founding fathers extensively in college and they were against a whole host of things you regularly defend. I can quote Jefferson and you can quote whoever... but they didn't intend for our country to screw over the average citizen and reward the wealthiest and multinational corporations.

    And this ridiculous idea of "robbing future generations" is a ridiculous right-wing talking point. You can't argue that government debt is bad for children you or I may or may not have and then think the estate tax should be repealed. Isn't that robbing current generations?

    Basically, you want a community when it's convenient (customers, clients, workers) but not when someone has to pay for it (taxes, healthcare, education). It can't be one or the other. There must be a balance, and that balance cannot be tipped in favor of the wealthiest and most powerful as it has been for more than three decades.

    The level of wealth inequality in our country is unsustainable, so either the wealthy and multinationals start paying people a good wage or there will be not "customers" just angry peasants with pitchforks and Uzis.
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    Nov 11, 2010 12:38 AM GMT
    southbeach1500 said
    Christian73 saidtax cuts for the rich


    People making $250,000 or $300,000 a year are not rich.


    They are in the top 2% of income earners in the US and the largest beneficiaries of the Bush tax cuts. It is also five times the median household income which is in the $50ks with two incomes. Please take your class warfare propaganda to someone who won't call bullshit on it.
  • GQjock

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    Nov 11, 2010 12:42 AM GMT
    When you have the Top 1% hoarding 24% of the entire wealth in this country

    .... and when the CEO's of the big corporations made 80 times what the average worker in that company made 25 years ago
    When Today that CEO makes 560 times what that worker makes

    There's something amiss there

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    Nov 11, 2010 12:48 AM GMT
    southbeach1500 said
    Christian73 saidPlease take your class warfare propaganda to someone who won't call bullshit on it.


    You (and the other liberals) are the ones always running around screaming "tax the rich!"

    Seems like you and the others have class warfare on the brain... icon_wink.gif


    Nope. As Warren Buffet has said "it is class warfare and [his] class is winning. It shouldn't be, but it is."
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    Nov 11, 2010 12:50 AM GMT
    southbeach1500 said
    Christian73 saidgovernment's role is to ensure "the general welfare."


    So where's my free government paid for house?

    Where's my free government food?

    Where's my free government clothing?

    Where's my free government electricity?

    Where's my free government car?

    Where's my free government gasoline?

    I need those things to be "well."



    Nothing is "free" but it is up to all of us citizens, including corporations who now have more rights than individuals, to ensure that the most vulnerable among us have basic needs met and opportunity to improve. The extent of wealth and income inequality in today's America prohibits that.
  • GQjock

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    Nov 11, 2010 12:57 AM GMT
    southbeach1500 said
    GQjock saidWhen you have the Top 1% hoarding 24% of the entire wealth in this country

    .... and when the CEO's of the big corporations made 80 times what the average worker in that company made 25 years ago
    When Today that CEO makes 560 times what that worker makes

    There's something amiss there



    Fine, let's go with that.

    So, shall we pass a law to make it so everyone has the same amount of money?


    No ............. we go back to a SANE tax rate for the weathy
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    Nov 11, 2010 1:20 AM GMT
    SB, whose wealth is being distributed and to whom?



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    Nov 11, 2010 1:53 AM GMT
    southbeach1500 said
    Christian73 saidPlease take your class warfare propaganda to someone who won't call bullshit on it.


    You (and the other liberals) are the ones always running around screaming "tax the rich!"

    Seems like you and the others have class warfare on the brain... icon_wink.gif
    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>You appear to be fully in favor of the "class war" that has come down on the Middle class since Reagans "trickle down economics" of the 1980's and succeeded under Bush's 8 years of completing the transfer of more wealth to the top 2 to 4 percent than any time in our history except perhaps durring the years of the "Robber Barrons' or just before the "Great Depression". Now that there is an effort to reverse this trend to save the US middle class that is the engine of our economy through their spending, you call it "class war" Corporate welfare, hasn't worked, giving ever bigger tax breaks to the very rich has failed misserably, or we wouldn't be in this current situation. In or for the rich to invest in business to increase the available jobs, the middle and lower income groups have to exist with discressionary money available to spend on goods and products. Now an untenable share of wealth is in the hands of only a few, no where near enough to increase orders of goods and services. Unless policies are enacted to keep and promote a healthy majority of Middle income families, there will be a continued spiral down hill for the middle class and a worsening of our economy. Purhaps you should make monthly donations to the rich, if your so concerned about the dissappearance of those 2 to 4 percent of our population who hold such a large share of the nations wealth. Hell !! Southbeach !!! set up a site to donate to the wealthy, after all according to you they are the only place jobs are going to come from, they need more money to build onto factories to make stuff, RIGHT ??? I mean after all, according to your thinking, the orders generated from the middle class consumers having money to spend, has no bearing on getting the economy moving, its all dependent on the rich getting richer. So keep on keeping on with policies giving primarily the wealthy most of the tax breaks, and keep squeezing more and more out of the ever dwindling middle class. Take away all their benefits that help them remain in the middle class, thats the way to do it !!! yep !!! Its worked well Hasn't it ??? I think you and the repubs need to realize and just accept the undeniable fact, that a vibrant economy is far more dependent on their being a vibrant middle class, than it is on the wealthy getting an ever larger share of the nations wealth.
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    Nov 11, 2010 2:00 AM GMT
    Truth is that horrible economic policy; horrible domestic policy; horrible international policy; by The GOP, is why we no longer have the budget surplus. Lack of proper regulation nearly caused an economical collapse. They couldn't have a much worse "plan."

    The tax cuts for the rich amount to a spending increase. They weren't supposed to get those cuts to begin with.

    The GOP math goes beyond convoluted: tax cuts; increased spending; unfunded wars; military industrial complex welfare. Protection of generational wealth for the richest of the rich skewing 95% of the wealth to just 5% of the folks, whose mission is to preserve that wealth. We should not become a country of king and peasants, as folks like SB would have it.

    They are, to be sure, a propaganda machine that needs to be countered with facts, day in and day out.
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    Nov 11, 2010 2:03 AM GMT
    chuckystud saidTruth is that horrible economic policy; horrible domestic policy; horrible international policy; by The GOP, is why we no longer have the budget surplus. Lack of proper regulation nearly caused an economical collapse. They couldn't have a much worse "plan."

    The tax cuts for the rich amount to a spending increase. They weren't supposed to get those cuts to begin with.

    The GOP math goes beyond convoluted: tax cuts; increased spending; unfunded wars; military industrial complex welfare. Protection of generational wealth for the richest of the rich skewing 95% of the wealth to just 5% of the folks, whose mission is to preserve that wealth. We should not become a country of king and peasants, as folks like SB would have it.

    They are, to be sure, a propaganda machine that needs to be countered with facts, day in and day out.
    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>You sure got this right chuckystud !!!!
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    Nov 11, 2010 2:06 AM GMT
    southbeach1500 said
    Christian73 saidtax cuts for the rich


    People making $250,000 or $300,000 a year are not rich.


    If they aren't rich, then what are they? If I earned $250,000/year, I don't even know what I would do with all of that. I live a pretty high lifestyle as it is and don't make anywhere's near that much.
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    Nov 11, 2010 2:51 AM GMT
    southbeach1500 said
    meninlove said SB, whose wealth is being distributed and to whom?





    Well, under Christian and GQJock's idea, it's being taken from "the rich"... but where it actually goes once it gets into the hands of the government is anyone's guess. icon_cry.gif


    Now now, you know some it's going to unemployment, disability pensions and lots of other things; funding the wars, building the roads n bridges you use. icon_wink.gif
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    Nov 11, 2010 2:53 AM GMT
    It's question to diffuse extremism.
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    Nov 11, 2010 3:19 PM GMT
    Christian73 said
    mocktwinkie saidYour analysis is lacking critical information. You fail to discuss all of the factors that detracted from the apparent effectiveness of the tax cuts. The beginnings of the economic crisis that occurred during Bush and even now have their roots in Clinton's presidency -- by the end everything was falling apart and it was apparent as soon as Bush took office. While I agree that Bush was a bad president (because he did go along with a lot of left-wing economic government intervention strategies in addition to a bad war), we also were attacked on 9/11 and we became involved in an extremely expensive war, this coupled with the housing crisis were obviously not going to make tax cuts appear effective for job growth. To say that tax cuts do not work because of that is just plain misleading and stupid.


    And, yet, your analysis is even worse. The rampant deregulation began in the Reagan administration. WAs pushed during the Clinton Administration by Republican Senator Phil Gramm and, of course, corporate lobbyists. Also, please name one "left-wing economic government intervention strategy" that Bush "went along with..."

    Yes. We were attacked on 9/11 and responded by going into Afghanistan. But, Iraq, the more expensive of the two, was completely unnecessary for American security. And that doesn't take into account the degree to which these two wars were privatized including sweet heart deals to contractors for services that cost 3 to 10 times the amount it would for our military to have done. Further, in every other war, taxes were raised to pay for the war, and, yet, Bush cut taxes twice while prosecuting two wars.

    The biggest beneficiaries of the Iraq War are four Western oil companies, all of which have had record profits. Perhaps they need to be taxed to pay the country back for liberating the oil.


    I can't believe you're still clinging on to this fantasy that the economic crisis had to do with deregulation. Fannie and Freddie were ORDERED and REQUIRED to push into greater subprime lending because leading liberal democrats PUSHED for it and made it happen. At the same time commercial banks are guaranteed under FDIC and it was more profitable for them to supply the supbrime loans that fannie and freddie were eager to buy. Not all of the banks went along with this, but many did and it created a scenario where there was competition to stay ahead of the game. Bush went along with this idea and even contributed to it. Deregulation had nothing to do with anything. The bottom line is that the economic crisis would not have happened if the government did not decide to INTERFERE with the NATURAL FLOW of the market. The idea that the government should interfere with the market is precisely at the core of leftwing economics -- the opposite of laissez faire.Bush being a "republican" by name means nothing, it has to do with the policies involved.

    When you blame "wallstreet" who are you blaming? The personal banker making 30k a year giving people loans? Are you freaking kidding me? I suppose my partner is "wallstreet" too and is to "blame" for the economic crisis, as he happens to be a financial advisor/broker.

    I have a friendly relationship with some people at my local bank and we were all laughing about the stupidity of people making vague references to "bankers" and "wallstreet" the other day when trying to find blame for the housing crisis. Personal bankers don't even know very much about what is "dangerous" or not -- they just go along with limited information while looking up to the practices of fannie and freddie as an example of what they should be doing.