Overdose: The Next Financial Crisis

340 Words2 Pages
Journeyman Pictures uses an odd metaphor to portray our economic problem. In 2001 president Bush decided to use federal reserves to encourage people to keep shopping and circulating the economy. By “drugging” the people with a one percent interest rate, banks can loan out more money and take greater risks. It its successful, they will keep the profit. If not, they will be rescued by the government. Home equity loans boomed, and Fannie May and Freddie Mac was born. People expected to get rich by buying a home and selling it at a higher price. The rating agencies kept the house prices high, so that more people would keep buying them. If they put bad ratings on them, they wouldn’t sell! But they eventually couldn’t keep them high. Once the ratings went down, people couldn’t pay off their loans. They use the analogy of bubbles for economic problems. We have and now we have the bailout bubble. Stimulus packages were executed in hope to keep the economy going. Unfortunately, both president Bush and Obama put the money from the stimulus package. On top of that, they “burst the bubble” by lowering interest rates even lower! But now we have this giant bubble. It’s not a small bubble that we can just burst and clean up the shrapnel… this one is so huge it engulfs the entire world. It’s a huge problem to say the least. If the United States, the place with the highest economic rating, were to have their economy crash then others would start falling as well. I don’t know what to say, and I have no idea what the US economy was to do. The stimulus package seems like a good idea, but no president seems to use it correctly. If the government just stands back, then less people would use banks much less when the government is so far in debt. As they say in the end: “The government can save the banks, but who will save the
Open Document