Is the sub-prime meltdown the beginning of the end of American capitalism?

Question

It certainly is a painful wake-up call to everyone in the working class who thought capitalism could work for them. They won't get fooled again.

Answer 1

First of all, never underestimate the workers' capacity to be duped. U.S. workers in particular have been repeatedly duped in the last thirty years and show no signs of waking up any time soon. Rabid, free market fundamentalism, the most toxic form of capitalism ever developed, seems to hold many, if not most, U.S. citizens under its hypnotic spell. Apparently, it's more important to keep prices low at Malwart rather than organize and seek labor rights and social justice.

Now, to answer your question: the sub-prime meltdown is not the beginning of the end of American capitalism. The meltdown is the first hint that Americans have that their alleged "supreme dominance" of the world has come to an end. The center of the world has been Beijing for most of the last decade; but people in the U.S. are only just beginning to realize that their status in the world has changed and continues to change.

As to the "extreme sport" that is American-style capitalism, a true awakening of the workers to the class war that is being waged against them by the wealthy elites in business and government won't come until the health care crisis reaches even grimmer proportions than at present.

Answer 2

Well, all countries have their economic problems. The recent downfall of the trade markets are due to greedy home buyers greedy loan providers, and poorly designed mortgage programs.

The US economy is not like in a "bad" shape. It's just that its fragile. Employment levels as a matter of fact has been fluctuating over the years since the events of 9/11. Not increasing.

Is capitalism to blame for this? Um...no. No political or economic system is 100% perfect. Nothing is. Everything should be applied such that the maximum benefits can be reaped. Look at the USSR, and how it collapsed. Look at communist China which applies capitalism in its economy (and it is already generating some really big social problems there) and its economy is booming.

And of course, many US investors invest in company shares and bonds on the stock markets. Regardless of what happens in an economy, stock markets would always be running. And sure there are always ups and downs. Nobody on earth can avoid that; unless you are not human.

Don't worry too much about such things. Good luck.

And too all those people who love to hate liberals, why do you always have to bring up the "liberal" word?

Answer 3

What end . You might as well accept the fact that the poor are never going to have anything .
No matter how much they save and no matter how careful they are with the income they earn .
Even buying the cheapest property to live in is better then paying rent .
Who wants to live in a community with gun fire all night and police cars racing up and down you block .

But lets say you can handle that and earn $20,000 a year working hard keeping the shelves and floors and bathrooms clean at a local retailer .

Your pay might increase 4% a year over that twenty years but after only 10 years your pay will reach $14.50 an hour .

Now name a ten year period in which you would have kept up with inflation . So go on and ride out the job another ten years because no place else is going to pay you as much as you are making now .
SO lets say you are smart and go to school to earn a business degree so you can run the store .
4-6 years later you have $100,000 dollars worth of student loans to pay back and the assistant manager making $16.00 an hour is earning less then you are so when he leaves you are offered the job and take a dollar an hour pay cut but you are in line to be manager now . SO now after 20 years you are making oh say $20.00 an hour and are waiting patiently for the manager to retire when you figure out he is only 55 years old and will be staying on another ten years .
So after thirty years your big chance arrives and because of the 4% pay increases you take another pay cut to become manager as you move up . Now you are working 60 to 70 hours a week for that $55,000.00 managers job covering all the shifts of people who do not show up you have to mop out the bathroom from time to time still and had you just stayed at $15.00 an hour and worked forty at straight pay and the other 20-30 at time and a half $22.50 you would have been pulling down $55,000.00 for the last 20 years .

So quit your job and start a business you can control your own paycheck with . Get a plumbing license instead or an electricians license and start your own company .

Answer 4

I think it's the first signs of a major economic depression which will hit America shortly after Bush leaves office. While I wasn't alive then, I knew many people who suffered through the Great Depression of 1929 - and if you listen carefully, you'll find similarities in today's society. People were over-consuming, squandering money on all kinds of new-fangled "things", investing in a stock market that showed all the signs of collapsing, and ignoring the realities of their own arrogance, avarice and hubris.
Add to that a multi-trillion-dollar 'war' that has put American taxpayers head-over-heels in debt for decades (if not generations) and you have the perfect prescription for a massive economic meltdown.
You might want to print this out and tuck away in your safety deposit box for a year or two: I predict that by spring of 2009 the United States will be in the throes of the worst economic depression in its history.
Those who claim "everything's rosie" have every reason to keep their optimism; after all, they're rolling in the dough. The irony is that they will be among those who will suffer the worst when the depression strikes because they will see the biggest losses (that's why so many millionaires jumped off ledges in 1929). Those who are already 'in poverty" won't suffer nearly as much because they're already used to the daily struggle to survive. -RKO- 11/06/07

Answer 5

The problem was that people with poor credit who shouldn't have been given loans in the first place, due to their high probablility of defaulting based upon their own credit history, were given loans. Then, when they couldn't pay the bills, the house was sold out from under them.

Many people in the working class have excellent credit. They are responsible and pay their bills on time. The subprime market was not aimed at them.

Now, if you DID pay your bills even on a subprime loan, you could have come out ahead. You could have rebuilt your credit using this tool. Problem is, too many people didn't take advantage of it as they could have.

On the other side, the creditors took advantage of people who already had trouble. It's like offering alcohol to an alcoholic. Not exactly an ethical thing to do. But many of those companies have since filed bankruptcy.

It was a risk the buyer takes. No one forced anyone to take on a subprime mortgage. As an adult, you choose to sign on the dotted line.

Answer 6

Wow that’s a strange stretch. Capitalism isn't working for them? We have a better standard of living here than any other country. If you want to compare countries that do not have capitalist systems then it even gets better. What most of them get per year would not support our yearly costs of paper towels. If you hate capitalism live in the anti-capitalist utopias all over the world. Good luck

Answer 7

No it is the result of the long term tech bubble rates were lowered to save the market and dishonest brokers made loans to people that couldn't afford their homes at the lower rate with an ARM loan. This is one of the long term effects of the SEC being barred from doing its job by B Clinton and the federal reserve saving the economy while criminals used the lower rates to make false loans and never would have happened without the tech bubble which was Clinton's fault and this is his legacy sweet right.

Answer 8

Reputable lenders need to come up with programs to refinance these people into a fixed they can afford. I'm sure they'd rather have payments coming in then having to go to the expense of foreclosing on so many homes to ultimately have those just sit and sit on the market. Everyone is just spooked right now.

Answer 9

Actually it will have the opposite effect;the economy will strengthen.Requirements for long term loans have and will continue to tighten.This will help weed out those who cannot do simple math and realize that they can't afford the home purchase to begin with.
Moral of the story?
Get an education.
Be prepared to move to a "hot" employment area.
Realize that you will change jobs at least 10 times during your working career and prepare for that.
Save some money.
Protect your credit rating.Don't cry because you defaulted on that $1000.00 credit card bill and are now considered to be a bad credit risk ;not my problem.

Answer 10

I don't think it will deep-six the whole economy. The people who are losing their butts were foolish enough to think it was wise to give mortgages to people who didn't have the means (or self-discipline) to pay them back.
The thing that might ruin the economy would be the complete disappearance of the American middle class, which is currently in progress.