The Fiscal Crisis – How did we get there? Obama answers
President Obama yesterday explained,
This is when the crisis spread from Wall Street to Main Street. After all, the ability to get a loan is how you finance the purchase of everything from a home to a car to – as you all know very well - a college education. It's how stores stock their shelves, farms buy equipment, and businesses make payroll. So when banks stopped lending money, businesses started laying off workers. When laid off workers had less money to spend, businesses were forced to lay off even more workers. When people couldn't get car loans, a bad situation at the auto companies became even worse. When people couldn't get home loans, the crisis in the housing market only deepened. Because the infected securities were being traded worldwide and other nations also had weak regulations, this recession soon became global. And when other nations can't afford to buy our goods, it slows our economy even further.
So this is the situation, the downward spiral, we confronted on the day we took office. And so our most urgent task has been to clear away the wreckage, repair the immediate damage to the economy, and do everything we can to prevent a larger collapse. And since the problems we face are all working off each other to feed a vicious economic downturn, we've had no choice but to attack all fronts of our economic crisis simultaneously.
Back to future: the President further explained,
It is simply not sustainable to have a 21st century financial system that is governed by 20th century rules and regulations that allowed the recklessness of a few to threaten the entire economy. It is not sustainable to have an economy where in one year, 40% of our corporate profits came from a financial sector that was based on inflated home prices, maxed out credit cards, overleveraged banks and overvalued assets; it's not sustainable to have an economy where or an economy where the incomes of the top 1% have skyrocketed while the typical working household has seen their income decline by nearly USD 2,000. That's just not a sustainable model for long-term prosperity.
For even as too many were chasing ever-bigger bonuses and short-term profits over the last decade, we continued to neglect the long-term threats to our prosperity: the crushing burden that the rising cost of health care is placing on families and businesses; the failure of our education system to prepare our workers for a new age; the progress that other nations are making on clean energy industries and technologies while we remain addicted to foreign oil; the growing debt that we're passing on to our children. Even after we emerge from the current recession, these challenges will still represent major obstacles that stand in the way of our success in the 21st century.Now we've got a lot of work to do. There is a parable at the end of the Sermon on the Mount that tells the story of two men. The first built his house on a pile of sand, and it was soon destroyed when the storm hit. But the second is known as the wise man, for when "…the rain descended, and the floods came, and the winds blew, and beat upon that house…it fell not: for it was founded upon a rock." It was founded upon a rock.We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and prosperity – a foundation that will move us from an era of borrow and spend to one where we save and invest; where we consume less at home and send more exports abroad.
It's a foundation built upon five pillars that will grow our economy and make this new century another American century: number one, new rules for Wall Street that will reward drive and innovation; number two, new investments in education that will make our workforce more skilled and competitive; number three, new investments in renewable energy and technology that will create new jobs and industries; number four, new investments in health care that will cut costs for families and businesses; and number five new savings in our federal budget that will bring down the debt for future generations. That is the new foundation we must build. That's our house built on a rock. That must be our future – and my Administration's policies are designed to achieve that future.
The challenges are too great. The stakes are too high. – WHERE ARE WE?