Thursday, September 25, 2008

Original sin

George Bush, during his transparent attempt to co-opt Democrats in general and Barack Obama in particular to his Wall Street subsidy plan --

First, how did our economy reach this point? Well, most economists agree that the problems we're witnessing today developed over a long period of time. For more than a decade, a massive amount of money flowed into the United States from investors abroad because our country is an attractive and secure place to do business.

This large influx of money to U.S. banks and financial institutions, along with low interest rates, made it easier for Americans to get credit. These developments allowed more families to borrow money for cars, and homes, and college tuition, some for the first time. They allowed more entrepreneurs to get loans to start new businesses and create jobs.

Unfortunately, there were also some serious negative consequences, particularly in the housing market.

Why might it be that over the last decade, more overseas money needed to come into the country?

Chart via Perotcharts

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