Here at home, the new President, found a mess as great as the ones overseas.
The economy was in a shambles and fixing it won't be a breeze.
The banks and Wall Street had taken on too much risk and had to be bailed out,
And the American auto industry had completely lost its clout.
"How did we let this happen?" the entire world did cry.
It's complicated to explain, but if you like, I'll try.
The explanation that I give you, is just based on my thoughts,
But so far, my thoughts seem to be holding up, and I've compared them to many reports.
First, gasoline prices hit record highs at pumps across the nation.
Two-thirds of the rise was directly caused by rampant speculation.
At the same time, housing costs, were going through the roof,
And bankers and brokers were issuing mortgages, without seeing any proof
That the buyers could afford the big houses they were buying.
Because they thought they could make the payments, without ever really trying.
Teaser rates were offered, so mortgage payments seemed easily made,
But when, in a year, the payments were adjusted, the buyers couldn't make the grade.
To the lending banks and agencies, it really didn't matter if the payments all came in,
There was no way these institutions would take it on the chin.
You see, they had sold the mortgages with all of their impurities,
To other institutions that bought them as mortgage backed securities.
They then bundled the securities before the buyer's eyes.
They couldn't tell the good from bad, so good was the disguise.
The bundles where then rated by each rating agency,
And each was rated triple-A, which made them great investments, you see.
But the bundles weren't really triple-A, and the lenders didn't care,
They had gotten their loan money back, and now had cash to spare.
That let them make still more home loans, and home equity loans, too,
Which put the home-owner further in debt, thus tightening the screw.
As long as property values continued to rise, no one was really in trouble.
But should those prices start to fall, it would burst the housing bubble.
And so, as all the payments went up and the teaser rates expired,
And gasoline prices reached their peak and some homeowners were fired.
Those who were living on the edge, couldn't pay their bills
They soon began to lose their homes, and that's the part that kills.
Foreclosures bring all housing prices down, which only makes things worse,
Causing those who lost a home and job to scream and cry and curse.
But what of those who put their money into mortgage based securities,
Did they lose their investments? The answer's NO, as you will shortly see.
They took out insurance, that guaranteed them that they'd be fully covered,
But the insurance was a house of cards, as soon they all discovered.
The insurance called, "Credit Default Swaps" became a major industry,
There were issued trillions of dollars worth, by companies like A.I.G.
But there was one trouble with all of this, as the world soon observe,
Since this was not really insurance, there was no requirement for reserves.
When thousands of mortgages defaulted, the world's financial system was at risk of shutting down
The banks and Wall Street needed cash infusions, which could come from only one town.
Washington D.C. was the location and the Congress and Treasury provided the money,
But did the executives that were rescued thank the taxpayers for making their cloudy day sunny?
No. They handed out big bonuses, to those that got them in this trouble,
The excuse; they were the only ones that knew enough to get them out of the rubble.
The entire country got up in arms, but there was little they could do.
There only hope was that somehow, someone, would get us out of this stew.
Then along came Barack Obama, who got a stimulus package passed,
Seven hundred billion dollars would be spent, for as long as it would last.
The object was to create or save jobs, three or four million would probably do,
They'd provide new clean energy sources and upgrade our infrastructure, too.
The jobs would be "shovel ready", that would get them started quickly.
But getting them actually going, turned out to be very prickly.
So things progressed rather slowly, few projects were bearing fruits,
Yet, after several months of trying, some thought they could see green shoots.
'though the jobless rate was rising, there was still something to shout about,
The economists were getting the feeling that things were bottoming out.
The economy will straighten out, if not sooner than surely later,
So it's time we passed the laws right now to keep us from falling once again into such a deep, dark
crater.
Four things need to be included in any new laws or regulations that are passed.
And the regulations must be enforced, or the protections will never last.
First, Fannie Mae and Freddie Mac, which were Government backed organizations,
Should never be set up to profit from their mortgage securitizations.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
