The Problem is Most Americans Still Believe It’s All Bush’s Fault

Most Americans do not like most of the policies of President Obama. If this is the case, then why do they still support him? Because a majority of people still blame George Bush for the state of the economy, and the President, even with all his faults, has their best interests at heart.

The seeds of the economic crisis that hit in 2008 were sown long before the two Bush presidents.

Today’s voters are schizophrenic. There’s a reason for it, as I hope to show below. Rush Limbaugh said the following on yesterday’s show:

[On February 11], we had the Gallup poll, and on every issue except one — and I forget what the one issue was — every issue, every policy, by vast majority numbers, the American people disagree with Obama. A vast majority disagree with Obama on every policy. I mean, it’s not close. In some cases, the numbers of people that disagree are in the 60 percentages, and the people agree with Obama are in the forties. But they liked [his State of the Union Address Tuesday] night. They thought it was exactly what was called for.

A New York Times story reports that while there is dissatisfaction with the country’s direction, they still support Obama’s agenda. Like Limbaugh, I am confused, but like Limbaugh, not really. We’re back to low information voters again. I have to say it: Most Americans are ignorant. They lack information and the ability to process new information if it does not fit with their poorly developed interpretive grid on how they see the world. They’re not stupid. They’ve been propagandized.

You don’t have to be a genius to figure out basic math and its application to economics. Our nation’s schools require at least three years of higher math, sometimes four, but most high school graduates don’t have the slightest idea how our economy works, and you don’t need algebra, geometry, trigonometry, or calculus to know.

There are many Americans who believe that the downturn in the economy is complicated and that capitalism is the culprit and has been discredited. The credit crisis was not the fault of capitalism but with anti-capitalist (free market) policies brought on by government intervention. Congress created an economic fiction by subsidizing loans that no bank or mortgage company would have done if there had not been government financial institutions behind them to insure the bad loans they were forced to make. But how do you explain this to people who don’t have the categories to understand what you’re saying? They hear you speak gibberish. They need to be economically born again.

Let’s say that three fifth graders want to purchase the latest hot video game and they heard that a friend of theirs got $500 for Christmas. Each of them wants to borrow $50 for the new game. The first fifth grader says he has a job mowing lawns and will be able to pay back the loan at the end of the summer with interest.

The second fifth grader gets a weekly allowance for doing his chores. No chores, no allowance. The same end-of-summer promise is made.

The third fifth grader doesn’t have a job, but she can guarantee that her parents will pay back the $50 at the end of the summer whether or not she can raise enough cash on her own.

The first borrower has less risk than the second borrower, but what if there is a drought and people don’t need their lawns mowed? To account for this contingency, the borrower has some items he can sell on eBay that are worth more than $100. He has collateral.

The second borrower has the greatest risk since he has no collateral to back up the loan if he defaults.

There is seemingly almost no risk with the third borrower since the loan is guaranteed by a reliable third party. But what if the parents lose their jobs? The loan is only as good as the parents’ ability to pay.

The mortgage debacle in America came to fruition because of promised government loan guarantees insured by assets from the VA, FHA, Freddie Mac (Federal Home Loan Mortgage Corporation), and Fannie Mae (Federal National Mortgage Association). It was the promise of the guarantee (“It’s the government!”) that made lending to high risk borrowers attractive to banks and other lenders. There was no perceived risk so the loans went to people who under normal circumstances would never have gotten a loan.

This worked as long as there weren’t too many people seeking the guarantee and there were no dips in the economy.

The transactions seemingly only had an upside. As long as there is a guarantor, as in the case of a parent who will guarantee a $50 loan, of government agencies with an unending source of capital, there was no need to scrutinize borrowers. This loan guarantee program has a long history going back to the Carter years. As with all government programs, it got bigger and bigger.

Even a 5th grader can understand this math. It’s too bad that a majority of voters are still stuck in the 3rd grade.