Recent Economic Crises Need Careful Scrutiny
In response to R. B. Kiehl's May 4 letter: As for "lies and deceptions," he did a neat job of cherry-picking authors. I refer him to the Center for Public Integrity for more detailed information and timelines, including briefings by the CIA and other sources.
As to the economy, most middle class taxpayers have had income increases that have barely kept pace with inflation. It has been reported widely that many people are working two jobs. The severance pay doled out to CEOs who were fired for incompetence is incredible.
The economy may well be headed for a recession, since consumer spending is a major driving force, and consumers are getting tapped out. Part of this may be due to the increase in credit card debt, which is by no means cheap. Rates run in the 23 to 30 percent range..
As for the subprime loan scandal, the blame could be spread equally between greedy borrowers who were betting on the increasing value of their homes and the greedy mortgage bankers who made loans to unqualified borrowers up to 105 percent of their equity, with crazy mortgages.
When the housing bubble burst, subprime lenders folded like a house of cards. It took massive infusions of cash by some Wall Street houses and a lowering of rates by the Federal Reserve Bank to stave off a depression. Some lenders are under investigation for fraud.
I believe in capitalism and that venture capitalists do a good job of lending to companies that will provide jobs and new technologies.
On the other hand, private equity and leveraged buyout firms can do the economy a disservice The SEC is finally recognizing the need for more scrutiny.
David F. Weigel
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