Who Caused the Recession?

Obama ran a successful campaign against George W. Bush in 2008. It looks like he is gearing up for another campaign against Bush in 2010.

Despite the fact that the ideas behind our current financial structure came from the left, the mantra of the Anti-Bush campaign is that the free market loving right created the current economic malaise.

I contend that one can lay the economic collapse on the left just as easily as the right.

The first observation is that most universities lean left. The ideas that come from universities have a far bigger impact on the economy than the president.

The second thing to note is that the Compassionate Conservatives and Neocons of the Bush Administration aimed to capture the center. To do so, they moved the Republican Party to the left. During the Bush Administration, the Democratic Party moved even further left. With both parties moving left, the county as a whole swung leftward during the Bush years.

We can see the effect of this leftward movement in uncontrolled spending and record deficits.

The International community moved left as well. At the beginning of the Bush Administration the emerging markets were the primary engines of economic growth for the world. In response to unpopular wars, many countries of the emerging market fell under the yoke of communism, stunting growth and falling back into third world status.

We see similar trends in the European Economic Union where countries moved leftward in response to unpopular wars.

So, prior to the economic crash the entire world was unified in a massive leap to the left. The direction a country has a bigger impact on investment than where it's just been.

Back in the United States, the Democrats took both the House and Senate in 2006. This new majority was substantially further left than the Democratic Party of the Clinton years who were trying to sustain their power by moving to the right.

For those of you who took new math and can't reason: The year 2006 is a member of the set of years that is less than 2007.

We blame the economic collapse on Bush and the right, but it happened in a time when Bush was a lame duck and the Left had a solid hold on the United States and most international governments.

In the days prior to crash, Bush had a single focus of winning wars that the press said was lost. He threw the last of the political capital of the right into staving off the possibility that the Iraq war would culminate in a Cambodia style genocide.

Jumping back to the economy, let's make a gigantic assumption. Let's assume for a moment that businesses invest for the future and not for the past.

Businesses saw their allies in government in a full scale retreat, while the rhetoric and ideology of the newcomers demanded radical change with greater government control, a reversal of tax cuts and substantially more regulation.

During the economic crash, the drum beat was that America lost the war and that radical change was on the way.

Holding to the wild-eyed assumption that businesses hire people for work that they will do in the future and not for work done in the past, businesses hearing the drum beat of defeat and radical change would be wary about hiring people.

With the prospect that taxes would soon increase and employees would become a major liability in the near future, businesses that anticipated troubling times would not only freeze hiring, but would actively seek to cash out in the economy.

An economic crash happens when businesses cash out en masse.

Of course, there were many other big problems in the economy. Banks like Golden West and Washington Mutual had hundreds of billions in questionable loans. Madoff had a $50 billion Ponzi scheme, and the mortgage backed securities hawked by Freddie Mac and Fannie Mae as cash equivalents were in fact debased.

The bulk of political donations from these groups flowed toward Democrats and Obama.

It is also important to note that one of the greatest financial manipulators of all, George Soros, had a single minded focus on destroying George Bush and bringing Democrats to power.

The wild rise in energy prices that took place during the crash shows that there was a great deal of financial manipulation going on in the background.

Many people blame the economic collapse on derivatives. The derivatives in question were created by the Security Modernization Act of 2000 that was signed by Bill Clinton, and not George Bush.

It is true that the Bush Administration hadn't a clue about how to regulate such derivatives, but very few people really understand the affects of the new mix of derivatives, much less a president whose primary focus was on handing wars.

I am not a fan of George W. Bush; however, I reject that the economic collapse was caused by the free market. There is a much more compelling case that the crash was caused by the leftward shift that took place during the Bush administration, and an intellectual elite that created self-destructive derivatives (The derivatives of the Security Modernization Act of 2000 is not the free market, it was a set of regulations to give the elite an edge on the market). This would mean that Bush's primary fault was that he moved to the center and failed to make a compelling case for the vision of freedom.

The economy collapsed in a time when an unpopular Republican was President. The House and Senate (which control the purse strings) were controlled by the dynamic Democrat duo of Pelosi and Reid. The world and the nation had taken a massive swing to the left.

The economic collapse of 2007/2008 was much like the start of the Great Depression in that it followed back to back progressive presidents. There is a stronger case that the collapse happened because we were veering away from a free market to the case that it was caused by the free market.