What, you don't believe me? I'll walk you through it.
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.
It was that Clinton guy. He made our economy strong, and it attracted all those foreigners. While you might think that would be a good thing, it was actually bad, because it gave you access to money that you didn't really deserve. And you went and took it, didn't ya? Yes, you did.
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.
But then you went and made bad decisions with that money! You had to go and blow it on a house. And here we trusted you.
Unfortunately, there were also some serious negative consequences, particularly in the housing market. Easy credit, combined with the faulty assumption that home values would continue to rise, led to excesses and bad decisions.
Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay. Many borrowers took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher price later on.
It was you who speculated on this. You were obviously "living beyond your means". What in the hell is wrong with you anyway? Do you take candy from strangers as well?
Borrowers with adjustable-rate mortgages, who had been planning to sell or refinance their homes at a higher price, were stuck with homes worth less than expected, along with mortgage payments they could not afford.
As a result, many mortgage-holders began to default. These widespread defaults had effects far beyond the housing market.
You didn't live up to your promises. We told everyone that you were responsible, hard-working people who could pay your debts, but we were wrong. So, so, wrong about you. You, along with Congress, let these poor investors down.
I'm not finished with you yet...
Many investors assumed these securities were trustworthy and asked few questions about their actual value. Two of the leading purchasers of mortgage-backed securities were Fannie Mae and Freddie Mac.
Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk.
The decline in the housing market set off a domino effect across our economy. When home values declined, borrowers defaulted on their mortgages, and investors holding mortgage-backed securities began to incur serious losses.
How could you go and do that? Well, we don't want to punish you for your reckless decisions that created this problem, but if we don't pay off the people that you mislead with your foolishness, they are going to destroy this country.
Do you want to be responsible for that as well? Do you?
More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically.
And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs.
Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And, ultimately, our country could experience a long and painful recession.
See? See what you did? Now we are going to have to save those poor investors from your bad decisions, and we have to do it right now and worry about the consequences afterward.
Once this crisis is resolved, there will be time to update our financial regulatory structures. Our 21st-century global economy remains regulated largely by outdated 20th-century laws.
But we have to be careful about it. Regulation, which we for the most part have removed because we thought you could be trusted, will have to be put back in place to protect us from, well, you. But we can't have too much regulation for them, or they might threaten to hurt us again. See how tricky this is for us?
There are other good ideas, and members of Congress should consider them. As they do, they must ensure that efforts to regulate Wall Street do not end up hampering our economy's ability to grow.
That's right. If we ask these people to pay for your mistakes, they will get angry with us. You need to come up to the window now because this is all your fault.
So be a sport, and let's borrow more money from these poor investment bankers. We will give you back the American Dream if you do.
And together we will show the world once again what kind of country America is: a nation that tackles problems head on, where leaders come together to meet great tests, and where people of every background can work hard, develop their talents, and realize their dreams.
As long as you do it at 29% interest.
(For the record, I am in favor of bailing these assholes out. But I'm really, really pissed off that free market Republicans will resort to this sort of extortion and never, ever own up to their responsibility for this mess.
You will make them pay for their share this November, won't you?)