Question

Regarding America's 2009 economic crisis, New York Times Op-Ed Columnist Frank Rich writes in a January 9, 2010 editorial that ultimately "Wall Street gamed and inflated the housing bubble, made out like bandits, and then left millions of households in ruin" and goes on to say that "bailed-out banks are [now] reporting record profits and bonuses. The contrary voices of Americans who have lost pay, jobs, homes and savings are either patronized or drowned out entirely by a political system where the banking lobby rules in both parties and the revolving door between finance and government never stops spinning."

Write a carefully reasoned essay in which you defend, challenge, or qualify Rich's claim regarding politics, economics, and the American citizen . Support your argument with specific references to your reading, observation, or experience.

Answer 1

Frank Rich's claims about the financial sector emerging relatively unscathed from the 2008 economic crisis, in stark contrast to the general population, align with economic realities and popular sentiments. They emphasize the misalignment between banking interests and public welfare and underscore the problematic interplay between finance and politics. This period serves as a reminder to revisit our regulatory frameworks to equally protect all economic participants.

Step-by-step explanation:

Frank Rich's assertion about the infamously disproportionate effects of the 2008 economic crisis reflects a reality where the financial sector largely escaped the dire consequences of their actions due to government bailouts, while ordinary Americans suffered significant losses. The fact that banks could return to reporting record profits and bonuses while millions of Americans lost their jobs, homes, and savings indicates a potent misalignment between the financial health of the banking sector and the economic wellness of the majority of citizens. Moreover, the claim that the political system is unduly influenced by the banking lobby, sustaining a perpetual revolving door between finance and government, echoes widespread sentiments during and after the crisis that culminated in movements such as Occupy Wall Street, which targeted the wealth disparities and influence of the 'top 1%' over economic policy.

On the economic front, the housing bubble was inflated by unregulated bond markets, speculative trading, and precarious mortgage securities. The collapse of this bubble led to the Great Recession of 2008, presenting a stark example of how economic prosperity for a few could lead to widespread economic devastation for many. On the political front, both main parties' relationships with the finance industry and frequent career transitions between government positions and financial institutions suggest a close, potentially problematic relationship between regulation and the entities being regulated.

These scenarios paint a picture where the financial crisis not only revealed glaring systemic risks and regulatory failholes but also sowed deep suspicion among the public towards the political and economic systems. The 2009 economic crisis thus serves as a wake-up call for reconsidering legislative and regulatory frameworks to better shield the wider population from the fallouts of the financial sector's misjudgments and to rectify the perceived inequality in economic and political recourses.

Answer 2

One of the causes for America's 2009 economic crisis was the invention of subprime mortgages, for 'second class' clients, who previously did not have access to credits, but the innovation of securitizing these mortgages arose, clients paid only interest the first years, making the quotas lower, but the interest rates were variable and then they were increasing and the salaries were being eaten by those payments, the central bank allowed the rules of the game to be changed, because of the crisis that was coming, this left thousands of Americans unemployed and without homes. In all this the government did not intervene favorably, on the contrary, after a while it helped the financial system to recover, but no citizen could do it.