CIA

Bill Clinton and Alan Greenspan. Clinton knew that he was elected because of the poor economy during George Bush's presidency. He knew that if he wanted to be re-elected he had to turn the economy around. Clinton knew that an easy way to jump start the economy was to lower interest rates which would put more money in the pockets of people. Under the pressure from Clinton, Greenspan continually drove down interest rates which created three short-term goods, but three long term disatsers. 1) They created a debtor society. When you lower the cost of money people are going to borrow more and sent themselves into further and further debt. On the short-term that is good for the economy because consumers are buying things, business is good, but in the long run, you have created alot of people with alot of debt. 2) When interest rates go low, people stop saving and they start investing. During the 90's, there was a huge influx of investment into the stock market which artifically drove the valu of the market higher and higher. We ended up with an over-valued market. 3) When interest rates are down, people can spend more on homes. When people buy a house, they do not necessarily look at the fair market value of that home, the place larger consideration on how much their monthly mortgage payment will be. So when mortgage payments are goind down because interest rates are dropping, people end up spending more and more for homes, and the housing market goes up and up. We are now paying the price for being a debtor society, with an overvalued stock market and an overvalued housing market. Bush dropped the ball, because he failed to see that this crisis was coming on, and failed to head it off, so blame falls on him also. But the origins of this economic crisis is with Clinton and Greenspan.