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The Great Recession Who Is To Blame and What Are We Going To Do About It? Dan Doonan , Labor Economist and Zach Teutsc

The Great Recession Who Is To Blame and What Are We Going To Do About It? Dan Doonan , Labor Economist and Zach Teutsch, Investor Education Coordinator June 28, 2010. Housing Basics. What factors should influence home prices? How much people in the area earn

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The Great Recession Who Is To Blame and What Are We Going To Do About It? Dan Doonan , Labor Economist and Zach Teutsc

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  1. The Great Recession Who Is To Blame and What Are We Going To Do About It? Dan Doonan , Labor Economist and Zach Teutsch, Investor Education Coordinator June 28, 2010

  2. Housing Basics • What factors should influence home prices? • How much people in the area earn • How much the property can be rented for

  3. Housing Basics • Think back to 1980… • How did banks used to make money on mortgages? • Lend, collect mortgage payments • How did that change? • They sell loan to investors, Collect a closing fee • Had no long-term interest in repayment • Wall Street firm owned it now • How does that change lenders’ incentives?

  4. Lending Changed: “How can I get you in this home today?” • How could we sell • products to Individuals, • which they couldn’t afford? • “Innovative” Financing! • Interest only, • pick a payment, • take a 2nd mortgage

  5. Housing Bubble: How could we see it coming? • Over 2000-2006: • Median home prices up 46%, • Wages up only 15% …

  6. 540,000 jobs lost in new building construction alone

  7. Housing Market Today • We built too many houses during the boom years. • What can we do about it now?

  8. Increase in Savings Rate • Personal savings changed from: • -3.6% of GDP in the 2006Q3 to • 5.6% in 2009Q1.

  9. The Wheel of Misfortune

  10. When you opened your first bank account who was it with? Who do you have an account with now?

  11. Union Density Declines - Cycle Continues

  12. Top Income Earners Share of Pie Up, Again

  13. Taxes are Progressive, Right?

  14. Top 400 Earners in US: Income and Taxes

  15. Top 400 Earners – Income Breakdown

  16. Wasn’t Always That Way…

  17. Do people think taxes were higher or lower in the 1930s than the are today? • What was the top tax bracket in 1960?

  18. What is this? Where is this? What’s inside?

  19. Business Tax Shelters • ExxonMobil made a $35 Billion profit this year. That’s $67,000 per minute. • How much did they pay in taxes? • $0 • It’s estimated that $100 Billion in lost in Corporate Tax Revenues Lost Each Year.

  20. GDP and Unemployment

  21. Recession is over… If you want it?

  22. What do the changes in the economy mean for us? • What’s been done in the past? • What can be done? • How can we get there?

  23. We’ll be glad to answer any questions you might have. You can contact us at: Dan Doonan Zach Teutsch ddoonan@afscme.orgzteutsch@afscme.org 202-429-1238 202-429-5090 Also, please e-mail us for the most up-to-date version of this presentation.

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