They lowered interest rates. They intentionally gave loans to people who could not pay back the loans. They inflated real estate values by having more buyers chase the supply. They heated up the construction industry and all the associated industries. They repackaged the loans and sold them as securities. The interest rates reset higher on the loans. The borrowers defaulted. The properties went into foreclosure. The institutions that invested heavily in the junk loans are insolvent (bankrupt).
The workers of the U.S. and the world really (the economy has been globalized for this reason to pit the poorest against other workers around the world) are being asked to bailout the rich (corporate socialism). This was planned from the start.
What is more, they lowered taxes on the rich. They increased deficit spending. Now they are saying there is not enough money coming in to pay for entitlements such as Social Security and Medicare. Rather than raise the taxes back up on the rich, those same workers who are being asked to transfer their earnings to the rich are being told that their benefits (entitlements) will have to be cut and/or privatized so the rich can get a cut on the privatized investments. Also, the increases in the minimum wage have been eaten by inflation. The workers are being told they will have to be prepared to live on less.
What is more, when the Federal Reserve cut interest rates and increased lending, it did it without having to undergo an audit. It is supposed to have reserves that are ultimately supposed to be backed by gold (even though we aren't on the gold standard anymore).
The U.S. government doesn't know how much the Federal Reserve has in reserves, if anything. The U.S. government doesn't know how much gold there is in Fort Knox or anywhere else where the U.S. gold reserves are supposedly held. At least the U.S. government isn't saying.
What is more, speculation has moved from real estate to oil and food commodities. It's another bubble causing artificial scarcity.
This is smoke and mirrors. This is voodoo economics.
All the so-called wealth that was built up during the inflation of the bubble is unreal. Once all the air has been let out, the economy will be smaller than it was before they started blowing up the balloon. The common people will be willing to work longer for less and do dirty work for less (murder; fight wars) while the rich will be taking a bigger piece of the pie.
This is the economy from the economists from Hell who don't know how to run the household accounts, the household here being the global economy.
Remember, Alan Greenspan is a libertarian capitalist. He's a disciple of Ayn Rand. He wants you to believe that he didn't know that the real estate bubble would do what it's done. This is the same Greenspan who warned everyone about the "irrational exuberance" of the dot coms. He did nothing but live, eat, breathe, and sleep this stuff after the dot com bust, but you're supposed to believe him that he didn't know the same thing was happening in real estate. What really happened was he figured it out even more.
Also, after leaving the Federal Reserve, he went to work for the guy who made billions shorting on the information about what was going to be the results of all this smoke Alan created for those who had handpicked him to begin with. If Alan wasn't smart enough to know what was going on, why did a guy, John Paulson, who runs the hedge fund Paulson & Co., who was smart enough to make billions on the crash hire Alan, to give him bad information? Why do you need an advisor who knows less than you do about the subject and who made a huge mistake?
It's called the revolving door. It's called reward for services rendered.