The oil companies and Haliburton both have record profits.  Doesn't seem to have hurt them. 

Our economy's state is not hurting because we are in Iraq, if anything that war is keeping our country afloat and giving Americans jobs. What hurt our economy was a bunch of ignorant people looking to get rich quick by investing in more than they could sustain coupled by shady lending practices. The reason it collapsed is these variable interest or interest only loans met their 3 or 5 year cushion and the people who got them could not afford to make payments. Which in turn causes them to go into foreclosure. As a direct result of that lenders have withheld funds which means banks no longer have money to give. So unless you have great credit and money down you will be hard pressed to get into a home. The rising unemployment is a direct result of all of this because of so many people going into the mortgage industry and then it collapsing on itself. If you remember a few years back the same sort of situation happened with tech stocks. . .

PMI only helps the lenders, and only in some circumstances. 
The broader economy had been propped up for the better part of the past twenty years by folks living beyond their means, who were using their homes at ATMs.  Every time the perceived value of their homes went up, they would cash out some of that alleged equity, and use that to buy big-ticket items.  As early as 1995 this trend was noted, and the sight of folks cashing in on overvalued items (homes, stocks, etc) led to Alan Greenspan's famous use of the term "irrational exuberance" in 1996.

The cycle repeats itself though, and we've witnessed the same scenario over the past few years.  An irrational run-up of perceived value, followed by unwise cash-outs at the peak of an inflated market, followed by the inevitable correction.  We are at that corrective phase now.

Drummer, as far as Iraq is concerned, it doesn't actually have anything to do with the present state of the economy.  To be sure, it is another big-ticket expenditure courtesy of a Federal government that sure knows how to throw money around, but that spending neither brought on nor exacerbated the current economic crunch.  In fact, if it weren't the Iraq war, you can be sure the government would have found some other way to spend our money.  (This is why the argument about funding the war is more political than practical...Democrats know full well that if Iraq was removed as a source of spending, they'd just fund something else that suits their interests; and Republicans are only slightly less prone to writing checks at our expense.) 

What we have now is a predictable and painful reminder that capitalist economies right themselves over time.  Booms and busts are cyclical, and neither lasts forever.

Speaking of finding something to spend money on.... Look a the drain on our budgets that welfare and social systems puts on the tax payer..... What should happen is lower taxes as a result of them cutting these programs off at the knees.... if only.. http://www.heritage.org/Research/Welfare/Test030701b.cfm

The idea that war helps economic growth is a myth, a type of Broken Window Fallacy.

 The cause of our current problems can be directly traced to the Fed monetary policies.  From January 2001 to June 2004, the federal funds rate target was lowered from 6.5% to 1%. Cheap and easy credit leads to risky behavior by lenders. There are other factors, but that is the core of it. The tech/dot com bubble was caused by the same thing.

Thanks,

Higgs

drummer72 - I assume that you were serious when you asked for some input about this horrible economic crisis. My economics classes were many years ago but here goes. First and foremost, we are not , repeat not , in a horrible economic crisis, that is pure political hyperbole that is to be expected in an election. The candidates who are out, and want to be in, have a vested interest in making people believe that the sky is falling. I just hope that they are not creating a self fulfilling prophecy. keep telling people that we have a crises and soon they will act as if we are, and cause one.

There are three measurements of economic health. The rate of unemployment, the rate of inflation, and the GDP (gross domestic product) the total amount of goods and services produced in the country in a year (sometimes called GNP, its the same thing).

Some numbers ( you can find all of these statistics on the net if you wish to verify). At present the unemployment rate is 4.03% ,traditionally a 5% rate was considered full employment ( as some are unemployable, some are between jobs, etc). so as you can see the unemployment numbers are very good. As a point of comparison, in the 1980s when we had real economic problems the rate was 9.7% in 1982, and 9.6% in 1983.

The rate of inflation is 4.03%, not great but compared to the 13.58% in 1980, not a disaster. if you were to discount the cost of oil (which, as any honest observer will admit, we have very little control over) the rate would be far lower. 

Lastly, GDP. Economist have described a recession as two or three quarters(sorry I forget which) with drops in GDP in a row. The GDP rate now is 0.6%. This is very low and a sign that the economy has slowed down, but it is not a drop, it is a low rate of increase but it is an increase. The 2007 GDP increased by 2.7%.

Yes we are in a period of economic slowdown, but we are not in a crises, as I said above, that is pure political rhetoric. Yes a big bank almost collapsed, but that is the price of making bad business decisions. some people are loosing their homes, also ,in large part because of bad decisions. remember , 95% of home mortgages are being paid on time by people who made smart decisions.

In summation, we are in a period of economic slowdown. There are some issues that the government is addressing (more for political reason that economic ones). This is all part of the normal economic ups and downs of a free market system.

Sorry that this was so long, but you asked for it!

It's my LaSabre Drummer!  You should know that!  5 miles to the gallon, 100 miles a day!  DUH!!!!!!

Drummer;
There are a lot of factors causing the economic crisis we are in. The war in Iraq, the housing market, rising energy prices, etc...

Millions of jobs have been created, sure. A lot are overseas and there are also millions of jobs that have been lost. I would not say the war in Iraq has helped the country. It has helped certain business. Jobs that have been done by the military in the past are now being performed by companies such as Haliburton and Blackwater. Good for them, bad for our military and country...in my opinion.
There has been a large spike in the cost of healthcare, college tuition, gas, national debt, foreclosures, etc..All of this while the buying power of the dollar decreases. Right or left, I think that we are all in agreement that tax cuts during wartime is just plain foolish. Correct me if I am wrong, but cuts during war time is a first.

We, as a nation, are heading in the wrong direction. There is plenty of blame to be shared by all politicians. We went from an agrarian economy, to a manufacturing economy to a service economy. If we learn anything from history, we will be a servant economy next. We are losing the war to be the best in technology. Not good!

As to why gas prices are higher. conspiracy theories about the gov and oil cos may be satisfying, but cold hard facts are more enlightening.

Economics 101, the law of supply and demand. When the supply of a commodity goes down, is stagnant, or rises slowly, and the demand for that commodity goes up dramatically, then the price will go up. If you have 1,000 widgets,and people want to buy 500, you can't charge a very high price. If demand for widgets goes to 2,000, you can dramatically raise your prices.

In recent years other nations have started to industrialize to a much greater degree. as a result they demand more of the limited supply of oil. As 1.1 billion Indians and 1.3 billion Chinese start to turn in their bicycles for cars, the demand for oil will greatly increase ,as will the price. A reduction in demand (by a world wide economic slowdown) could lower the price as could an increase in production ( which is why OPEC keeps control of members production). We are at the mercy of foreign oil producers, among them some who do not like us and have no desire to do us a good deed.

In the short term we need to increase domestic production. Various groups are doing all they can to prevent that from happening. In the long term we need to get away from dependence on oil.

Millions of jobs have been created, sure. A lot are overseas and there are also millions of jobs that have been lost.

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US unemployment rate is 4.3%, which is very low. Historical 5% unemployment has been considered full employment. Add to that millions of workers who are off the books (illegals for example).

here is a list of things that hurt our economy one way or another

1- war

2- home loans

3- illegals sending all their money to their home nation and not spending it here

4- hospital and medical treatment for illegals

5- school and school related items beong spent on illegal children

6- american debt ratio

7- no savings will hurt long term

8- lack of education = low paying jobs due to lack of eduction

9 illegals not paying taxes

10 any govement (federal/state/county) spent on illegals

11 out of control spending keeping up with the JONESes

12 insurance claims due to un-insured/under insured motorist s

The issue isn't supply though, supply isn't constrained, it's knee-jerk reactions from speculators driving up the cost per barrel of oil.