consider the source

Warning Signs of a Modern Depression: See 1990 Japan

in response to john46...

first, greed is good. you state "The problems in the financial markets are almost entirely because of greed." i agree; indeed they are. but that also is the same greed that helped your and the rest of America's 401ks return strong performance in so many other years. i believe it's inconsistent to state in the same sentence "we must eliminate greed" and "...we can return to being leaders in the world." we became leaders of the world in no small part because of greed. sure there are many other factors, but without incentive we don't excel in innovation and don't strive for greater efficiencies. bright minds from around the world come to study and work in the US because of the prospects for success, often measured in monetary terms.

second, when we remove financial and building company stocks all else is not fine. i agree that dividends and stock buybacks have been strong, but that was then. stocks price in what is to be, and not what was. we already earned the buybacks and dividends of 2007 with the stock appreciation seen over the prior 4 years (DOW up 86% from trough in 2003 to peak in 2007).

in discussing what is to be, it's inappropriate to dissociate what's happening in financial firms and homebuilders from the rest of the economy. people used home equity loans to buy boats, cars and pay off credit cards. it's fair to even say that some of the health you cite for other industries was on borrowed money, driven by unsustainable gains and confidence derived elsewhere. when that goes away, and you throw in layoffs, missed mortgage payments and inflation, it's easy to see how iphone sales might weaken a tad.

i agree with most of your comments about government, as well as financial stock losses being born by shareholders, but i don't think government is to blame for lending practices. i do think that lenders were greedy and shortsighted in their loose practices, but consumers were just the same. people made conscious decisions to buy homes they couldn't afford because they were silly enough to think that real estate only goes up. shame on them. of course i feel sorry for the family that's put on the street, but if you can't afford to own something you shouldn't be buying it. i don't subscribe to the excuse that homeowners didn't understand that their teaser rate went away in a year and all of the sudden their payments jump up. it's all there in the payment schedule; they saw it (okay fine, there were probably a relatively small # out there that didn't read their docs). people just expected there would be appreciation and a refinancing, neither of which ended up being the case.

the government doesn't bail out the public from doing countless other self-destructive and downright dumb actions, so why should this be different? when things go up too fast, it's healthy and right for them to come down some as well.