SGK

Should Wall Street Have Saved Itself?

This bubble, as the one before it, are perfect examples of the herd mentality that defines Wall Street - "..if the guys next door are doing it and making a ton of money at it, we need to do it too...!" However, Main Street colluded to a large extent by demanding and accepting 120% LTV, Interest only, variable interest rate mortgages it never had a realistic chance of paying back and by overloading on revolving credit debt to the tune of $3,000,000,000,000 in the last 4 years. What's different about this bubble is that it was largely made possible by exotic, off-balance sheet financial vehicles and derivatives that were created by mathematicians and statisticians (yes, many of whom were PhDs) and were little understood; and the government (Congress, Fed, SEC) were instrumental and complicit in allowing this to happen. Now that the genie has vacated the bottle, we can't get him back in....