oldsuretyguy

Bernanke Edges Closer To the 'Real' Root Cause Of the Crisis

I agree with Mr.G that the root of the problem is lack of "good paying" jobs. Maybe the Unions should take a little of the heat here since this is why so much of our industry was farmed out to the third world. Our free market capitalistic greed created the decline in US industrial output and we were egar to exploit or create capitalism in Asia after Mao and this is where it has taken us. Runaway inflation in the '70ies because of inflated oil prices from a so-called oil shortage drove housewives into the workplace as US manufacturing jobs began to dissapear. This inflation looked good to many homeowners who realized significant increases in their real estate values even though their job related salaries stagnated. The Bush era liberated the Neo-cons, Wallstreet and his buddies, the business elites from the stiltifying rules and regs of past administrations. When Greenburg announced after the DotCom crash of '2000 that you can't expect to make money in the market for ten years, where was the money to go for big returns? How about the US housing market! What could be safer? Loans are guaranteed by US Fannie Mae, et al and housing prices always go up, don't they thus creating a significant cushion for the lender willing to lend at 100% loan to value?! Since this is such a safe harbor for US investment $$$, let's go one or two steps farther and create Credit Default Swaps that guarantee real estate loans so banks can take these loans off the books and can loan even more, Even sub-prime lending now makes sense....these loans are guaranteed and they can be bundled and sold as securities. Got to love it folks! It's Wallstreet gone mad. There's too much financial junk around that probably needs to be completely eliminated in favor of regulated shares in highly audited public firms. Put the brakes on Wallstreet and If you want to gamble just go to your neighborhood Indian casino.