BearBull

Don’t Blame Wall Street - At Least Not Completely

I agree with Markos for the most part but I don't think that politicians can grasp the complexity of the economic implications in passing such legislation. In other words I view the legislation as a gamble that only addresses the collateral damage and not the systemic cause of the financial crisis. Markos did point out the fundamental cause of the crisis and it is not Wall Street, it is the entitlement mentality that coerced lax loan requirements and put people in homes and automobiles they did and do not have any business owning. Until there is a fundamental shift in the personal consumption and saving patterns of the U.S. consumer this problem can not go away. The lack of savings by U.S. citizens is irresponsible and why housing prices have to continue to fall and continue to put pressure on the financial system.

If the proposed legislation universally punishes and rewards throughout Wall Street and Main Street I see no alternative but to approve the legislation even though it will not remove the uncertainty in the market. The uncertainty will not go away in the short term and will only dissipate in the long term when the underlying U.S. economic household fundamentals correct themselves over the next 24 to 36 months. How many consumers have 20% down payment for a home? How many consumers can afford that $500,000 to $1,000,000 home and stay at or below the 30% gross income mortgage threshold? While these metrics didn’t matter a year ago…times have changed and now U.S. consumer behavior has to change!