Who's Really To Blame For The US Financial Crisis

I bet I shocked you with this post title, huh?!

Yes, I'm going to step away from my typical light-hearted fare to talk about something serious.

For the past few years the US has been in the midst of the biggest financial crisis since the Great Depression. All of the experts have weighed in and the blame game and the pointing of fingers has been going on for the past 3 years.

I'm no financial expert. I'm no political pundit. However, I am an investor and a consumer and therefore believe myself qualified enough to share an educated opinion about what I believe lead us here as a country.

In it's simplest form, this crisis can be blamed on 2 things:

1. Avarice on Wall Street

2. Naiveté on Main Street



Avarice on Wall Street:


In my mind this is pretty self explanatory. Wall Street's primary function is to provide me, as an investor, with lucrative investments so that I can make a shit load of money. That's their 'Raison d'être'. Yes, implicit in that function, they're supposed to ensure that the investments they offer are sound. We trust them to do this for us. We trust them to reassure us that all is well and that our money is safe. However, we forget that this is a THEIR business and they will look out for themselves FIRST!

Bottom line, Wall Street put together some shoddy, shitty bundles of investments (Mortgage Backed Securities) marketed and sold the shit out of them and made a killing by duping (whether that was the initial intent withstanding) their trusting investors.

Naiveté on Main Street:

So Wall Street pushes these new (Super-duper! Get them while they're HOT!) investments to your banks, credit unions, 401Ks etc. and, as is want to happen with such a dastardly trickle-down effect, they end up on the doorsteps of John and Jane Q. Public on Main Street in the form of Mortgages.

We can all argue now that hindsight is 20/20, but right at that moment all John and Jane could see was the opportunity to achieve the 'American Dream'; to own their very own home. So, they naively signed away their lives agreeing to terms they either didn't comprehend, were blithely unaware of, or determined that they could meet the terms of the contract when their mortgage payment tripled after a year.

I remember hearing the rationale put forth by friends/co-workers trying to reassure themselves that they could 'do it'. Both partners would get second jobs. They would save more from right now. They could cut out lattes, HBO, sell the second car and take lunch to work every day. They would invest more on the side. All sound, long term goals and noble to boot. What they did not account for was the fact that when the crisis hit that they would lose the very jobs they had now. Harsh reality soon set in and the dream was lost; evidenced by the foreclosure sign on the lawn of the dream house they really, truly could never, ever afford in the first place.

Sad, but true.

As my grandma used to say:

'If it looks too good to be true, then it probably is.'

Those investments Wall Street was selling us were too good to be true, but that was what lured us as the salivating, greedy, money-hungry investors that we are. The returns were good, so we didn't ask any questions or tread carefully. Wall Street's greed and Investor greed. That's Avarice.

As a consumer, taught that our 'be all, end all' is to own our own home, we jumped at the chance to do it and do it NOW. It all looked so doable, so simple. That should have been our first clue. That's Naiveté.

Thanks for reading.

Dazz, Investor & Consumer.