Blame it on Wall Street

The real economy of the United States, the one where people work and make things, continues to be exploited.

Remember the housing bubble? More accurately it was a home mortgage leveraging bubble. Long before the bubble surprisingly burst, mortgage brokers knew they could sell just about any mortgage to Wall Street. So they irresponsibly peddled mortgages and home equity loans to anyone who was warm. There was plenty of greed, speculation, and stupidity to go around.

Wall Street then cooked up a complex formula predicting housing prices would never go down, leveraged up, sliced and diced the “toxic mess” and peddled it as quality, high yield investments backed by “historically” rock solid home mortgages.

“Investing” like this happens when the SEC is neutered, the Federal Reserve makes money almost free, off-balance sheet accounting is accepted practice, there are no leveraging limits, and firms are “too big to fail”. Oh, yes, there was one sacrificial lamb slaughtered by the Treasury for appearances.

Long story short, most on Wall Street made really, really big money. Investors, homeowners and taxpayers back in the “real economy” didn’t fair so well. Will something like this happen again? It already is. That’s the sad story ... but here’s the sad future.

Shortly after the housing bubble burst, Wall Street firms and others started staffing up their commodity trading speculation/leveraging departments. Today, it is estimated that pure speculation adds $50 to the cost of a barrel of oil and $1.50 to a gallon of gas. Guess who pays for that?

When you can’t afford to feed your family or buy gas to get to work, focus your frustration appropriately.

Guy Turnbull

Algonquin