Wall Street’s overexuberance might have led to busts, but not a prolonged malaise like this one which can be pinned squarely on leftist policies.
Leftist policies did prolong our bad economy by throwing money into a bad situation. But even if McCain won in 2008, Wall St will still implode from the toxic assets. Lowering taxes will not move the economy like before because our banks got into something that never happen in previous downturns. It is called derivatives. Estimates on this financial weapon of mass destruction ranges from 50 trillion to 1500 trillion. That is right, trillion. The entire world GDP is about 25 trillion.
Why do you think the Fed Reserve and US Treasury was desperate for TARP? Greek gov bonds represent a very small part of the EU that its major banks can absorb if Greece choose to default. The reason the ECB, major European banks, US Federal Reserve, US gov, and US banks got very scare is many banks brought derivatives on Greek bonds that were leveraged. The losses can be 40 to 100 times of total Greek bonds if default happened. Why do you think the EU used threats to prevent Greece from having a referendum on default? What is the EU going to do as Italy is having problems? Where is the physical paper currency going to come from to plug its impending implosion?
The world currency system is tottering. One break and it is possible for the entire world banking system to implode on the derivative leveraged sovereign bonds. Once that happens all rules and promises by banks to her customers and/or gov to her citizens are off. Right now government and the bankers figure if they don’t take the customers money to prevent the implosion, the customer will lose everything anyway thus any action is justified. That type of mentality is dangerous to all customers with accounts in banks, brokerage firms, 401k, mutual funds and etc. MF Global is the first red flag waving and many can follow. If deregulating, tax cutting GOP were in charge, they cannot stop the crisis and confiscation of customer money either. IMHO Obama will not be reelected and the next POTUS will be a one term.
The way I see it, a dictatorship is the only way out of this crisis.