Who’s to blame?

There are loads of people to blame for the housing collapse, mortgage mess, the credit lockup, stock market losses and structural damage to the world economy. Although they’re related, these are individual catastrophes, each with a free-standing potential to destroy America’s ‘free market’ system. There’s no getting away from the fact that this global problem started right here and that the wealth of other nations and other peoples will be dissipated along with our own. And, they’re not particularly happy about. They will, therefore, exact a price for the stupidity and short-sightedness of a very few Americans which in turn will be borne by all Americans.

But, who are ‘they’? Who shoved their fellow citizens into a morass that may take us decades to backfill? According to Rep. Barney Frank (D-MA), he wasn’t in any way responsible. Neither was Sen. Chris Dodd (D-CT), nor Franklin Raines, or Tim Johnson. But then neither was Chris Cox, Harvey Pitt, Alan Greenspan, Ben Bernancke, John Thain, etc. The list goes on and on. The blame rests with Democrats. The blame rests with Republicans. The speculators, Wall Street fat cats, bankers, hedge fund managers, ratings agencies and who knows is to blame. Unscrupulous mortgage brokers, various financial intermediaries, homeowners, homebuilders and a cast of thousands are also implicated. Like the stock market speculation of the tech bubble, the real estate and credit market speculation was a bubble destined to burst. But no one could have imagined the far-reaching, devastating consequences. But in hindsight, there could have been no other outcome.

Over the years, little pieces of legislation and regulation were added, deleted or amended. A small change in real estate lending policies here, a capitalization requirement there - it seemed innocuous, something that the economy could easily afford. But there were hundreds of incremental changes in a hundred different areas of finance, banking and investment that no one could track, all building on one another. The resulting mess is equally complex. Nevertheless, there is one more shoe to drop — the response to this American-made calamity by the rest of the world. How harsh and painful it will be is anybody’s guess.