Economic Woes? Thank Greed and Stupidity.

Rubber Dagger here reporting from the blood drenched trenches of the financial industry. I talk to a lot of folks who ask me "what happened?" and "what happens next?"

I've posted this video, made in 2007 by a couple of comedians, that fairly well sums up how we got here.



Let me add one more thought to that. I recently had the pleasure of sitting down in an intimate setting (meaning a small group) with the President of Market Analysis for one of the largest investment corporations in the world; we'll call him Al.

My concern is that nobody is being held accountable in the wake of all the destruction. CEOs and CFOs, who should have known the amount of risk they were taking with these sub-prime loans, have either walked away unscathed themselves or with golden parachutes. Did you read the article about the new CEO for Washington Mutual? Google it.

The legislators seem distracted trying to spin this crisis to their own advantage, and main street Joe is worrying about pink slips.

When I brought this up and expressed my gut feeling that we are doomed to repeat ourselves due to the lack of accountability; Al agreed! He said that the problem with Wall Street is that corporations are asked to produce sales results. The CEO turns to his crack staff and asks them to come up with a product that will sell. They're not concerned with quality so much as results. Thus, in Al's words, "We find a way to shoot ourselves in the foot every 10 years or so."

Hmmm...anyone remember the .com bubble? How about Black Monday from the savings and loan debacle in 1987? Oil embargos? Great Depression?

While the facade may be new, the ailment will always be the same. Greed from investors demanding quick results creates pressure for corporations to produce those results regardless of whether the product themselves are sound.

So, where are we going from here?

Thanks to the legislators we are solidifying an even bigger socialist model. Now the government is actually going to hold shares of stock and property?! That was never supposed to happen.

However, now that it has, the government could hold on to those assets until they appreciate appropriately and sell at a profit. One could only hope they'd put these gains to good use by reducing the national debt - fat chance, though. Most likely politicians will see that money as additional welfare capital to give to those already not paying any taxes.

Also, if we keep down this path, the government will become the broker for large failed business entities. They'll swoop in and save a company who made fatal errors in their business plan and broker the restructuring to companies who haven't. Thus the free market never gets a chance to naturally restore a financial balance to the economy.

In the end, for main street Joe, the market will recover more quickly - but at what cost? We've just opened Pandora's Box and we won't be able to close it again.....

Quick - I need some Alka Seltzer