Re-posted from my guest blog on Rooflines.
In case you missed the first post in this series, you can link to it here. You should read it. My mom says so.
My goal is to answer my mom’s simple question: why did the economy crash? She was asking me because she had read two newspaper articles that had completely different views as to why this very bad thing happened: Five Good Reasons Why Wall Street Breeds Protesters (USA Today), and Wall Street’s Gullible Occupiers (Wall Street Journal).
In a nutshell, these two opposing views are:
- Wall Street greed, lax regulatory oversight, and excessive executive compensation fueled a global debt glut that finally imploded; and
- Federal housing policies forced Wall Street financiers to provide high risk mortgages to unworthy borrowers, ultimately leading to an unstable housing market that finally collapsed and brought the economy down with it.
In my first post, I explained some of the background for these opposing views, and I also spent a substantial amount of time discussing why view #2 appears to be (a) freakishly out of touch with reality, (b) so freakishly out of touch with reality that even people who normally want to blame the government for everything can’t agree with it, and (c) in spite of (a) and (b), freakishly popular.
To add vinegar to gall, I don’t think view #1 really doesn’t do justice to the issues either. Continue reading