Let's Point Fingers !

What a mess: Imploding house prices, crumbling credit markets, plunging dollar, equity markets in disarray. It's been a very slow motion train wreck to this point. From Greenspahn's nearly free money policy of several years ago to Wall Street's creative Franken-financial instruments that enabled investment banks to make money hand over fist. A byproduct was millions of Americans have lived well beyond their means for years.

Now the day of reconing for Wall Street, and for Main Street has come. Who's to blame? We might have a shortage of credit, or food, or oil, but we certainly have no shortage of who to blame for this mess. First, let's start with Main Street. Who in their right mind mortgaged their house for expensive cars, luxurious vacations or even just dinner out every night? Apparently lots of people. Living beyond their means became an entitlement. And of course a plethora of "get rich quick schemes" developed with all of this easy money. Dot coms, house flipping, etc. But perhaps the biggest bubble of all was in the value of the US Dollar.

And how about banks of all stripes. They became enablers for all of this madness. Need a loan? To paraphrase what the Mexican said to Humphrey Bogart in Treasure of the Sierra Madre: "We don't need your stinking collateral senior". And so banks booked dollars by the gazillions as income, except it had a curious name: Negative amotization income. Meaning if the bank didn't actually recoup the cost of their capital then the bank took an increasing equity position in the borrower's house. OOPS! But then house prices started what appears to be a mulit-year descent and the rest will soon be history.

Who else to blame? Why the regulators, bureaucrats and politicians of course. And neither political party gets a pass here. Barney Frank, Democratic Chair of the House Fincancial Services Committee watched as all this developed. You might draw some solace (although not much) by noticing that NOW he sees the problem and will take action. And how about another Democratic Senator: Chris Dodd, the Senate Banking Committee chairman? He can now pile on with Frank. The list goes on at the White House. Did the previous Treasury Secretary, John Snow do anything? Well he was good at what his charter was: Cheer leading. And please, do not wake President Bush over this, he's too busy fooling around with his costly and unnecessary foreign adventures. His new Secretary of the Treasury, Hank Paulson will handle these distasteful issues. Wait a minute! Didn't Paulson formerly head up Goldman Sachs and weren't they partly responsible for all of this . . . . ?