Few days ago I had a pleasure of watching The Big Short. This film illustrates a backstage of how the real estate bubble had been pumped and then bursted in 2006-2008. The picture explains in a very simple way how the public can be manipulated, pushed into debt, and then responsibility of paying up can be shifted onto society’s back. In my opinion, it is definitely a great presentation of the rotten Wall Street.

However, The Big Short is far from being flawless. Have in mind that it was made to serve a clear purpose – to blame greedy investment banks for everything that happened. This is not the entire truth as the masterminds behind this bubble were:

1. Alan Greenspan’s FED. Lowering the interest rates made credit cheap which in turn created a perfect environment for a bubble to emerge.

2. George Bush Junior government. During the inauguration it was said that every American would be able to achieve the American dream and live in his/her own house. Government gave that ‘opportunity’ to everyone, no matter the income.

Add those two up and you get a recipe for a disaster that made percentage of house ownership drop way below the level of 2001. The only thing that sky rocketed was… debt in every corner of the economy.


Happy Easter to you and your loved ones!

 

Trader21