Wall Street a.k.a. Greed Street

Bush's tax cuts have kept the economy growing, we are told again and again and again.

WRONG! While tax cuts may have contributed at the margins, what kept the economy growing was Mr. Greenspan's "generosity.

By lowering the Fed funds rate to next to nothing and flooding the system with $$ picked from his "money tree," Mr. Greenspan did indeed help the economy perform well...in the short run. In fact, if lower taxes and interest rates had been offset by budget cuts, a case could have been made for sustainable economic growth.

Alas, that was not to be. In fact, precisely the opposite occurred as the Administration engaged in a spending spree of humongous proportions, aggravated by launching a very costly, unprovoked war on Iraq. These expenditures were financed from $$$ picked from Bush-Cheney's "money tree," (read: money borrowed from overseas).

Once the system was flooded with liquidity, Mr. Bush declared that the "ownership" economy was now in full swing. And, for a short while, that was indeed the case.

Anxious to oblige, lending standards were rendered obsolete by banks and S&Ls, teaser rates became the rage, and with the exception of the homeless, everyone was able to obtain a mortgage, whether qualified or not.

Prices of homes skyrocketed and allowed owner to borrow against their equity. This in turn led to increased spending and GDP growth.

Down payment anyone? Oh, never mind. Just sign on the dotted line and we'll take care of the rest.

Credit cards were issued to everyone, qualified or not. Teenagers were also a preferred target given that they love shopping, say "charge it" and present the bill to mom and dad. In short, no one was immune from the credit card assault and the debt loads on both, the economy and the consumer, continued growing.

If these totally irresponsible actions were not bad enough, the arrival of Wall Street on the scene made a bad situation much, much worse. By engaging in their favorite sport, namely, deadly "Games People Play" with derivatives, they triggered a major financial crisis that is presently being played out in the U.S., and to a lesser degree, overseas.

While it is true that the use of derivatives (options and futures) can be very profitable, it is also true that they can lead to enormous losses, as is presently the case. These are the actions that led to the sub-prime mess that affected and infected U.S. debt markets to the point they are practically frozen.

By "bundling" mortgages that included "the good, the bad, and the ugly" and selling this tainted merchandise both at home and abroad, many foreign institutions have also suffered major losses.

While no one knows the precise nature and or extent of derivatives on their books, they are rumored to be in the trillions. Hence, it should not come as a surprise that the value of the dollar has dropped precipitously of late.

Presently, pressure on Fed Chairman Bernanke to lower interest rates, once again, has reached a crescendo and he seems ready to oblige on Dec. 11th or earlier. Whether lower rates will solve the problem is yet to be determined.

According to financial "experts," it is the only way to normalize a financial system that has run amok, given that well-functioning debt markets are at the very core of capitalism.

It's a classic case of GREED trumping rational thought....