There’s been a full- fledged attack from certain news sources harping on about the role of real estate in the crash of 2008. A lot of it is valid. But what’s being pushed under the rug is the shadow banking industry that took a busted bubble recession and turned it into a depression on par with the Great Depression. Were it not for extreme government intervention, the damage would have been astronomical.
And the financial sector, in the wake of such a massive blow to our economy, has escaped relatively unscathed. Major financial regulation overhaul isn’t on the table, even in the extremely long and complex legislation known as Frank-Dodd. And here’s the kicker: Wall Streeters are crying about how rough life after the crash has been.
To me, this just shows how isolated and convoluted the realities of these people are. It’s alarming. And it’s further evidence of a growing divide in our country and politics: those who suffer from a cut in bonuses that exceed six figures vs those who lost their jobs, homes, and retirements. It also underscores an odd sense of entitlement for those in the upper income tax bracket.
Until we come to grips with the fact that the middle class is the engine that powers the economy and that their purchasing power makes our economy diverse and robust, this divide will only get worse and our economy more anemic. Stagnant wages for the majority of the working class is far more worrying than the deficit. Now if only the crybabies on Wall Street and politicians on the Hill could come to terms with it.