Three years into global collapse, Wall Street still gambling
The more things change, the more they stay the same. In 2008, Wall Street’s bad bets and risky speculation led to the collapse of America’s housing market and sparked a financial crisis around the globe. Today, banks have grown more powerful and profitable, while the threat of double-dip recession has deepened. “If part of the problem was being too big to stay afloat, and if part of the problem was high dependence on the financial sector, if you fast forward three years, we have even bigger financial institutions on which we are at least equally dependent,” Max Wolff, Green Crest Capital’s chief economist, told RT. “So the structural problems are probably worse and certainly not a whole lot better.” Washington saved Wall Street with nearly one trillion dollars in government bailouts. Yet in the past three years, critics say that Washington has failed to effectively regulate Wall Street. The financial industry can still trade, bundle debt and bet the same way it did 36 months ago.“We still have the same problems,” said economist and author Nomi Prins. “The only difference right now and why I think they are worse, is because backing these problems has been trillions of dollars of different kinds of federal subsidies. So we are really in a worse position than we were before – there is a lot of cover-up, there is lack of transparency.”America's great recession has chipped away at the middle class, exacerbated homelessness and resulted in at least 14 million unemployed citizens. Just last month, zero jobs – not one was created. Meantime, Wall Street executives broke records last year pulling in US $149 billion in pay and compensation. According to analysts, the US is approaching its highest level of inequality since World War I. “If you are not in the top ten or 20 per cent, you are significantly poorer than you were in 2008 and in 2008, you were making one-fifteenth as much money as the wealthiest people in the United States,” says Max Wolff.“We have seen corporate profits, bank profits, record-breaking profits in some cases, three years after the crisis,” says Lynn Parramore, Huffington Post contributor. “Why is that? They are taking the same risks with investors’ money, depositors’ money that they were taking before. And why? Because they know they will be bailed out if there is a problem.”In 2008, US credit agencies failed to forecast the problem, ranking Lehman as a secure investment just one week before its historic bankruptcy.“Very little has changed with their business model,” said Joe Weisenthal, deputy editor with Business Insider. “Probably the only thing that has really changed is that there is really much more skepticism towards them.”The collapse of Lehman Brothers ignited a perfect storm of economic distress and fear around the world. Yet three years later, the problems that caused the crisis remain unsolved. Many economists are predicting that this means another financial collapse is not just probable – it is inevitable.