Losing hundreds of billions is not something any economy can shake off right away. Wall Street is also afraid to lose the great stars of big finance so no only did they pay them handsomely for the subprime junk, they're still throwing money around in order to keep everyone from jumping to the next company. Throwing more money, a lot of money, at these people isn't going to help get beyond this self made problem any faster.
Somehow missing in this review is the complete failure by all of the G7 governments in regulation. They all knew what was going on and none took any action. Money was flowing and life was good. Thanks in for the great leadership and I guess we'll find the bill is in the mail.
One culprit was the lavish performance-pay regime on Wall Street and in the City, which, they say, 'encouraged disproportionate risk-taking with insufficient regard to longer-term risks'. The secretive 'off balance sheet' accounting used by many banks to hide their borrowing was also criticised.
But the investors who bought securities backed by the shaky American mortgages did not escape blame either: the report identified 'poor investor practices, including excessive, too often mechanical, reliance on credit rating agencies'.
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