As Americans engage in an orgy of bashing greedy bankers (and ertainly they deserve some of the blame) I ask: how much debt have you yourself taken on? My debt is about 10% of my annual income (all my debts, not balanced by, e.g., retirement savings, which gives me positive net assets). The average in America is 100%. See:
http://www.npr.org/blogs/money/2009/02/household_debt_vs_gdp.html?ft=1&f=93559255Now, why the huge rise since 2000? It's nice to blame Bush, and certainly his buy-buy-buy rhetoric bears part of the gain. Another part is Greenspan encouraging people to borrow-borrow-borrow (and he pushed ARMs in particular circa 2005).
A third part is the dysfunctional relationship between China and the West (and certainly Bush and Greenspan are implicated in this). China began lending to the West like mad after the Asian financial crisis in 1998, basically behaving like all the banks we deplore, in order to avoid another domestic or regional economic crisis by racking up a surplus. The West acted like all the irresponsible borrowers we ought to equally deplore. LOTS of people saw this problem coming and have warned about it for years. Here's a discussion:
http://www.nytimes.com/2009/03/02/opinion/02krugman.html-- edit --
Oh, yeah, there was a point to all that!
I expect we'll reduce our consumerism to an economically sustainable level. If Obama is
really good, we might even move toward environmental sustainability (through taxes reflecting environmental externalities of consumption). But Obama wasn't, as widely rumored, born in a stable in Bethlehem. So for any fundamental change in human nature, we'll have to wait a bit longer.
~Alyssa