Kyle Bell

Today may go down in the history books as the start of the next Great Depression. The Dow Jones dropped over 500 points on Monday, September 15, 2008, marking the biggest drop since the 9/11 attacks. Over the weekend it was revealed that the investment bank Lehman Brothers would file for bankruptcy. Most people (including myself several months ago) had never heard of Lehman Brothers. It’s the fourth largest investment bank in the country. And while it sinking would otherwise be a big deal on Wall Street, it probably would not have much affect on Main Street.

That’s not true, though, because of the situation that the economy now faces. With the $613 billion in debt that Lehman Brothers will be protected from in bankruptcy, news broke that the third largest investment bank, Merrill Lynch, was also in trouble. Instead of filing bankruptcy they agreed to be bought out by Bank of America for $50 billion. The collapse of Lehman puts 25,000 people out of work in an economy that already has a 6.1% unemployment rate.

The blame lies in Washington and on Wall Street. President Bush and his administration enabled the mortgage crisis by letting Wall Street become the Wild West where an unregulated banking industry played by its own rules. The banks were giving loans, “sub-prime mortgages”, to people that either could not afford them based on their income or had bad credit. They gave them loans anyway and teased them with low interest rated, but the interest rates were variable and adjusted upwards eventually.

Meanwhile, the banks sold these mortgages to investment companies so when one of these people with these loans paid their mortgage, it wasn’t actually going to the bank – it was going to an investor. When the interest rates adjusted, millions of these loans defaulted and now the companies that put their money into them are waving around worthless pieces of paper. There was no government regulation at all of these schemes that resulted in massive exchanges of money, people losing their homes and investors being defrauded.

America under George Bush and the Republicans has become nothing but a way for large companies and powerful Wall Street executives to pass on risk to someone else while they cash in. Al Greenspan has called this a once in a century event. The economy is teetering on the brink of recession and while it is unpleasant to imagine, the reality is that the parallels to the Great Depression are too great to ignore.  We have an out-of-touch president, a reckless group of thugs on Wall Street and millions of average Americans suffering, as usual. America, have you had enough?