padna, I'm not going to quote that whole post, but I do want to respond to a few things in there.
When I say point the finger at Wall Street, I'm not just talking about the last few years. More like the last 30. The stock market is supposed to reflect the growth of the country, which is why long-term it's been such a reliable place to park your money. But that's been predicated on the companies and assets being traded actually contributing to the growth of the country. More and more, that's no longer the case. Some time in the 80s Wall Street figured out how to start cutting anything tangible out of the equation. The tech bubble, at least, involved companies having their values inflated. The derivatives bubble was based on... well, there were shaky mortgages buried deep in there somewhere, but the bubble was mostly made up of works of economic fiction. CDO's don't employ people. AAA tranches don't build anything.
Wall Street, as a culture, figured it could make more money selling things that weren't real. That has had the combined effect of not just divorcing the market's performance from the economic health of the country but actually harming it, by sucking more and more money out of the economy rather than recycling it.
Towards the end of your post you asked what incentive people had to invest their money when the top marginal rate was 90%. Well, clearly they had some sort of incentive, because money still got invested hand over fist. I'm not advocating a return to those kinds of rates, but maybe you need to ask yourself what those other incentives were, and what happened to them, before dismissing Wall Street's contribution to the current situation.
Spending is absolutely an issue, but it's not 'purely and simply' the only issue. It's as much symptom as cause. And if you ignore those other causes, you're no better than any politician ignoring ugly realities and kicking the can down the road until the next electoral cycle.
7/27/2011 10:20 PM (edited)