The consequences were largely ignored, as a process called financialization put more and more power in the hands of the economic architects on Wall Street.
New York University's Dr Nouriel Roubini was called "Dr Doom" for predicting the emergence of a "financial monster" that could not be sustained.
Roubini reasoned: "Combine an opaque and unregulated global financial system where moderate levels of leverage by individual investors pile up into leverage ratios of 100 plus; add to this toxic mix investments in the most uncertain, obscure, misrated, mispriced, complex, esoteric credit derivatives that no investor can properly price; then you have created a financial monster that eventually leads to uncertainty, panic, market seizure, liquidity crunch, credit crunch, systemic risk and economic hard landing."
What he and many others did not draw adequate attention to were the underlying structural problems in the US economy that led it to collapse.
Stephen Lendman of Gobal Research enumerated some of them:
- Soaring consumer debt;
- Record high federal budget and current account deficits;
- An off-the-chart national debt, far higher than the reported level;
- High and rising level of personal bankruptcies and mortgage loan defaults;
- An enormous government debt service obligation we are taxed to pay for;
- Loss of manufacturing and other high-paying jobs to low-wage countries;
- A secular declining economy, 84 per cent service-based and mostly composed of low-wage, low or no-benefit, non-unionised jobs;
- An unprecedented wealth gap disparity;
- Growing rates of poverty in the richest country in the world;
- A decline of essential social services