THE CURRENT WALL STREET COLLAPSE has its roots in the Technology Bubble of the late 1990s, when the price of the stocks of Internet startups skyrocketed, then collapsed, resulting in the loss of $7 trillion worth of assets and in the recession of 2001-02.
THE LOOSE MONEY POLICIES OF THE FED under Alan Greenspan had encouraged the Technology Bubble, and when the US fell into a recession, Greenspan, to try to counter a long recession, cut the prime rate to a 45-year low of 1.00 per cent in June 2003 and kept it there for over a year. That had the effect of encouraging another bubble: the real estate bubble.
As early as 2002, progressive economists, such as Dean Baker of the Center for Economic Policy Research, were warning about the real estate bubble.
However, as late as 2005, Ben Bernanke, then chairman of the Council of Economic Adviser and now chairman of the Federal Reserve, attributed the rise in US housing prices to "STRONG ECONOMIC FUNDAMENTALS" instead of "SPECULATIVE ACTIVITY". IS IT ANY WONDER THAT HE WAS CAUGHT COMPLETELY OFF GUARD WHEN THE SUBPRIME CRISIS BROKE IN THE SUMMER OF 2007? "A Primer on Wall Street Meltdown" by Walden Bello, Click Here http://mrzine.monthlyreview.org/bello031008.html
