The Current Great Recession - Who Is To Blame

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In the midst of the current economic downturn, dubbed the “Great Recession”, it is natural to look for one, singular entity or person to blame. Managers of large banks, professional investors and federal regulators have all been named as potential creators of the recession, with varying degrees of guilt. No matter who is to blame, the fallout from the mistakes that were made that led to the current crisis is clear. According to the Bureau of Labor Statistics, the current unemployment rate is 9.7%, with 9.3 million Americans out of work (Bureau of Labor Statistics). Compared to a normal economic rate of two or three percent, it is clear that the decisions of one group of people have had a profound affect on the lives of millions of Americans. The real blame for this crisis rests on the heads of the managers that attempted to play the financial system through securitization, and forced the American government to “bail out” their companies with taxpayer money. These managers, specifically the managers of AIG and Citigroup, should be subject to extreme pay caps for the length of time that the American taxpayer holds majority holdings in their companies, as a punitive punishment for causing the Great Recession.

Not only were millions of Americans been put out of work due to these manager’s actions, the American financial markets themselves were pushed to the brink of collapse. Despite the fact that the global financial markets, in reality, are not perfectly efficient, there is a corrective mechanism built into the day-to-day trading in the market. When prices are driven down by large sells, either by large investors or a movement in a stock, there are usually new buyers for these stocks at the cheaper price. Managers of...

... middle of paper ...

...ssion, to use them as an example for risk taking on Wall Street.

Works Cited
Axelson, Ulf, and Sandeep Baliga. "Liquidity and Manipulation of Executive Compensation

Schemes." Review of Financial Studies 22.10 (2009): 3907-3939. EconLit. EBSCO. Web. 24

Jan. 2010.

Bureau of Labor Statistics. "January 2010 Unemployment Statistics." 5 February 2010. Bureau

of Labor Statistics. 8 February 2010 .

Dew-Becker, Ian. "How Much Sunlight Does It Take to Disinfect a Boardroom? A Short History

of Executive Compensation Regulation in America." CESifo Economic Studies 55.3-4 (2009):

434-457. EconLit. EBSCO. Web. 24 Jan. 2010.

Kandel, Eugene. "In Search of Reasonable Executive Compensation." CESifo Economic Studies

55.3-4 (2009): 405-433. EconLit. EBSCO. Web. 24 Jan. 2010.

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