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Bankers Blame Consumers for Recession

January 19, 2010

E.J. Manning
International bankers and investors are trying to put the word out that they aren’t responsible for the Great Recession of 2008 or a financial downturn. Instead, they are blaming consumers and consumer debt for the latest downturn in the global economy.

According to bankers, it wasn’t investment banks borrowing wildly that caused the crash. It wasn’t corporations running up debt instead of issuing new stock shares that caused the crisis. It wasn’t the federal government that nearly plunged the economy into oblivion.

This is not a surprise. The international banking community and Wall Street has been looking for a way to deflect the blame of the global economic crisis for quite some time. Now they think they have found the way to pin the blame on someone else, the consumer. The average American household increased the amount of debt as a share of household income by a third.

Considering that the “McKinsey Global Institute” is directly tied into the international banking scene, international attorneys and multinationals firms like Deloitte, as well as the Swiss Banking Community, the statistics and conclusions of their report can hardly be trusted. As a former insider, I can safely say that this is the case. What does “McKinsey” say?

In a report prepared by “McKinsey Global Institute,” most of the crisis lay squarely at the feet of middle-class consumers: Americans, Britons, Canadians. They simply bought more house than they could afford.

According to McKinsey, the crisis won’t last for just a year or two. McKinsey’s researchers say that deleveraging or reducing debt goes on for six to seven years in the aftermath of a financial crisis.

McKinsey suggested there’s more trouble ahead. “The bursting of the great credit bubble is not over yet.”

Still pending are a juggernaut of triggered adjustable-rate mortgages for residential consumers and staggering amounts of debt due for commercial real estate. The report found that $1.3 trillion of U.S. commercial real estate loans will come due in the next four years. Refinancing all that debt will be a challenge after the 2008 meltdown. Bankers are still involved  in the practice of bundling such loans into marketable securities for sale on Wall Street for investors. This points to another major downturn in the economy, if not the global economy.

“Households account for the largest share of total debt in the United States, Canada and Switzerland,” concluded McKinsey. From 2000 to 2008, U.S. household debt had grown $6.8 trillion. Financial institution debt rose $3.9 trillion. Government debt was up $4 trillion.”

McKinsey seems to be right about one thing. The credit crisis and the crisis in banking is not over yet. The recovery is not going to be quick. The problem is the source of the information as the international banking community attempts to wash the collective hands of rich bankers and investors everywhere.

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