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Poll Misses Point: Washington and Wall Street Partners in Blame for Bad U.S. Economy

"Who do you blame more for the bad U.S. economy, Washington or Wall Street?" asked a recent USA Today/Gallup poll.

Wrong question.

In fact, it's the sordid relationship between the U.S. government and the big financial institutions that plunged the U.S. economy into turmoil in 2008 and has hampered its recovery ever since.

"They are brothers-in-arms against the greater good of the American public. They are conspirators," said Money Morning Capital Waves Strategist Shah Gilani. "Who is to blame, is it Wall Street for giving money to Washington to clear a path for their schemes, or is it Washington pandering to Wall Street for money to wage their campaign battles to put themselves in place to repay their paymasters?"

In the USA Today/Gallup poll, 64% of Americans blamed the federal government more for the bad U.S. economy, with just 30% pointing a finger at big financial institutions.

But the poll also indicated that the American public is extremely unhappy with both groups, with 78% saying that Wall Street bears a great deal or fair amount of the blame for the bad U.S. economy; 87% say that of Washington.

"You see the frustration that there's some serious things wrong with capitalism in America, but you also see the conundrum - how do we change it?" Terry Madonna, a political analyst and polling expert at Franklin and Marshall College told USA Today.

Close to half of Americans - 44% - also see the system as unfair to them, with some groups, such as people without a college degree (49%), feeling more mistreated than others.

Gilani couldn't agree more.

"Calling the "system' unfair is like calling the Grand Canyon a ditch," he said. "It's massively, incomprehensively unfair. It's unfair first and foremost on the macro level. The system favors the few at the expense of the masses. If there is class warfare stress in this country, it's because the nexus of Wall Street Washington manufactured it."

That Washington's efforts to fix the bad U.S. economy - very loose monetary policy on the part of the U.S. Federal Reserve and billions in stimulus spending from U.S. President Barack Obama and the U.S. Congress - have changed little is no doubt part of the reason why people remain disgruntled with government.

"The Fed is part of the problem, not part of the solution," Gilani said. "They did what they had to do to save us from going over the financial chasm, but they also helped us get there."

How to Fix It

Gilani had several suggestions on what should be done to make the system more fair as well as to prevent another financial crisis like we had in 2008:

  • Break up all the "too- big-to-fail" banks.
  • Regulate derivatives and determine what limitations need to be put on their use, by who, and when.

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