Cascade Effect Part I

The 'cascade effect' was wildly exaggerated by the banks with the most mud on them from the fraud, to scare up welfare for themselves. The toxic assets were toxic, but they were toxic almost entirely to two classes of people: owners of the banks, and people who own bank shares or other speculative products related to the financial sector.

If Washington had chosen to, they could have spent less, spent more wisely, and cleaned up more, by just quarantining the whole area like a hazmat site, locking down the financial product divisions and trading accounts of the banks pleading for assistance, and then backing up dumpsters for the paper ( that doesn't mean buy it ) and paddy wagons for the con artists.

95% of Americans get through their economic lives just fine if Goldman Sachs is trading for $2 a share or $100 a share. These investment banks are not cogs in the economy. They don't 'supply' anything (they claim they supply liquidity, but mostly, they drain liquidity ). They don't bring us milk, they don't cut our lawns, they don't teach our children. The numbers they deal with makes them look huge and important, but they can be downsized without crashing the whole house on top of us. Some turbulence, sure, but banks don't cause depressions by having weak profits. They mostly cause depressions by what they do when they're healthy, not when they're sick.