Obama versus Wall Street….

Having pushed through a controversial healthcare reform bill, Obama and his administration have now decided to enter the lion’s den and take on the financial might that is Wall Street. A risky step for the President some might say, especially if you take a close inspection at his campaign contributions. Despite these political inconsistencies, the Democrats are sailing full steam ahead in an effort to regain control of their financial sector, the main target of which is of course, Goldman Sachs.

Nearly two years ago the whole world was rocked by a global financial crisis of epic proportions. Banks folded, financial investments went south and millions of people’s current accounts were put into jeopardy because of the heavy investments made by financial institutions into the sub-prime mortgage market. When the AAA rating fell apart and the full scale of the debt was uncovered, the whole market crashed like Richard ‘the hamster’ Hammond in a dragster, dragging financial institutes and taxpayers with it.

It now turns out that the epicentre of the global crash occurred slap-bang in the middle of Wall Street, thanks to the casino-style betting of unregulated derivatives perpetrated by banks such as Lehman Brothers and Goldman Sachs. Unfortunately, for a lot of innocent investors, economic globalisation has increased the interdependency between financial companies; nowadays when one falls, the others feel it, so does the stock exchange and so does the global financial market.

The sub-prime mortgage crash affected the financial stability of the entire world. Iceland became bankrupt virtually overnight. Deposit accounts in Ireland, and across the globe, were put at risk before an alliance of governments stepped in with bailouts of unprecedented proportions. England was hit particularly hard, enduring its first bank run since the 19th century.

While governments scrambled around shoring up the system, those institutes that did survive began to slowly buy up all the assets of those that perished, producing record profits. But now things look like they may change. As always the world waits breathlessly for some signal from America regarding tighter fiscal controls. If Obama does manage to coral Congress into new financial regulation then the rest of the world may follow suit, bringing some measure of order to the chaos of the past.