While Barak Obama is likely the most powerful man in the world, there is one power greater. You and me. American public opinion. We even make the news; opinion polls. So, it would be wise for us to be informed, to understand what is happening in our country. How can you have an accurate opinion, if your information is bad? In the case of our current financial meltdown, the facts are amazingly easy to understand.

It starts in housing. For homeowners, the amount of money you owe on your mortgage, subtracted from the value, or potential sales price of your house; is your equity. Equity rises with housing values and can be borrowed against by the home owner. It increases the owners personal wealth, but is not liquid cash. It is the proceeds you would receive IF you sold your home. Owners are also able to borrow more money with their perceived equity. As housing prices rise, equity value rises. The company who owns the mortgage records increased housing values as company growth. So, the more housing prices rise, the more apparent growth, the better the bottom lines look. The better the bottom lines look, the more salary and bonuses those who are in charge receive.

Home ownership stagnated around 65% in the late 1990's. In hopes of allowing more Americans to own homes, and to add more buyers into the economy, subprime mortgages were introduced. From 2001 -2003, these accounted for less than 10% of all loans. Between 2004 - 2006 they accounted for 20% of total mortgages sold. Having more "qualified" buyers also helped drive up prices. Many buyers and low inventory increases value. Supply and demand. Adjustable rate mortgages made up 7% of all home loans. When the time came for rates to adjust, approximately March of 2008, owners began to default. As more owners defaulted, housing prices began to drop. Gas prices spiked. Growth stopped. Unemployment began to rise. Snowball.

Now, if that was all we had to contend with, we would be in much better shape. But, it's not that easy. To fuel even higher growth, new devices were invented - new ways to create growth from the original system. The main way this was done was by bundling investments together and selling them in groups. So, mortgages, and other instruments, were grouped together and sold in bundles. As housing prices rose, these saw growth (not liquid money, remember, this is equity). So, managers created a perception of growth by selling these back and forth.As housing prices rose, equity grew, their "value" grew. Integrated into the system, 20% of mortgages were subprime - risky and subject to default. In order to move risky investments, an "insurance" called a "swap" was invented and sold along with the investment to cover the risk. Similar to car insurance, if the car is devalued, the loss is paid back. But, they couldn't call it insurance because insurance is regulated. With insurance the insurer must have funds on hand to make good a claim. Here, there was no liquid capital to repay claims, so they called them swaps. Credit default swaps.

They sold so well, they wrote $60 trillion worth of them, more than the total of all the GDPs in the world! The GDP of the US is 14 trillion! This $60 trillion in swaps contracts are tied to bundles of investments that include subprime loans and are spread throughout world economy. Foreclosures rose 79% from 2006 to 2007. As that number rose, swaps came due. Major banks and investment companies found that with the devaluing of housing, they owed more money than they had liquid cash. Many institutions just went bankrupt. End of story. By September of 2008, the stock market took in these facts and adjusted itself accordingly.

So, there it is, at least a basic understanding, though many details are left out for brevity. The financial meltdown in four paragraphs. Simple enough to understand. So, why didn't someone in charge DO something? This story took at least 5 years to tell itself. As a real estate agent, I talked about the "bubble" nearly everyday. Greed and poor management only goes so far. Was no one in charge? Was no one watching the big picture? We knew the bubble was et to burst. We should have projected the effect and adjusted accordingly. Instead, reckless Americans participated in this obviously flawed system, to pad their pockets at the expense of America itself. Those in charge failed in their posts. World markets and entire countries have been devastated. Our reputation is marred. We do not yet completely understand the ramifications, even now. Unemployment is up to 8.1%. One third of the world's wealth is projected as loss.

For this reason, it seems irresponsible and ignorant to blame America's current crisis on an administration who was not in power when any of these events occurred. Within 6 weeks of election, Republicans began to claim the majority of the problems lie with Barak Obama. At the same time discrediting the idea of finding out where the system is actually broken and investigating George Bush, the CEO of America during this period. The out cry against investigating Bush has a name, "Bush Derangement Syndrome". The illness Americans have if they believe George Bush, and what happened under his watch, should be investigated. Check Wikipedia, it's there.

The rhetoric around this subject has reached a fever pitch in recent weeks. It is the subject of multiple media shows on Fox TV among others, resulting in many Americans turning against the recovery which is inevitably needed in a global crisis. Outlay by the government to stimulate the economy, is unavoidable in the face of a $60 trillion mess. Failure of systems, often suggested by pundits, would result in loss of pensions, exponential job loss, more foreclosures. Republicans vote tax cuts. Of course.

I spoke with three friends today who had all lost their life savings and homes through this crisis. About a $200,000 average loss between the three. Each of them had savings, good jobs, they were responsible people. Their years of hard work gained them nothing. Instead, rich Americans got profoundly richer breaking a system we are all going to get much poorer fixing!

We hold the world currency. How do we look to other countries as misinformation permeates American voters? How does a cover up help us on the road to recovery? President Obama has to fend off acidic attacks and fix the nearly unfixable global financial meltdown at the same time. This corruption happened under Bush's watch, yet Obama is blamed AND has to get us out of this global mess at the same time. Hats off to him. I 'm sending him positive intentions. One thing we might all do.