I’m of the mind that some of the Wall Street shake-up happening now due to the housing bubble is probably going to be a good thing in the long run. Wall Street needs to be more accountable and honorable in its dealings. So it’s a bit of money karma that stalwart firms are going down right now: Lehman Brothers has shut down, and Merrill Lynch was barely rescued by Bank of America.

Banks are also a bit unstable right now; I’m glad that my bank, Wells Fargo, did not engage in mortgage speculation.

The US economy may have avoided a major decline, US Federal Reserve Chairman Ben Bernanke has said.

Mr Bernanke said the risk of a substantial downturn had “diminished over the past month or so”.

Playing down recent unemployment rises, he said a series of interest rate reductions combined with tax cuts was helping the US offset its difficulties.

Read the full story: Danger of US downturn ‘has faded’

Some folks are agitating to stop Congress from bailing out people with looming foreclosures:

All we hear these days is whining from reckless home borrowers and their banks.

But did you know that renters are 32 percent of American households? And that homes in foreclosure are less than 2 percent?

So why is Congress rushing to bailout high-flying borrowers and their lenders with our tax dollars?

For more: AngryRenter.com

It’s not just poorer folks who are going through foreclosure; many McMansions are also being foreclosed:

The sharp increase in housing costs — and the desire to live in brand-new, spacious houses with modern features — led many affluent buyers to take out loans they couldn’t afford.

“People had in their head, ‘I need a mud room, I need giant columns, I need a media room, and I’m going to do anything to get it,”‘ said Robert Lang, co-director of Virginia Tech’s Metropolitan Institute, a research organization that focuses on real estate and development.

Here’s a great article in Fortune explaining the mess behind the mortgage meltdown: Chaos on Wall Street

The rich are indeed getting richer, while the middle class is struggling to stay afloat:

Growing numbers of middle-class Americans say they aren’t better off than they were five years ago, reflecting economic pressures amid growing debt, a study released Wednesday shows. Their short-term assessment of personal progress, according to the study, is the worst it’s been in nearly half a century.

The survey by the Pew Research Center, a Washington-based research organization, paints a mixed picture for the 53 percent of adults in the country who define themselves as “middle class,” with household incomes ranging from below $40,000 to more than $100,000.

Particularly worth noting:

Middle-class prosperity also lagged compared with richer Americans. From 1983 to 2004, the median net worth of upper-income families — defined as households with annual incomes above 150 percent of the median — grew by 123 percent, while the median net worth of middle-income families rose by just 29 percent.

http://news.yahoo.com/s/ap/20080409/ap_on_bi_ge/middle_class_poll

From reading the likes of the Housing Bubble Blog, the mainstream media dropped the ball on the looming mortgage crisis. Yet, editors at top newspapers believe they provided quality coverage. What do you think?

I’ll be the first to admit I don’t really understand all the ins and outs of Wall Street, but I did know it was very big news when the large investment banking firm Bear Stearns practically went belly up within a week…and then, with a Fed bailout pending, Bear Stearns was bought out by JPMorgan for a measly $2/share.

If none of this makes sense, you should still check out the Housing Bubble Blog for bits and pieces on this latest financial market news. More financial companies look to be in serious trouble with unheard of billion-dollar losses. Some readers are concerned that the Fed’s response in this situation is mirroring what happened prior to the Great Depression of the 1930s.

If you’ve been following the U.S. financial situation lately, you’ll see a lot of bad karma (i.e., subprime loans) coming back to bite the asses of the big corporations that profited from them. With Federal Reserve Chairman Ben Bernake trying to bail these companies out, others are suggesting maybe Ben is the one who should bail:

Federal Reserve Chairman Ben Bernanke should resign and the Fed should be abolished as a way to boost the falling dollar and speed up the recovery of the U.S. economy, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe Wednesday. Read more

Actually, the answer to the above may be: none. But let’s take a quick look at them, shall we?

McCain wants to continue the disastrous policies of G.W. Bush - mainly, cutting taxes while keeping us at war indefinitely. Well, we all know where that path leads - financial ruin.

Huckabee has this crazy idea to get rid of the IRS. I like that in theory but I’m not sure it will fly practically. But at least he wants to change things and is bold enough to take a stand.

Clinton wants to stimulate the economy by encouraging the development of green tech jobs. She also wants to reduce tax breaks to corporations who take jobs outside the US. Unfortunately, her mortgage relief plan is probably not going to help nor is it a good idea to bail out people who were speculating.

Obama - who the heck knows what his plan is about other than the fact that he’s promising an awful lot to a lot of people? I saw him speaking at a community college on TV, promising to make community college affordable. How is he going to do that on a federal level? Community college is called community college because it’s by and for the community. Not the nation.

I personally believe that none of the current presidential candidates really have a good plan to get the U.S. out of its current financial mess. Out of all of them, I think Clinton probably has her head on the straightest. “Fiscal responsibility” is what she said in a speech. So as long as she would be willing to keep spending in line, and raise taxes only on the rich and corporations (who have been given too many tax breaks), she might be able to get us somewhere.

I’m not confident, however, that we’ll elect a president who will actually help the economy or stop the federal deficit. If Obama or McCain are elected, I have a bad feeling things will get a lot worse before they get better.