The Western media is putting Iran’s nuclear program on the top of the list of the world agenda, but there are far more significant problems developing behind the scenes. The U.S. financial crisis has been brewing for the last two years. With no signs of abating the contagion has spread globally and will impact generations to come. Iran’s nuclear program helps mask this global economic problem.

The nature of the crisis challenges the basic concepts of capitalism and a free market economy. Analysts believe that left unregulated, greed took over the CEO’s of major financial institutions in the U.S., who not only pocketed hefty salaries but also sketched short term plans to benefit themselves, ignoring the long term health of the financial sector.
The trend of deregulation of the financial investment sector, which started during the Ronald Reagan-Margaret Thatcher era, has now been effectively reversed as the U.S. Treasury coughed up some $800 billion to bail out major financial institutions thereby nationalizing them.
The executives in the Wall Street deserve to be punished for seeking to maximize their short term bonuses by taking excessive risks with no regard for the long-term interests of the public shareholders.
Instead it was recently revealed that as the crisis deepened a group of troubled U.S. banks doled out more than $2 billion in bonuses and other payments to their highest earners. Now, the federal authority on banker pay says that nearly 80 percent of that sum was unmerited. The Obama administration’s duties were broadened to include pay packages of top earners of 419 companies that accepted the bailout.
According to the Financial Times the group includes Wall Street giants like Goldman Sachs, JPMorgan Chase and the American International Group as well as small lenders like Boston Private Financial Holdings.
On Friday the U.S. Commerce Department put the steam out of any economic growth forecasts announcing a GDP growth of 2.4 percent in the second quarter of this year, less than the expected figure. Such statistics has repeatedly put a dent in the consumer confidence in the U.S. where consumer spending accounts for 70 percent of the economy.
Faced with the November mid-term elections the administration of President Barrack Obama is under pressure to intervene. A review of the financial system has been mandated by the 2009 economic stimulus bill. A comprehensive review and reform package is due by January 2011.
In this series of articles we will first examine the root causes of the U.S. financial crisis and look at its impact around the world.