One of the very best articles I've ever seen explaining how our allowing the bankers and the gummint their way has brought us down:
LINK
Excerpts from the article:
So what is financialization anyway? It is the process by which something very ordinary (say, a TV set) becomes financed. In doing so there is inherently created the use (and usually the abuse) of leverage.
What is leverage? Leverage is simply the ability to act as though you have much more of something than you really do. For example, you can use leverage to pry off the lid on a beer bottle. Your raw strength is multiplied by the lever (the bottle opener) to lift the cap.
But note that there is no free lunch. While the opener may multiply the force applied to the cap, the distance the opener moves is proportionally reduced compared to the movement of your hand.
In economics, leverage is the use of debt to pretend to have more economic surplus (that is, purchasing power) than you really have.
Let's take a TV set. If you save up the money to buy one, then go into the store and pay for it, you now own a TV set. There is no leverage involved; you took your economic surplus form working (which you didn't need for food, energy, shelter and clothing - thus, it's a true surplus to you) and you expend it on a TV set. The transaction is simple; once it is completed there are no residual effects. If you lose your job the next day, you still have the TV set and will forever more until it either breaks, wears out or you dispose of it in some way.
But what if the TV set costs $500 and you only have $100? Well, you could financialize your acquisition of the TV. That is, you could borrow $400 by buying the TV on installment payments with a $100 down payment, and now you have a TV.
Or do you?
Actually, the bank (or the store) owns a TV. You may have custody of a TV set, but you don't own a TV set. You owe a debt. You have promised to work tomorrow to cover the expense of the television. You don't own the TV until you pay it off.
This is all fine and well up until you lose your job. Now the bank comes after you and wants the TV back, plus whatever deficiency there is on reselling the TV set to cover your debt. You suddenly discover, much to your chagrin, that you never owned it at all.
This all sounds pretty ordinary, except that the economic effect of financializing that transaction isn't, in fact, ordinary at all.
See, in economics there is this thing called "supply and demand." The more demand there is for something with a given supply, the higher the price tends to be. In ordinary times a gallon jug of drinking water in a store is a dollar, and from the tap it costs so little we don't ordinarily put a price on it. Yet if there was just a hurricane, and there is no fresh water available, what would the price of that same gallon be? Ah, now we have much demand and very short supply, and as such the price will be quite dear. Perhaps the price of that water might be several gallons of gasoline (for the seller's generator, of course.)
So what has happened to our economy over the last three decades?
In short, things that never should have been became financialized. And as the goods and services became financialized, demand was shifted upward - people were made "able" to allegedly "buy" things they could not otherwise afford. The expected response in the marketplace to such a thing, predicted by basis economics, was that prices would rise.
Prices, in fact, did exactly what you'd expect.
If you're wondering why you can't afford to pay for college by flipping burgers or pizzas in your off hours, this is the reason. It was precisely the distortion of the government making student loan debt non-dischargeable, which made it available to almost everyone at a "low interest rate", that drove up the price of college educations to the moon. And to the moon they went - up 450% since the 1980s, more than five times as much as average salaries increased.
How about houses? A middle-class house in 1960 sold for $12,000. It had three bedrooms, one bath, a living room and an eat-in kitchen. The walls were plaster (not drywall) and it was of generally-stout construction. The average family income in 1960 was $6,691 or about 1/2 of the price of a house. The average family size was just over 3 persons and about 32% of women were in the workforce; the remainder typically stayed home and raised the kids. That wasn't so hard to do when you could buy a house at twice the average income.
What happened when we financialized houses? Prices went up. A lot. They went up much faster than did incomes. First to 3x incomes, and in some parts of the nation in the 2000s they went to utterly ridiculous multiples, like 5, 6 even 10x. How? Nobody ever really actually owned the damn house; the bank owned it and you were turned into a financial slave!
How about cellphones? Oh, they're cheap; we didn't financialize those, did we? The really nice ones are $199 at the store. Uh, no they're not. Ever notice that the price of the service is twice that of prepaid? Why do you think that is? That's simple - the difference between $100/month and $50/month is, well, $600/year. Oh, and that was a two-year contract you signed, so that $500 cell phone that you got such a "deal" on at $199 actually cost you nearly $1,500. That's right - that nice "smartphone" was financialized and you're paying three times as much for it as a consequence, rather than buying it right now for cash on a prepaid plan.
There's a lot worth reading here, but I'll just quote the conclusion:
More importantly than your personal interest in this is that as a society we've reached the limits of the ability to financialize our lives. That's why the markets, housing and economy crashed in 2007. We had used financial leverage to live beyond our means for the previous decade but in fact the imbalances and intentional distortions in the market date back to 1980. There has not been one three month period where we have not abused leverage and financialization since that time. Not one.
This is the choice we have before us.
We did not find ourselves here because of the "free market." We are here because the rich and powerful demanded special protections from government that allowed them to enslave you, they enticed you into taking that first hit off the crack pipe of cheap money, and then once you were hooked good they used the jackboot of the government to screw you through changes in the law and special protections for themselves so that you could not easily escape.
The solution is not to demand "free stuff" or "fairness."
The only solution is to remove the excess leverage from the economy - to get rid of the debt that has been accumulated and force recognition of the fact that not only are many people bankrupt but the financial institutions are as well. Only when the balance sheets on both sides are cleared can the economy recover.
This is the choice we face ladies and gentlemen. We can either demand changes that are mathematically sustainable or we will fail at our goal and the spiral you're seeing right now in Greece will come here.
A government big enough to give you everything you want is also big enough to take everything you have.
(Sorry, couldn't help myself. 
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And get offa my lawn! Damn kids... 
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