Four years after the economy melted down there's still a serious lack of understanding among the general populace as to the root causes of the collapse. It's not that the causes aren't well documented, they're just complex and opaque, and that's probably just as well as far as those driving the economic train are concerned. 

The latest example of this disconnect between economic cause and effect is the movement to blame seemingly every municipal deficit on public employees, their benefits and their unions. Obviously exploding pension obligations play a role in putting stress on the cities' or states' coffers, but those obligations were far from the only reason the municipalities started to bleed red ink. Thomas Ferguson explains in his article on AlterNet (h/t to Fec for the pointer):

What has driven cities and towns to the brink is not demands from their workforce but the collapse of national income and the ensuing fall in tax collections. Or, in other words, the Great Recession itself, for which Wall Street and the financial sector are principally to blame. But many powerful interests have jumped at the opportunity to use the crisis to eviscerate what’s left of the welfare state, roll back unionization to pre-New Deal levels, and keep cutting taxes on the wealthy. The litany of horror stories that now fills the media is ideal for their purposes…

At a time when cities and states are taking hatchets to services and manically raising fees and fares, the group’s analysis merits a closer look and a much, much wider audience.

Its starting point will be familiar to anyone who recalls the debate over financial “reform” of the last few years. In the bad old days of pre-2008 deregulated finance, bankers started pedaling hot new “structured finance” products that they claimed were perfect for the needs of clients who had thrived for decades using cheaper, plain vanilla bonds and loans. The new marvels – swaps and other forms of so-called “derivatives” whose values changed as other securities they referenced fluctuated in value – were often complex and frequently not priced in any actual market. Their buyers thus had difficulty understanding how they really worked or how they might be hurt by purchasing them...

The result, for years now, has been literally billions of dollars of losses for cities, states, and other local authorities, including school boards and state college loan agencies. Locked in by the termination fees, they can stay in the swaps and pay and pay as the banks’ payments to them dwindle. Or they can buy their way out of the swaps at preposterous prices – Morgenson indicated that New York State recently paid $243 million dollars to get out of some swaps, of which $191 million had to be borrowed.

One of the common themes found in almost every accounting of the financial meltdown has been the complexity of the financial products that Wall Street used, without oversight, to reap billions, if not trillions, of dollars in profits while setting the economy up for a massive fall. Who really knew what mortgage backed securities and credit default swaps were before the crisis? Very few people knew what they were, and even fewer understood how they worked, and that's why when it came time to start assessing blame it became a whole lot easier to point the finger at moderate-to-low income homeowners who took a too-good-to-be-true deal on their mortgages and then failed to make good. It was easy to blame them, the first dominoes, because the average person could understand what they did wrong. On the other hand the financial Masters of the Universe were happy to let the little guys take the fall while they hid behind the opaque curtain of financial shenanigans they'd hung around the rest of us.

And the banks' shenanigans were quite possibly intentional and coordinated. From Matt Taibbi at Rolling Stone (again h/t to Fec):

The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement. And they did it so cleverly that the victims never even knew they were being ­cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime…

USA v. Carollo involved classic cartel activity: not just one corrupt bank, but many, all acting in careful concert against the public interest. In the years since the economic crash of 2008, we've seen numerous hints that such orchestrated corruption exists. The collapses of Bear Stearns and Lehman Brothers, for instance, both pointed to coordi­nated attacks by powerful banks and hedge funds determined to speed the demise of those firms. In the bankruptcy of Jefferson County, Alabama, we learned that Goldman Sachs accepted a $3 million bribe from J.P. Morgan Chase to permit Chase to serve as the sole provider of toxic swap deals to the rubes running metropolitan Birmingham – "an open-and-shut case of anti-competitive behavior," as one former regulator described it.

Now let's be clear – if the banks' actions and the extent of their screwing of us were more easily understood we would probably have such a huge popular outcry against them that even our Wall Street-coddling Congress and Obama administration would be forced to go after their friends. As it is the average Joe is too busy trying to keep food on the table to pay much attention to this stuff, and quite frankly it's just easier to blame the deadbeat down the street than to try and figure out how guys in the pink ties and cuff links took him and the rest of us to the cleaners. Sadly the denizens of Wall Street continue to reap the rewards of their corrupt system while the rest of us get to eat cake.

If we only knew.