Question for Discussion: How do we create a Real Wealth Economy?

Readings: Leopold, pp. 151-164, 175-180, 189-190; Herbert, "Safety Nets for the Rich"; Brooks, "We Need a Bailout Too"; LInd, "That Sound your Hear
is the Social Fabric about to Snap"; Vanden Heuvel and Schlosser, "America Needs a New New Deal"

Videos: DVD: Inside Job: 120-123, 137-142; DVD: Financial Meltdown 2008--IMF Advisor MF Advisor on Financial Oligarchs, Robert Johnson on Zombie Banks ; DVD: Wall Street vs. Main Street--Warren on the Big Banks;
DVD: Wall Street vs. the Middle Class--on Public Protests
DVD: Wall Street and Populism (Zombie Banks);
DVD: Financial Meltdown (Criminal Wall Street--William Black;)
You Tube: Gordon Gekko - "I create nothing, I own."
You Tube: Gordon Gekko speaks the truth about the bailout.

Alternative to Economic Globalization

• How to Prevent the Next Wall Street Crisis
• LTCM: It's a Short-Term Memory
• Finance before the Next Meltdown
• Greenspan Recants
• The Pillage People
• Posner, A Failure of Capitalism
• Krugman, The Madoff Economy
• The End of the Financial World as we Know It
• Krugman, Reagan Did It
• Reckless, part 1
• Reckless, part 2
• Saftey Nets for the Rich
• Johnson, Who Caused the Crisis
• Prins, Its Takes a Pillage
• Obama Speech to Wall Street
• The Death of Rational Man
• Johnson, The Next Financial Crisis
• A New Financial Foundation
• To Each According to his Greed
• Who will Rein in Wall Street
• Bill for Tarp could be Huge
• What else could our Bailout have Bought
• Why there was no depression
• What went wrong with Economics
• Krugman, What went wrong with Ecconomis
• Geitner and Wall Street
• Global Financial Crisis 2008
• All Fall Down
• The End of Wall Street's Boom
• Brown, All Together Now
• Krugman, Averting the Worse
• Feds Plans to Police Banks
• Krugman, Boiling the Frogs
• Spitzer, Break the Banks
• Bailout the Bailouts
• Capitalism the Remix
• If an Economists Fall in a Forest
• Changing the World
• Is American Dream dead
• Is the Conservative Era Over
• The Decline of the Middle Class
• Dumb Money Chapte 1
• Economists for an Imaginary World
• Government has a hand in the Economy
• Everyman's Depression
• FDR's lessons for Obama
• The Fed Ignored Evidencce
• The Roof Caved In
• Finding a Gatekeeper in the World of Finance
• Goldman Sachs a Welfare Queen
• Keynes can't Help Us Now
• Krugman, The Widening Gyre
• Hutton, Krugman's Fear for a Lost Decade
• Hightower, Madoff is not the Problem
• Gorbechez, We had our Perestroika
• Posner ?, The Myth of the Rational Market
• Reich, No downturn for Greed
• Gross, The Rich War on the Rich
• Lind, RX for the Economy
• Summers and Wall Street
• Reich, Why Wall Street Reform is STuck in Reverse
• The Big Bang of Bailouts
• The Lehrman Shock
• The Real AIG Scandal
• Spitzer, The Regulatory Charade
• Lind, The Social Fabric is Snapping
• Johnson, US Inequality during the Recovery Period
• Meyerson, Wall Street's Just Desert
• Brooks, We Need a Bailout Too
• Chait, Wealthcare
• Rothkoff, Where are the Leaders
• Rich Income in 2006
• Reckless Part One
• Reckless Part Two

• ---

  
  

What caused the Financial Collapse of 2008?

• Riot Police Beat Unarmed Berkeley Students Trying
  To Set Up OWS Camp.
  
  
• Levin, Euopre, The Confidence Game that Could Break the Bank
  
  
• Young, King Vision and the OWS Battle
  
  
• Multiple CDOs backed by Multiple Credit Default Swaps:
  
  .
  In a very real way, credit default swaps enabled anyone to hedge their bets for any security at any time, in any place in the world. Anyone could unload some or all of their risk, or so it seemed.
  It worked beautifully--as long as everyone
  could pay their bets if the bonds or securities
  ran into financial trouble..
  
  
• When someone couldn't pay that started a cascading series of failed bets, because everyone else tried to make some one else pay for their bad bets. In the end, governments were forced to pay for these failed bets.
  
  
• The larger lesson is that governments need to regulate derivaties, CDOs, and Credit Default Swaps. Only by regulating them can the government make sure that investors have the money to pay for
  their failed bets.
  
  
  
• What Caused the Credit Freeze that Threatened Global Depression?
  
  Banks stopped lending to each other because they weren't sure of their own losses and they
  weren't sure the other banks could be trusted to pay back their loans. This caused the
  global economy to freeze up.
  
  
• The Real Size of the Bailout
  (See this Chart)
  
  
• What Else Could 14 Trillion Buy?
  (See this Chart)
  
  
• Goldman Secretly Bet on the Housing Crash
  
  
• Goldman Sachs Faces Lawsuits over Securities
  
  
• Taibbi, Why Isn't Wall Street in Jail:
  
  The rest of them, all of them, got off. Not a single executive who ran the companies that cooked up and cashed in on the phony financial boom — an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities — has ever been convicted. Their names by now are familiar to even the most casual Middle American news consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley. Most of these firms were directly involved in elaborate fraud and theft. Lehman Brothers hid billions in loans from its investors. Bank of America lied about billions in bonuses. Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling. What's more, many of these companies had corporate chieftains whose actions cost investors billions — from AIG derivatives chief Joe Cassano, who assured investors they would not lose even "one dollar" just months before his unit imploded, to the $263 million in compensation that former Lehman chief Dick "The Gorilla" Fuld conveniently failed to disclose. Yet not one of them has faced time behind bars.
  
  
• Sheer, Too Big to Jail:
  
  

  Those toxic assets and other collateralized debt obligations and credit default swaps were exempted from government regulation by the Commodity Futures Modernization Act, which Rubin helped design while he was treasury secretary and which was turned into law when Rubin protégé Lawrence Summers took over that Cabinet post.

  In arguing that the derivatives market in housing mortgages and other debt obligations required no government oversight, Summers told Congress, "First, the parties to these kinds of contracts are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies. ... Second, given the nature of the underlying assets -- namely supplies of financial exchange and other financial instruments -- there would seem to be little scope for market manipulation. ..."
  
  

• Moral Bankruptcy: Why are we letting Wall Street
  Off So Easilty?
  
  
• How Big Finance Bought Uncle Sam
  
  
• Financial Industry Contributions to Political Parties
  
  
• Letting the Banks Off Easily
  
  
• Thank You, Wall Street. May We Have Another?
  
  
• SEC allows Banks to Commit Fraud Again and Again
  
  
• Scheer, Banks are Allowed to Commit Fraud Again and Again
  
  
• Taibbi, the Next Big Bank Bailout
  
  
• Prins, How Big Banks Fleece You - The Daily Beast
  
  
• Break Up the Big Banks? - Richard A. Posner - Business
  
  
• Leopold, Summary of the Factors that Caused the Finnanciail Collapse
  
  
• Ritzholtz, The Big Lie :
  (What Really caused the Financial crisis: See 10 points)
  
  
• Johnson, Who Caused the Economic Crisis"
  (Look at argument over Bank Fraud):
  
  So what are these three criminal storylines? The first, and the smallest (if you can believe it) at approximately $10 trillion, is the housing crash and the mortgage meltdown. Totally criminal, as its primary cause was banksters stuffing worthless mortgage paper into CDOs [securities known as collateralized debt obligations] and calling them AAA. Criminal at every level, as real estate agents were convincing their buyers to pay more, not less, to "earn" their fees through a winning bid, appraisers were offering non-independent and completely tainted appraisals, mortgage brokers were altering loan documents and changing income data to qualify buyers, bankers were paying rating agencies to call junk paper AAA, and principal investors like pension funds, insurance companies, and sovereign governments failed to perform even the minimum levels of due diligence demanded by their fiduciary duties
  
  
  
• Uncle Sam, the Enabler;
  (Look at list of Changes that cause the Financial Crisis}
  
  
• Financial reform law: What's in it and how does it work
  
  
• How financial reform will really work - Aug. 23, 2010
  
  
• Financial Reform Passes, But What Does That Mean?
  
  
• Democrats revive financial transaction tax idea | Reuters
  
  
• G20 fails to endorse financial transaction tax | Reuters
  
  
• Leopold, Financial Disaster Insurance:
  
  According to historian Niall Ferguson, "Every day two trillion
  dollars change hands on foreign exchange markets, every month seven trillion dollars chanee hands on global stock markets ." He also calculates there about $3 trillion in CDOs" out there and that the estimated value of credit default swaps "was just under $600 trillion.'" By my back-of-the-envelope calculations, I estimate that the global casino sees about $900 trillion worth o ftansactions each year, plus or minus a few hundred trillion. If we"collecte a 3-basls point insurance premium {three one-hundredths of 1 petcent or less than 1/3 of a penny per dollar} on the face value of each and every transaction, we could collect about $2.7 trillion " per year in total global premiums. I suspect the U.S. share would be at least $500 billion per year, year in and year out.'
  
  
  
• Reich, "Why Wall Sreet Reform is Stuck in Reverse"
  
  
• Spitzer, "The Regulatory Charade"
  
  
• Does the Financial Collapse prove that our Financial System
  isn't Working?
  
  
• Banks are Still too Big to Fail
  
  
• `Perfect Quarter' at Four U.S. Banks Shows Fed-Fueled Revival
  
  
• Krugman, "Obama Did Not Fight Hard Enough
  Against Tax Cuts for the Rich"
  
  
• Herbert, "Safety Nets for the Rich"
  
  
• Rich, "Who Will Stand up for the Super Rich"
  
  
• Dickinson, How the GOP became the Party of the Rich
  
  
• Companies PIle up Cash
  
  
• Newsweek: New Market Bubble is Brewing
  
  
• Wall Street Markets vs. Main Street Markets
  
  
• Why is the Federal Government bailing out Wall Street
  instead of Main Street?
  
  
• LInd, "That Sound your Hear is the Social Fabric about to Snap"
  
  
• Brooks, "We Need a Bailout Too"
  
  
• Watchdog Sees Huge Bill for Banks Bailout (Oct. 2009)
  
  
• AIG bailout Monies
  
  
• All That Money You Lost - Where Did It Go? - CBS News
  
  
• Gross, If the economy's stagnant, why are stocks up ?
  
  
• Cooper, "How the Federal Reserve Should Work"
  
  
• Fernholz, The Myth of too Big to Fail
  
  
• Ritholtz, Bailout Nation: "The obvious solution--put the insolvent banks into FDIC receivership, fire management, liquidate holdings, sell the assets off, wipe out shareholders, and pay the bondholders whatever was left over--was simply unthinkable" (p. 221)
  
  
• This is what the Resolution Trust Corporation did with insolvent S & L's in the late 1980s and early 1990s. They then sold the reconstituted S & L's to new investors. This was not an option for Paulson, though.
  
  
• Bankers went to Jail in the S & L crisis
  
  
• Sanders: Break up "too big to fail"
  
  
• Bank bailout could cost $4 trillion
  
  
• Big banks like Citigroup are still too big to fail after financial reform
  
  
• Under Attack, Fed Chief Studies Politics
  
  
• G20 finance ministers agree to maintain fiscal support‎
  
  
• Business Aims to Relax Bans on Products Made
  with Child & Slave Labor
  
  
• Posner, "We are in a Depression"
  
  
• Johnson, Who Caused the Economic Crisis"
  
  
• Johnson, "Fix the Economy"
  
  
• Boone and Johnson, "The Next Financial Crisis"
  
  
• Total Bailout Cost : $8 Trillion
  
  
• New American Contract for the Middle Class
  
  
• The State of the Middle Class
  
  
• How to Save the Middle Class from Extinction
  
  
• Bartels, Growing inequality in the U.S.
  
  
• Top .01 percent's Wealth since 1945
  
  
• Brooks, "We Need a Bailout Too"
  
  
• LInd, "That Sound your Hear is the Social Fabric about to Snap"
  
  
• How might the current financial crisis shape financial sector
  (html version with graphs)
  
  
• How might the current financial crisis shape financial sector
  (pdf version)
  
  
• U.S. Military Spending- 1946-1996
  
  
• U.S. Military Spending, 1946-2008 (in-class)
  
  
• In Context: US Military Spending Versus Rest of the World (in-class)
  
  
• Naomi Klein: Wall St . Crisis Should Be for Neoliberalism
  What Fall of Berlin Wall was for Communism
  
  
• Alperovitz, Taking the Offensive on Wealth
  
  
• Stiglitz, "How to Prevent the Next Wall Street Crisis"
  
  
• Schwenninger, "Democratizing Capital"
  
  
• Vanden Heuvel and Schlosser, "America Needs a New New Deal"
  
  
• Chris Lewis, What about a Green New Deal?
  
  
• Andersen, Ending Plutocracy: A 12 Step Program
  
  
• Korten,"12 Point New Economy Agenda"
  
  
• What Else could our Bailout Buy
  
  
• Economists for an Imaginary World
  
  
• Gross, "Dumb Money"