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Question for Discussion: What caused the 2008 Financial Meltdown and how does the Bank bailout affect America's Future?

Reading:The Corporate Scandal Sheet 2002; Uncle Sam, the Enabler: How the Investment Banks screwed the Government and Taxpayers; What went Wrong?: from The Warning DVD;The Bet That Blew Up Wall Street - 60 Minutes; Watchdog Sees Huge Bill for Banks Bailout (Oct. 2009); 5 Ways the Government used our Money to Save Big Banks and Screw Us

Video: Credit Default Swaps: Fall 2009 60 minutes stories;
DVD: Frontline: The Warning: Fall 2009; DVD: Inside the Financial Meltdown



Daily Class Web Links

Market Collapse of 2001-2003?

What Caused the 2008 Financial Collapse?

Debating the Financial Bailout

Are we in a Depression?

Should we bailout Wall Street and the FIRE sector?


The Decline of the American Middle Class


What caused the Financial Collapse?

Daily Class Outline

The Great Depression and the Financial Collapse of 2008

  • We can compare the Great Depression and the Financial Collapse of 2008 in terms of different responses to an economic crisis

  • In 1933, Roosevelt focused on supporting workers, farmers, home-owners, and small business

  • In 2008 and 2009, Presidents Bush and Obama focused on bailing on the Financial system and the big Banks

  • Roosevelt would argue that American freedom also depends on economic security

  • Roosevelt, "The Power of a Few": Threats to American Freedom

  • Moyers, "Moyers and FDR: FDR was his Friend" (in-class)

  • Vanden Heuvel and Schlosser, "America Needs a New New Deal" (in-class)

  • Chris Lewis, What about a Green New Deal? (in-class)

  • Can Americans be free in 2010 without economic security?

  • What is the responsibility of the government to support economic security?

  • Roosevelt and Bush and Obama have very different answers.

  • Does American Freedom still depend on economic security?

  • Can America still be a middle-class society without economic security?

Market Collapse of 2001-2003: Prelude to the 2008 Financial
Collapse

What Caused the 2008 Financial Collapse?


The Events Leading to the 2008 Financial Collapse

Are we in a Depression?

  • Posner, "We are in a Depression" (in-class)

  • The $10 Trillion Hangover - Paying the Price for Eight Years of Bush

  • Bush's 10 Trillion Borrowing Binge

  • Banking Collapse of 2008 : Three weeks that changed the world ...

  • Gross, "Dumb Money"

  • Government bailouts of the Financial Markets 1982-2008

  • The Problem is that the Federal Government has bailed out Wall Street because it thinks that Finance (the FIRE sector)is at the center of a healthy economy (in-class)

  • The FIRE sector of Wall Street is doing really well
    but the real economy of Main Street is hurting. By 2008,
    Finance was 31 percent of the wealth created every year
    in our GDP

  • Money creating money on Wall Street through the inflation
    of asset bubbles (stocks, housing, bonds, securities, or
    derivatives) does not help the real economy of Main Street

  • The real economy of Main Street involves companies hiring
    workers, producing goods and services, and creating wealth
    for real communities. If Main Street doesn't work, then our
    economy doesn't work.

  • Is it possible that we owe our foreign creditors so much
    money, and depend on their continuing to loan money to
    us, that we can't break up the Banks and reform the financial
    system without really hurting our Arab, Chinese, and Japanese
    creditors? If so, then Friedman is right: The Electronic Herd
    is really calling the shots. This would represent the end of
    any pretense at democracy in the United States. Friedman would
    we right that our politics is just Pepsi or Coke with no other
    alternative choices. This is what Friedman means by TINA:
    There is No Alternative.

  • Korten, Wall Street Markets vs. Main Street Markets

  • Why is the Federal Government bailing out Wall Street
    instead of Main Street?


Should we bailout Wall Street and the FIRE sector?


Bailing out the Plutonomy

Should we bailout the Middle Class and Main Street?


How can we fix the Financial System?

 



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Sewall Academic Program; University of Colorado at Boulder
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