
   
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


Market Collapse of 2001-2003?
What Caused the 2008 Financial Collapse?
- FIRE (Finance, Insurance, and Real Estate) sector
- Moral Hazard after LTCM bailout
- The Greenspan Put
- The Excitement of making lots of money and profits
drove the system
- The More Money they could make, the more they were
willing to take huge risks
- The FIRE sector took these risks because they knew they
couldn't lose. If they lost their investment, the Federal
govenment would bail them out
- Today the U.S. government is guaranteeing their new loans
to the tune of Trillions of dollars and guaranteeing their bad
loans to the tune of trillions of dollars
- Was all this a "Quiet Coup," as Simon Johnson argues?
- Not really, they all believe that what is good for the FIRE sector
is good for the entire economy. This is their larger mistake.
- The people regulating Wall Street are the same Wall Street
players they are now regulating. This is the revolving door.
- They thought that what was good for the FIRE sector was good
for the American economy and society. They believed that
they were the "center of the universe."
- Simon Johnson, The Quiet Coup
- Bailout Recipients spent Millions on Lobbying
- "The banks lobbied Washinton so they write the rules that got us into this crisis. They then lobbied Washington to get the money to bail them out. And now they are lobbying Washington to write the rules so they get us into the
next crisis. It's perfect circularity. I look at it as more a question than an
answer: Who owns this process?"
Elizabeth Warren, TARP Congressional Watchdog
- Robinson, Mad as Hell Tea-Time (2009)
- Watchdog Sees Huge Bill for Banks Bailout (Oct. 2009)
- Prins, Real Costs of the Bailout
- The Costs of the Bailout
- Banking Collapse of 2008 : Three weeks that changed the world ...
- Newsweek: New Market Bubble is Brewing
- CIT bankruptcy: 5th largest in U.S.
- GoldmanSach 's lesson: House always wins
Debating the Financial Bailout
- What went Wrong?
- Dorgan, Reckless Part One
- Banking Collapse of 2008 : Three weeks that changed the world ...
- You Tube: Falling Dominoes -- model of collapse of
interconnected global financial system
- The dominoes fall: a timeline of the squeeze and crash
- Uncle Sam, the Enabler: How the Investment
Banks screwed the Government and Taxpayers
- Greenspan and the Wisdom of Markets
- Graph of Bailout Costs versus the New Deal
- Watchdog Sees Huge Bill for Banks Bailout (Oct. 2009)
- Prins, Real Costs of the Bailout
- Prins, The Beneficiaries of the Bailout
- Prins, Its Takes a Pillage
- 5 Ways the Government used our Money to Save
Big Banks and Screw Us
- Krugman, "The Madoff Economy"
- The Bet That Blew Up Wall Street - 60 Minutes - CBS News
- Ziuek, "To Each According to His Greed";
- Total Financial Losses in the 2008 Financial Collapse
- Spitzer, "The Real AIG Scandal"
- Bailout Recipients spent Millions on Lobbying
- 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?
- Korten, The Edmunds Fallacy
- What does Korten Mean by Phantom Wealth?
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Why is the Federal Government bailing out Wall Street
instead of Main Street?
Are we in a Depression?
- Posner, "We are in a Depression"
- 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 is that Finance
is at the center of a healthy economy
- 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
- Bailout Recipients spent Millions on Lobbying
- Watchdog Sees Huge Bill for Banks Bailout (Oct. 2009)
- Banks screwed the Government and Taxpayers
- Uncle Sam, the Enabler: How Wall Street
screwed Main Street: A Memo from the top
- Greenspan and the Wisdom of Markets
- Total Bailout Cost : $8 Trillion
- Watchdog Sees Huge Bill for Banks Bailout (Oct. 2009)
- TPMDC | Talking Points Memo | The Influence Your Money Can Buy ...
- G20 finance ministers agree to maintain fiscal support
- Hertz, "The Death of Gucci Capitalism"
- Naomi Klein: Wall St . Crisis Should Be for Neoliberalism
What Fall of Berlin Wall was for Communism
- Baker, "Barack Hoover Obama"
- Obama's Huge Deficit Flipflop
- Dowd, "Virtuous Banks, Really"
- Stiglitz, "How to Prevent the Next Wall Street Crisis"
- Schwenninger, "Democratizing Capital"
- Hirsh: Why We Should Break Up the Big Banks | Newsweek Voices
- Robert Reich: Breaking Up the Big Banks, and Why Congress Won't Do It
- Leonard, The Break Up the Banks Delusion
- Leonard, Boom and Gloom
- Johnson, "Fix the Economy"
- Boone and Johnson, "The Next Financial Crisis"
- Lewis, The End of the Financial World as We Know It
- Lewis, How to Fix a Broken System
- RGE - New recommendations to solve our financial crisis (pdf)
- RGE - New recommendations to solve our financial crisis (html)
- Korten is right. We have the power and chance to reform this
Money monster that Wall Street has become. The danger is that
we won't be able to do it because of the influence of Big Money
in Politics
- Korten,"12 Point New Economy Agenda"
- Reich, "Why Wall Sreet Reform is Stuck in Reverse"
- Korten: Summary of Political and Economic Reforms
Should we bailout Wall Street and the FIRE sector?
- Watchdog Sees Huge Bill for Banks Bailout (Oct. 2009)
- AIG bailout Monies
- Spitzer, "The Real AIG Scandal"
- Bailout Recipients spent Millions on Lobbying
- All That Money You Lost - Where Did It Go? - CBS News
- Gross, If the economy's stagnant, why are stocks up ?
- 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"
- 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
The Decline of the American Middle Class
What caused the Financial Collapse?

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
- Banking Collapse of 2008 : Three weeks that changed the world ...
- Timeline of the Economic Collapse
- JPMorgan to buy Bear for $2 a share -- Signs of the Times News
- Biggest Mistake of the Financial Crisis: Lehman Bros. Bankruptcy ..
- Government bails out AIG with $85 billion loan
- AIG bailout Monies
- The Bet That Blew Up Wall Street - 60 Minutes - CBS News
-
-
- FIRE (Finance, Insurance, and Real Estate) sector
- Moral Hazard after LTCM bailout
- Government bailouts of the Financial Markets 1982-2008 (in-class)
- The Greenspan Put
- The Excitement of making lots of money and profits drove the system
- The More Money they could make, the more they were willing to take huge risks
- The FIRE sector took these risks because they knew they
couldn't lose. If they lost their investment, the Federal
govenment would bail them out
- Today the U.S. government is guaranteeing their new loans
to the tune of Trillions of dollars and guaranteeing their bad
loans to the tune of trillions of dollars
- Was all this a "Quiet Coup," as Simon Johnson argues?
- Not really, they all believe that what is good for the FIRE sector
is good for the entire economy. This is their larger mistake.
- The people regulating Wall Street are the same Wall Street
players they are now regulating. This is the revolving door.
- They thought that what was good for the FIRE sector was good
for the American economy and society. They believed that
they were the "center of the universe."
- You Tube: Falling Dominoes -- model of collapse of
interconnected global financial system
- The dominoes fall: a timeline of the squeeze and crash
- Spitzer, "The Regulatory Charade" (in-class)
- Does the Financial Collapse prove that our Financial System isn't Working?
- Simon Johnson, The Quiet Coup (in-class)
- Bailout Recipients spent Millions on Lobbying (in-class)
- "The banks lobbied Washinton so they write the rules that got us into this crisis. They then lobbied Washington to get the money to bail them out. And now they are lobbying Washington to write the rules so they get us into the
next crisis. It's perfect circularity. I look at it as more a question than an
answer: Who owns this process?"
Elizabeth Warren, TARP Congressional Watchdog
- Robinson, Mad as Hell Tea-Time (2009) (in-class)
- Banking Collapse of 2008 : Three weeks that changed the world ...
- Newsweek: New Market Bubble is Brewing (in-class)
- CIT bankruptcy: 5th largest in U.S.
- GoldmanSach 's lesson: House always wins
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?
- 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 ?
- 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 (in-class)
- Sanders: Break up "too big to fail"
- Under Attack, Fed Chief Studies Politics
- G20 finance ministers agree to maintain fiscal support (in-class)
- 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"
- Watchdog Sees Huge Bill for Banks Bailout (Oct. 2009) (in-class)
Bailing out the Plutonomy
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Should we bailout the Middle Class and Main Street?
How can we fix the Financial System?
- 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)
- Reich, "Why Wall Sreet Reform is Stuck in Reverse"
- 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"





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