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The Almighty Buck

twitter's Journal: Michael Lewis Bloggs the Financial Crisis.

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If you want an inside understanding of the current financial bust, you could ask the man who wrote Liar's Poker. Or you could read his great essay on it.

Update March 23, 2009

Despite the extended looting and accompanying sucker's rally on Wall Street today, the current predatory lending and investment fraud crisis is showing it's true magnitude. Small wars have cost less than what this crisis has already cost and we are looking at the start of losses, not their end. Other interesting summaries come from Rolling Stone and alternet [2]. The people who described 12 deregulatory steps bought with $5 billion in lobby money can rightly say, "we told you so," have some interesting regulatory remedies. Here are a few interesting links that chronicle the details of the mess:

2008

  • March 14 - Greg Pallast says the removal of Elliot Spitzer on private prostitution charges was done to make "bailouts," bank mergers and nationalization possible. He also gives a nice summary of the working of the predatory lending and "sub prime" mortgage scams. Stats: $250 Billion to bankers, 2 million homeowners on brink of forclosure.
  • October 13 - Naomi Klein notices the "bailout" is little more than public looting. There has been no "nationalization" of banks because they are under no obligations. She further predicts that bankers will be back for more. Stats: $700 Billion spent.
  • October 23 - U.S. Security and Exchange Commission Chairman Christopher Cox repudiates deregulation policies, "The last six months have made it abundantly clear that voluntary regulation does not work." He's talking about the "Enron loophole" where energy futures were and still are traded on the unregulated Intercontinental Exchange (ICE) where rampant speculation blew the price of oil and fattened oil company proffits. The price of oil doubled normally between 1988 to 2000 but the the market was deregulated in 1998 and 2002, shooting the price from $36 in 2000 to $60 in 2005 then a staggering $110 per barrel in 2008. This resulted in high gasoline prices that precipitated the housing collapse.
  • November 27 - Alan Greenspan admits he was wrong about deregulating derivatives markets.

2009

  • January 19 - Truthout jeers the second round of public looting that does little for homeowners and proposes two reasonable alternatives. The second alternative to TARP 2 is to give homeowners the difference between bubble price and current fair value instead of the banks. That would give people the ability to make their payments and rescue the banks. As things are proposed, homeowners end up with a lower priced mortgage but no equity or way to make payments and banks will end up blighted property owners anyway.
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Michael Lewis Bloggs the Financial Crisis.

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