Streams

A Year After the Economic Meltdown

Friday, September 18, 2009

William D. Cohan, author of House of Cards: A Tale of Hubris and Wretched Excess on Wall Street revisits the economic crisis, the bailout, and looks at where we are now, a year after the failure of Bear Sterns, Lehman Brothers, the bailout of AIG, and the start of the recession.

William Cohan was last on the show August 19th, discussing the final days of Merrill Lynch. You can listen to that interview here.

He was also on the show May 25th to talk about his book House of Cards, about the failure of Bear Stearns. You can listen to that interview

Guests:

William D. Cohan

Comments [12]

Reggie Greene / The Logistician from North Carolina


Here’s a thumbnail of what it takes, in my view, for a society to be prosperous:

1) An inventive / innovative class; people have to want to invent things and processes;

2) Cross-culturalization, where multiple inventors get together and compare their inventions, and newer \ better inventions are created;

3) Seaports or trade route intersections;

4) Business flowing from invention / innovation;

5) Decent Jobs flowing from business, so people can take care of their families with pride;

6) A reasonably decent life flowing from more people having jobs; and

7) Education encouraging the repeat of the process

Either some force in society sets this in motion, governs the process, and maintains it, or it does not. If you leave it to chance, you might be on top for a while but you will be on top indefinitely. But that is a cost of freedom, when you do not direct people what to do with their lives.

My suspicion is that China will be the next world power because they tell more people what to do, and they are more controlling. More free? Of course not. But more planning, organization, consistency, and coordination take place under their model. We in the U.S. use the “herding cats” model, and there are benefits and costs associated with it.

We’ve needed more inventors for years, and few in our country have paid attention to that issue.

Sep. 29 2009 03:08 PM
db from nyc

... "flash trading" and investing can not be used in the same sentence! "flash" trading is NOT investing, it is super fast day trading!

Sep. 18 2009 12:39 PM
Larry from Nyack

The Cramer rant [or "meltdown"] that I mentioned above is on youTube:
http://www.youtube.com/watch?v=SWksEJQEYVU

Sep. 18 2009 12:37 PM
Robots Need 2 Party from NYC

Has the way to play the game become it's OK to have bubbles as long as you get out before it bursts? Has responsible investment, slow growth, become a thing of the past? If the financial crisis proved anything it is that a few can walk away with all the gains while everyone else suffers the losses. That is probably pretty attractive to some people.

Sep. 18 2009 12:36 PM
Hugh Sansom from Brooklyn NY

Why would Wall Street view what happened as a mistake? Goldman Sachs and others made a PROFIT out of this disaster.

And given that, why wouldn't they go ahead an repeat it? The Bush and Obama administrations have effectively provided a massive incentive for Wall Street to do it all over again!

Sep. 18 2009 12:34 PM
Hugh Sansom from Brooklyn NY

Through its PAC, individual employees, families, Goldman Sachs was the second largest donor to Obama's campaign.

Harvard, the pseudo-intellectual ground zero for the 'thinkers' behind the crimes (particularly Harvard Business School) was the third largest donor (again, not the institution itself, but its PAC, if it has one, and its faculty, families, etc.)

Citigroup and JPMorgan Chase are also in the top ten.

Sep. 18 2009 12:31 PM
CJ from Long Island

Seriously, where is the broader prosperity? I can't even get my credit company to lower my APR when I pay every month on time.

Sep. 18 2009 12:27 PM
JJ

What about the failure of most economists as what was pointed out in a NYT magazine article?

Isn't one of the problems is that both Keynesians (not Keynes himself) and Monetarists, Neoclassical economists effectively ignore the impact of financial intermediation and volatility of financial markets on the economy?

And, that we have to look at some of the new Institutional Theories of Finance as a better guide?

Sep. 18 2009 12:23 PM
Larry from Nyack

Please ask if Jim Cramer's August 6, 2007 CNBC rant that "Bernanke has no idea what it's like out there [at the major investment banks]" and "he has to open the discount window.." had any effect on the government's actions?

Sep. 18 2009 12:22 PM
Hugh Sansom from Brooklyn NY

William Cohan is sure that Goldman Sachs has the legally required amount of leverage.

WHY?! Part of the problem was and is EXACTLY that the Fed and the SEC were NOT doing their regulatory jobs.

Paulson, Geithner, Greenspan and others with them and before them just took as an Article of Faith that Wall Street Knows Best.

Cohan sounds like just another acolyte.

Sep. 18 2009 12:18 PM
Hugh Sansom from Brooklyn NY

The Dow has loved bad employment figures for years. I haven't done the numbers, but my observation is that the Dow typically goes up on days when increases in unemployment are announced.

As for why a jobless recovery can still see a happy Wall Street, I think that's pretty easy: We are a two-tiered society. There are the oligarchs - represented by Bernanke, Obama, Geithner, Greenspan, Summers.

Then there is the rest of us. The bottom 90 to 95 percent of the population.

As for the Keynesian response. Well, it was quasi-Keynesian. But any true Keynesian would have advocated far more spending (as Paul Krugman did, and he is not a pure Keynesian by any stretch of the imagination).

One reason we are seeing such poor employment results is that the government hasn't spent enough.

As Stiglitz, Krugman and many others have noted, the raw fact is that the people making decisions on Wall Street or in Washington have no connection to or compassion for or understanding of the poorer majority.

And regarding conspiracies.... No need to call it a conspiracy. We have the documentation proving conclusively the vast number of meetings Geithner had with Goldman Sachs criminals.

Sep. 18 2009 12:15 PM
Andrew B. from New York City

In yesterday's New York Times, I see
the Federal and state government has allocated $11 million in taxpayer cash for free money
for retraining education. Laid off workers are getting $12,500 in free cash for this.

Just one catch - they have to be ex-employees of big investment banks like Lehman Brothers, the
greedy SOBs who created the recession who put everyone out of work.

Laid-off employees of other industries? Nothing for us.

http://www.nytimes.com/2009/09/18/nyregion/18unemploy.html?_r=1&hp

Sep. 18 2009 12:10 PM

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