Here, five years after the Great Recession began, we seem to be mired in a jobless recovery. What happened? Plenty of books have been written about it. I have read a few. Michael Lewis’ The Big Short is an easy and entertaining read which gives a good description of CDO’s (collateralized debt obligations). However, he perpetuates the self-excusing notion that only exceptional people could have foreseen the disaster. He, in fact, was one of those writers who had denied the danger of the oncoming bubble.
A good book, looking at one of the really big operators who made enormous profits during the crash, is Gregory Zuckerman’s The Greatest Trade Ever. It tells the riveting story of John Paulson’s enormous bet against the housing bubble. There were others, who made great sums but who were also involved in the purposeful construction of these dangerous CDO’s while betting against them. An instructive view of this strand of the story and its seamy political aspect can be read at a Wikipedia article on the hedge fund, Magnetar.
Yves Smith’s book, Econned, asserts that the economics profession has been co-opted by the same incentives that have corrupted the corporate world. She, a Wall Street expert, is disturbed that leading economists take the view that the economy is self-correcting and so we just need to sit back and wait.
The prominent economist Joseph Stiglitz is a very distinct exception. In his latest book he views the mess we are in from the 50,000-foot perspective of a top insider (World Bank and White House), yet with the sympathy of a small “d” democrat for the workingman. If you have the stamina to plough through even a part of The Price of Inequality, you will feel you have gained a sense of what is really going on here. There are lots of holds on it at the library, but not on his DVD kitchen table talk.
Neal Barofsky has written of his experiences as Special Inspector General for the TARP Fund that was voted by Congress. The Fund was not only to prevent a melt-down of the economy but deal with the millions of homes subject to foreclosure. He feels the provisions of the law that called for adjustment of mortgages were not followed by a Treasury too beholden to the banks. His revealing talk on KUOW’s Weekday for March 15 can be replayed on your computer or smartphone. I highly recommend it for an up-to-date sense of the priorities felt at the Treasury Department.
Jon Talton writes of the dismal prospects for a vibrant job recovery due to robotization. See his Seattle Times column of February 28th.
And now there is talk of our being inflicted with another questionable presidential election outcome because of changes in various states’ election procedures for selecting their representatives to the College of Electors. As a result, we could have a president chosen by a minority of the voters, a sure prescription for big trouble.
And then there is global warming. Bill Moyers dedicated a program to that, mid-month on PBS. Listen to his expert interviewee and lose more sleep.