[2008-2010] Meltdown & Bailout (and related affairs)

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[2008] Bringing Down Bear Stearns. On Monday, March 10, Wall Street was tense, as it had been for months.

[2008] Bringing Down Bear Stearns

The mortgage market had crashed; major companies like Citigroup and Merrill Lynch had written off billions of dollars in bad loans. In what the economists called a “credit crisis,” the big banks were so spooked they had all but stopped lending money, a trend which, if it continued, would spell disaster on 21st-century Wall Street, where trading firms routinely borrow as much as 50 times the cash in their accounts to trade complex financial instruments such as derivatives. Still, as he drove in from his Connecticut home to the glass-sheathed Midtown Manhattan headquarters of Bear Stearns, Sam Molinaro wasn’t expecting trouble. Molinaro, 50, Bear’s popular chief financial officer, thought he could spot the first rays of daylight at the end of nine solid months of nonstop crisis.

It was an uneventful morning—at first. [2008] The End Of Wall Streets Boom - News Markets. [2009] The Great American Bubble Machine. Rolling Stone Politics. [2009] The Quiet Coup - Magazine. The crash has laid bare many unpleasant truths about the United States.

[2009] The Quiet Coup - Magazine

One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform.

And if we are to prevent a true depression, we’re running out of time. Jim Bourg/Reuters/Corbis One thing you learn rather quickly when working at the International Monetary Fund is that no one is ever very happy to see you. Edstrom_MortgageSecuritization_POSTER_17_x_22_v4_1.jpg (JPEG Image, 1237x1600 pixels) - Scaled (40. [2010] Wall Street's Bailout Hustle.

[2010] Bethany McLean on Goldman Sachs (January 2010) Senior partner Sidney Weinberg in 1957. From The New York Times/Redux. As the firm grew, it developed a unique culture, characterized by impossibly hard work, loyalty, secrecy, and a lack of flashiness. Senior executives there—unlike those at other firms—do not have palatial offices with private bathrooms. In the late 1970s, Whitehead put what are still Goldman’s 14 Business Principles on paper. The first: “Our clients’ interests always come first.” At one time, outsiders could see this principle in action. By the early 1990s, Morgan Stanley and Goldman Sachs sat atop the pinnacle of Wall Street. Insiders and outsiders alike have long struggled to define Goldman Sachs’s secret sauce. The place does not ooze the smug satisfaction that often comes with great wealth. [2010] The Blundering Herd.

Excerpted from All the Devils Are Here, by Bethany McLean and Joe Nocera, to be published this month by Portfolio, a member of Penguin Group (USA) Inc.; © 2010 by the authors.

[2010] The Blundering Herd

In the years leading up to the financial crisis of 2008, there was no more infectious disease on Wall Street than Goldman envy. Goldman Sachs, perhaps the most storied name in all of American finance, had gone public only in 1999, the last of the big firms to do so. After the I.P.O., Goldman’s mind-boggling profits were on full display. [2010] Jamie Dimon - America’s Least-Hated Banker. [2010] Wall Street, investment bankers, and social good. A few months ago, I came across an announcement that Citigroup, the parent company of Citibank, was to be honored, along with its chief executive, Vikram Pandit, for “Advancing the Field of Asset Building in America.”

[2010] Wall Street, investment bankers, and social good

This seemed akin to, say, saluting BP for services to the environment or praising Facebook for its commitment to privacy. During the past decade, Citi has become synonymous with financial misjudgment, reckless lending, and gargantuan losses: what might be termed asset denuding rather than asset building. In late 2008, the sprawling firm might well have collapsed but for a government bailout.

Even today the U.S. taxpayer is Citigroup’s largest shareholder. The award ceremony took place on September 23rd in Washington, D.C., where the Corporation for Enterprise Development, a not-for-profit organization dedicated to expanding economic opportunities for low-income families and communities, was holding its biennial conference. There is something in what Mack says. [2010] What's a dollar of stimulus worth?

By Dylan Matthews BHeffernan1 asks: How many jobs does a federal gov dollar buy?

[2010] What's a dollar of stimulus worth?

Provide optimistic (most efficient -- extending unemployment? Building a smart power grid?) , median and pessimistic (tax cuts for wealthy?). [2010] Do the rich spend less of new income than the poor? By Dylan Matthews PtitSeb did not ask this exactly, but this quotation he posted from Mark Zandi raises an interesting question: Mark Zandi's op-ed in the NYT last week ... mentioned that "successful small-business owners, who power the nation’s job-creation machinery, make up one-third of these high-income taxpayers.

[2010] Do the rich spend less of new income than the poor?

" This reminded me of an argument that people like myself often make to defend giving money to lower-income people as a form of stimulus, which is that lower- and middle-class people tend to have a higher marginal propensity to consume than upper-income people.

The foreclosure crisis