The financial crisis

Really want to understand what's going on?.  Simple, but it will take two hours of your time.  Listen to this “This American Life” podcast that explains how sub-prime mortgages, etc., got us into all this mess and then listen to this more recent one that tells you everything you need to know about the bailout and the evils of Credit Default Swaps.  Nothing else I've read, seen, or listened to has come close to helping me understand all this mess.  Well worth your time.

That said, I just read a really great article in the New York Times about how much Alan Greenspan's slavish devotion to his libertarian ideology is very much at fault.  Maybe I'm wrong, but it seems to me that right-wing ideologues are more likely to be hopelessly beholden to their ideology.  This is a great example of massive harm it has wreaked on the whole country.  My favorite quote from the article:

?The sudden failure or abrupt withdrawal from trading of any of these
large U.S. dealers could cause liquidity problems in the markets and
could also pose risks to others, including federally insured banks and
the financial system as a whole, In some cases intervention has and could result in a
financial bailout paid for or guaranteed by taxpayers.?

Why this?  Because, it is from Congressional testimony in 1994!.  There was ample warning from plenty of smart people that we needed to regulate deriviatives trading.  But Greenspan (and many others, including Democrats, in fairness) were convinced the market could self-regulate.  I don't know what makes anybody ever thing self-regulation will work.  Time and time again, human beings choose risk and short-term profits over sensible long-term strategies.  That's why we have regulation.  Anyway, you really should read the article. 

On a final financial note, I am very pleased to learn that the Fed (seemingly under much more flexible and intelligent leadership than the formerly-revered Greenspan) is moving towards buying up bank shares (nice explanation here).  My sense is that most all economists who are not hopelessly right-wing think this is the smartest solution to the crisis and I am quite encouraged that Bernanke and Paulson seem to be more interested in doing what makes the most sense rather than simply what makes libertarian Republicans happy.

Mainstream media needs love

Washington Post's Dana Milbank goes in search of a hug:

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