Griftopia: Bubble Machines, Vampire Squids, and the Long Con...

"Matt Taibbi's unsparing and authoritative reporting on the financial crisis has produced a series of memorable Rolling Stone features. He showed us how Goldman Sachs, that "great vampire squid", played a central role in creating not only the housing bubble but four other big speculative booms that filled its coffers while wrecking the American economy. He explained how Wall Street banks cooked up schemes that helped decimate municipal budgets and cost countless jobs, and how Wall Street lobbying led to a financial reform bill that won't prevent another meltdown. Taibbi builds on that eye-opening work in his new book, Griftopia: Bubble Machines, Vampire Squids, and the Long Con That is Breaking America, due out from Spiegel & Grau on November 2. In this exclusive excerpt, he describes how our cash-strapped country is auctioning off its highways, ports and even parking meters at fire sale prices — and finding eager buyers in the unregulated sovereign wealth funds of oil-rich Middle Eastern countries."

The dramatic story behind the most audacious power grab in American history

Buy HERE.

The financial crisis that exploded in 2008 isn’t past but prologue. The stunning rise, fall, and rescue of Wall Street in the bubble-and-bailout era was the coming-out party for the network of looters who sit at the nexus of American political and economic power. The grifter class—made up of the largest players in the financial industry and the politicians who do their bidding—has been growing in power for a generation, transferring wealth upward through increasingly complex financial mechanisms and political maneuvers. The crisis was only one terrifying manifestation of how they’ve hijacked America’s political and economic life.

Rolling Stone’s Matt Taibbi here unravels the whole fiendish story, digging beyond the headlines to get into the deeper roots and wider implications of the rise of the grifters. He traces the movement’s origins to the cult of Ayn Rand and her most influential—and possibly weirdest—acolyte, Alan Greenspan, and offers fresh reporting on the backroom deals that decided the winners and losers in the government bailouts. He uncovers the hidden commodities bubble that transferred billions of dollars to Wall Street while creating food shortages around the world, and he shows how finance dominates politics, from the story of investment bankers auctioning off America’s infrastructure to an inside account of the high-stakes battle for health-care reform—a battle the true reformers lost. Finally, he tells the story of Goldman Sachs, the “vampire squid wrapped around the face of humanity.”

Taibbi has combined deep sources, trailblazing reportage, and provocative analysis to create the most lucid, emotionally galvanizing, and scathingly funny account yet written of the ongoing political and financial crisis in America. This is essential reading for anyone who wants to understand the labyrinthine inner workings of politics and finance in this country, and the profound consequences for us all.

An Extended Excerpt from todays' Guardian

Steve Eisman: Maverick Trader

The financial crisis was predictable, but only a handful saw it coming. Of those, even fewer were bold enough to bet against the market. And the boldest of them all was an unknown trader

"He agreed, though: the main effect was to transfer the financial risk to the shareholders."

"When things go wrong, it's their problem," he said – and obviously not theirs alone. When the Wall Street investment bank screwed up badly enough, its risks became the problem of the US government. "It's laissez-faire until you get in deep shit," he said, with a half chuckle. He was out of the game. It was now all someone else's fault."

 http://www.guardian.co.uk/business/2010/mar/20/steve-eisman-maverick-trader-financial-crisis

Regulatory Reform in the context of financial stability and competition implications

Bailing out the Banks: Reconciling Stability and Competition

An analysis of state-supported schemes for financial institutions

Thorsten Beck, Diane Coyle, Mathias Dewatripont, Xavier Freixas and Paul Seabright


The financial crisis of 2008 has seen the fall of several of the mighty US investment banks, the collapse of renowned commercial banks on both sides of the Atlantic and the exhaustion of banks' capital all over the world. With it, standard views of banks, financial markets, their risks and their regulation had to be suspended, at a time when bank bailouts became unavoidable. This raises key policy questions on the way taxpayers' resources should be used: What type of capital should governments inject? How should banks' shareholders and creditors be treated? Does capital injection distort competition? Should the standard rules preventing anti-competitive behaviour be applied? How to contain future risk-taking by banks?


This report assesses two related aspects of the policy response to the unprecedented financial crisis: competition policy and financial regulation. It addresses both the effectiveness of the response to the current crisis, and the lessons that can be drawn in order to reduce the likelihood of future crises.


The links between competition policy and banking stability are central to assessing the crisis policy response, and in particular the effectiveness of state aid control. There have been two contrasting views of the relationship between competition and stability - one is that stability is such an urgent issue in the crisis context that it overrides competition concerns, while the alternative view is that intervention to restore financial stability will lead to massive distortions of competition in the banking sector, and so competition rules should be applied even more vigorously than usual.


In contrast to these two views, this report concludes that competition policy is indeed more important than ever in times of crisis, but that the competition rules appropriate to the banking sector are different from those that apply in other sectors. This is because bailing out one bank in an episode of crisis helps its competitors, and state aid rules should reflect this characteristic. Additionally, while European competition authorities have tried, since the autumn of 2008, to strike the appropriate balance between the insistence on competition concerns and the need for urgent action to respond to the financial crisis, the time has now come for a thorough competitive assessment of the banking sector following the recent bailouts. The fact that aid to individual banks has sector-wide competition implications means that a competition assessment conducted on a case-by-case basis is not sufficient.



The report also makes a series of recommendations about regulatory reform, with regard to both financial stability and competition implications. Critically, the report calls for a strengthening of competences at the European level, beyond coordination mechanisms.


Download the report here [PDF 408 KB]

Part 2 - Inside the Collapse 60 Minutes with Michael Lewis

Watch CBS News Videos Online

A Slew of Academics take a shot at a Post Mortem

WSJ Blogs

Real Time Economics

Economic insight and analysis from The Wall Street Journal.

Academics on What Caused the Financial Crisis

 Annamaria Lusardi, Dartmouth College

On financial literarcy: “Levels of financial knowledge are strikingly low and, moreover, there is a sharp disconnect between how much people think they know and what they actually know. “   
Read full remarks.

http://blogs.wsj.com/economics/2010/02/27/academics-on-what-caused-the-financial-crisis/ 

Reporting to THIS Task Force (Just curious where the task force for actually doing something about it is?):

http://www.fcic.gov/hearings/