Tuesday, January 11, 2011

Greed And Easy Money

Mini Book Review: Bailout Nation by Berry Ritholtz

Great book to review the past four/five years as the Fed government poured trillions of tax payer dollars into failing companies -- mostly financial institutions. Reading the story in a few days rather than hearing the story on a daily basis over several years made the bailouts more frustrating.

The book summarizes the US history of money, the Federal Reserve and government bailouts prior to 2008: Lockheed in 1971; Penn Central; Chrysler; Continental Illinois Bank; the S&L fiasco to the tune of ~$180 billion in costs to the taxpayer. Then in 2008, the outlay of taxpayer dollars gets serious with trillions of dollars. Each bailout made it easier for the next.

How did it happen.... The easy answer is greed and easy money. There is lots of blame to go around in the bailout and economic collapse. Ritholtz lists the players starting with the Federal Reserve. The list continues with Federal legislators and agencies, ratings agencies, huge banks, mortgage brokers, home buyers, and many others.

After most of the book describing a serious problem, the author includes in a final chapter ideas from other Wall Street talent with some possible solutions to dig out of this economic hole.

Barry Ritholtz also writes a blog at The Big Picture.

Ever wonder where all that money went that everyone lost. For an explanation check out The Invention Of Money -- the show this past weekend from This American Life.


  1. This is definitely on my reading list.

    Did he talk about the repeal of the Glass-Stegal (sp) Law that separated investment banking from retail banking? Wasn't that what enabled junk mortgages to be bundled and repackaged as securities, and then caused the housing boom?

  2. Yup. Phil Gramm is one of the few names (along with Greenspan) that is noted as being a major factor in this economic debacle.


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