Remember the iconic Depression-era movie “Mr. Smith Goes to Washington, in which Jimmy Stewart plays the wholesome young man in Washington out to do good? Well, Mr. Smith could just as easily have been your friendly banker at Washington Mutual. Unfortunately, Mr. Smith lost his way and turned predatory lender – and that’s the subject [...]

I just came across a post on Zero Hedge called “An Overview Of The Fed’s Intervention In Equity Markets Via The Primary Dealer Credit Facility.” Now, that’s a mouthful. As far as I can discern, the post’s purpose is to expose alleged equities market manipulation by the Federal Reserve. However, I found the argument rather [...]

The Seattle Times has a must-read piece on Washington Mutual today which reveals a lot of the fine detail on how the company was run and what led to its demise (hat tip calculated Risk).
As with many of the other busted financial giants like Northern Rock and Lehman Brothers, indications that something was amiss were [...]

John Gapper had a good piece in the FT yesterday called “Goldman should be allowed to fail.” His conclusion is that Goldman is allowed to game the system. It is a broker-dealer masquerading as a bank. It takes on much more risk than a traditional bank. It engages in different activities. It compensates its staff [...]

You are a teacher at a local primary school. Each school day you and some of your colleagues watch over the children at the school playground to make sure all of the children follow the rules and keep their hands to themselves. Your role is to keep the children safe. Mind you, this is a [...]

Watch the hour-long retrospective which aired tonight on PBS’s Frontline.  It should be very enlightening in regards to the seeds of the bubble and meltdown.  It examines who the players in the 1990s and 2000s were, what their attitude to regulation was, and how lax regulation created a bubble and a bust.
Also see the following [...]

In one of my latest posts I said “greed is not good.” Quite frankly, I looked at this statement as self-evident in the wake of an economic catastrophe where greed was a defining element.  Yet, a remarkable number of people commented in defense of greed; they seem to believe greed is a good thing. So, [...]

In the 1987 movie classic Wall Street, the sinister protagonist Gordon Gekko played by Michael Douglas gives this famous quote:

In the last seven deals that I’ve been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars. Thank you. I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.

Since that time, this quote has become famous as the “Greed is Good” philosophy of capitalism.

Marshall Auerback here.  I want to add a few thoughts on the situation in Latvia which Ed has highlighted on several occasions. His allusion to Argentina to describe the situation in the Baltics last July was on the money. I have a solution here out of the Argentine playbook.
In Latvia, the neo-liberal insanity continues.  The [...]

Remember when Paul Krugman asked aloud “How Did Economists Get It So Wrong?” He had a very well-received answer.  But he left out something.
The elephant in the room was debt.  No one seems to have been noticing.
Below is a British video parody version asking economists and political leaders the same question (in a slightly [...]