Financial meltdown 101
Like most of you, I’ve been trying to make some sense of the financial fracas going on around us. I’m no economist but it’s been interesting to read all the diverse views and “who’s to blame” articles. Seems from my chats with friends, most of us are remaining calm albeit privately worried. Here in Oz, we’ve seen the Australian dollar and the stock market on a pretty rough roller coaster ride. So I’ve gathered some links together to help us make sense of what’s happening – How to Understand Economic Stuff 101. I found all the articles very helpful in charting uncharted territory.
- First up, is a link to Financial Meltdown 101 – everything you ever wanted to know about the biggest economic meltdown since the Great Depression but were afraid to ask. It’s an excellent and easy to read account. Of particular interest has been the recent gutting by the US Federal Reserve of the Glass-Steagall Act, which was enacted during the Great Depression to prevent the type of banking activity that led to the 1929 stock market crash
- Here’s a good article in the Monthly Review describing the subprime fiasco.
- An article that explains the 2004 decision by the US SEC, which changed the net capital rule for big investment banks and allowed them to pile up new debt.
- A Daily Kos Post looking at Alan Greenspan’s legacy, particularly how he favoured Derivative instruments whereas other financiers like Warren E Buffet referred to them as “weapons of mass destruction”.
- Is deregulation to blame? Maybe. Maybe not. Read this Washington Post article to find out.
- Then you can read the Seven Deadly Sins of Deregulation & Three Necessary Reforms.
- Is it 1929 all over again? read this article to find out.
- And here’s a really interesting article about the woman (Brooksley Born, ex-head of the Commodity Futures Trading Commission) who some say might have prevented the financial mess but was silenced by Greenspan and his gang.
- Has Capitalism been rescued by financial socialism? Read this article.
In a future post, I plan to offer up some predictions for a post-financial meltdown world. What will we be facing?
Meanwhile, in times of crisis we should always look on the bright side as the saying goes. So here are some financial meltdown jokes from BBC News. My favourite being: “What’s the difference between Investment Bankers and London Pigeons? The Pigeons are still capable of making deposits on new BMWs”.
Here are 10 reasons why we will survive the meltdown. And lastly, the hilarious 45-slide powerpoint presentation that did the rounds of Wall Street – stick figures explain the financial crisis with liberal amounts of swearing.
Image credit: Webphemera
UPDATE: 31/1/09 Check out this article – Six Errors on the Path to the Financial Crisis.