They will go down in infamy.
If you missed PBS’ special on the Market Meltdown I’m posting it here. It’s a real good history lesson on America’s collapse in the credit market. It covers every major failure, bailout, and meeting conducted during those/these times of crisis. The scary thing is that, as I was watching, I felt like this show went to air a little too soon. I mean, it seems like Frontline is talking about the credit crisis as if its already part of history. Hmmm… I got news for you news-people… this is the present.
Very interesting perspective on the video. It ties in everything you need to know- from the housing market, to the credit market, to the bank failures, Lehman, Fannie Mae, AIG failures and more. It kind of blames Frank Paulson and Ben Bernanke for everything. That’s a little unfair since the blame should go a little further back to the misuse of credit by consumers and the delinquent loaning by creditors. Whatever. Video takes us back to the first meltdown… Bear Stearns.
Anyway, grab some popcorn and enjoy the video. Actually, it probably would have been appropriate to air this thing on Friday the 13th.
TIMELINE
- First Tremors– Bear Stearns exposed to toxic sub-prime mortgage market. Rumors spread. Stock falls.
- The Deal to Save Bear Stearns– Paulson and Bernanke fear “systemic risk” in Bear’s crisis.
- Next Crisis: Fannie Mae, Freddie Mac– People still buying homes thinking they’ll be instantly rich. Idiots. Suddenly, fears of toxic assets spreads to world’s LARGEST mortage lenders. Paulson forced to nationalize both. Ooops.
- Let Lehman Fail: One day after Fannie Mae/Freddie Mac, September 8. Lehman, one of WallStreet’s oldest companies, thinks it will get help like Bear Stearns, but Paulson, ignores systemic risk and out of “moral hazard”, tells CEO to figure it out themselves. OOOOOPS. LEH stock melts down. Bernanke bails out AIG. World’s largest insurance company is nationalized. What the?!
- Market Begins to Crash, “Red October”: 2 days after Paulson lets LEH collapse, the market responds and drops hard. Hmmmmmm. Bernanke starts to panic so he teams up with Paulson to come up with a WHOLE SCALE BAILOUT on financial system. Instead of taking it at a case-by-case basis, they bring idea to Congreass to create that infamous and epic $700b bailout. This idea of a “blank check bill” comes as so radical to many conservative House Representatives and the bill is rejected. As the bill gets more and more “nays” aired on TV, the Dow Jones enters into PANIC MODE. Market starts to crash. Those in the House voting against the Bill can only sit and watch now. Dow drops -777 points making it the single largest decline point-wise in the Dow’s history. I clearly remember that day.
- The Contagion goes Global: Markets around the globe go haywire. Iceland is bankrupt. Ireland banks go south. China’s growth fizzled. Paulson tells 9 bank CEO’s governement’s taking a central role in financial system. Trillions of dollars have yet to be spent to “fix” this problem.
… very interesting timeline and development. Stop and think, where do we stand now? It’s a little frightening to think or imagine what lies ahead. I can only hope that the worst is behind us, even though I know hope in this economy is the weakest weapon we got. I’ll leave it to you to decide what chapter we are in, in this sad story about the worst financial crisis since the Great Depression.
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Gio–Thanks for posting this. I missed the program, so I’m grateful, ovah heah.
Great work Gio.
I’m tempted to buy a copy for the library so my child can grow up knowing about the kind of stupidity that shook the world.
My only thought was that there seemed to be way too many interviews with journalists rather than with the principal actors in the events.
The nine bank CEOs at the end, in a strange fit of association, reminded me of the Nazgul
yeah, Frontline has some cool stuff. If you look at the parallels of today’s economy and the 70’s/80’s you will see alot of similarities that one of the Frontline episodes highlights.
But what we are seeing today really has nothing of comparison. Everyone is pointing fingers. In the end GREED has cost most people everything they own. Tragic yes, but it’s not like most people don’t know there is some risk to being selfish in any way.
All I know is I am all about FAZ for now, and no doubt my favorite tech company AAPL will eventually get whacked around like everyone else.
PAY YOUR DEBTS!!! And make money that way. Of course take into consideration FLY and his financial braintrust regarding investments…
Gio- LPHI link for ya.
http://invivoanalytics.com/2009/02/17/lphi-life-partners-holdings-inc/
Excellent stuff. I watched about half of it last night. Thanks Gio.
Did you mean to call him “Frank Paulson” or was that a typo ?
He was never really that “frank” with us !!! It all looks like lies in hindsight now.
Great special. You beat me to it.
Those idiots still dont get it. Bear Stearns did not fail due to “rumors” that drove the stock price down. If the fundamentals were worth a shit, Bear Stearns could have survived any rumors!
Thanks, Gio.
And thanks to “i hear you like mud…” for mentioning it yesterday or I would have missed it last night.
Kind of turned my stomach after dinner, tho.
Doesn’t that video just piss you off? I mean, to look back and see just how stupid America, as a whole, was in ignoring the simplest laws of of economics. When you’re having fun at the party, it’s hard to leave.
There’s a lot in that show that made the veins in my neck want to burst.
What’s really bothering me now is that we’ve all but conceded that the only way to get out of the mess that YEARS of irresponsible borrowing and spending got us into is for MORE borrowing and spending.
It’s the Wile E. Coyote running-off-a-cliff theory: If he just keeps on running he can save himself, even tho there’s nothing but air under his feet. We all know how that turned out.
I was listening to an NPR interview today about how here in CA, our $40 billion deficit is going to mean big cutbacks in public schools. (Apparently, even in the boom years, CA was borrowing $7-$9 billion a year).
There can’t be a more tragic, idiotic, or vivid example of trashing our future to pay for our present. The quality of schools here (which has been declining for years, but was once first-rate) accounts for generations of skilled workers wanting to live and raise families here, ultimately creating Silicon Valley and the high end of the CA economy.
We’re institutionalizing a culture of irresponsibility and generations of downward mobility. If we’re going to throw money at ANYTHING that’s going to take years to re-pay, it should be in educating the next generation and RE-educating the people who are now without jobs. Everything else is just burning down the house to escape the cold.
Fucking hell, I’ve worked myself into a murderous mood. Best stay away from civilized company for awhile.
That Frontline special about the market losing money– cost me money today. I stayed up so late to watch the stupid thing I woke up tired and numb sitting in front of my PC at the open. Just dur dur dur dur.
I didn’t like how they tried to make Bernake and Paulson look victimized. No doubt Paulson probably suffered some of the most stress out of anyone in the administration last year, but don’t victimize the guy. He forced people’s hands. He made conscious decisions and he wasn’t alone at the plate.
Just fyi, somebody pointed this out on Twitter. Jim Rogers interview from 2/13:
http://www.youtube.com/watch?v=lrr0ONPboGE&feature=subscription
Anton: I am also perplexed. Paulson was not victimized. This started wayy before Bear.
I think we REALLY trace all this back to the year (2000??)AND the law(saw it on IBC somewhere Wednesday)That fucking Paulson pushed through as head of GS. It allowed all IB’s to make more money by increasing allowable levearage from an acceptable 10% (approx) to what they are now- what 80% plus?
These greedy fucks got someone to ok this fuckery- congress, SEC? WHO WHO voted with Paulson the unholy, the unclean, the asshat, on this?
Now I”m worked up too, Anton.
We’re institutionalizing a culture of irresponsibility and generations of downward mobility. If we’re going to throw money at ANYTHING that’s going to take years to re-pay, it should be in educating the next generation and RE-educating the people who are now without jobs. Everything else is just burning down the house to escape the cold.
Here’s the good news. The Private Sector is already well on its way to taking up the slack.
The “marketization” of the higher learning space, via on-line and in-house training, is exploding right now.
The only thing standing in the way of the private sector taking those skills to the secondary and elementary levels is the unions.
Formidable, but not insurmountable. The people will eventually be heard.
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“Here’s the good news…”
Jake, the fact that a business has sprung up to accomplish the mission that public schools are failing is not good news.
Agree with the fucked union dynamics, but that’s only part of it. This is a basic social value.
If we can’t make educating kids a priority, we’re fucked as a country. (I mean, more than we seem to be right now.)
That isn’t liberal, just common sense. And CA is (was) a case study demonstrating that quality public education pays cash dividends.
Swift would have found this too broad to parody. It’s like a prequel to “Soylent Green.” First devalue kids. If you can do that, we’re all just meat anyway.
Problem is, I’m not willing to learn Portuguese in order to make it in the paradise that is Brazil.
Better take an extra Ambien tonight.
Why does “making kids a priority” mean forcing education down a top heavy government bureaucracy channel?
It’s no coincindence that the greatest pillar of our education system — the post secondary college and university array that is the envy of the free world — is largely privately funded and guided, while the flagging parts are largely government controlled.
It’s “one way” government that is fucking up these institutions, and it has nothing to do with how much people “care” about children. People care about their own children, and want what’s best for them. “What’s best” should be a recognizable choice, and not a force fed, one size fits all solution.
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No, Jake, teaching the kiddies to read, write and reason is not “forcing education down a top heavy channel.” And who said anything about “a one size fits all” solution?
They’re talking about cuts to basic elementary school programs out here. How are they going to climb up to that “greatest pillar of our education system — the post secondary college and university array that is the envy of the free world” if they’ve been denied a decent primary education?
Man, I have no idea where you’re fucking coming from sometimes. Do you think that if you can afford to send your kids to a good Catholic or other private school they aren’t going to suffer as adults if the kids who went to shit public schools grow up to be idiots?
At least out here, the next generation is going to inherit a staggering debt. By cutting back on education — the one program that actually benefits them — it’s as if we’re trying to make sure they grow up too stupid to figure out they’ve been ripped-off.
Oh, and that “greatest pillar of our education system” has suffered staff cutbacks and price increases in recent years, too. It’s getting to the point that even good students simply can’t get in. If they do, they and/or their parents will be deeper in debt than any students have ever been.
You give me shit about being one of those liberals who got his and now wants to make sure no one else can get theirs — a patent and egregious falsehood, btw — but do you think we aren’t hobbling these kids out of the starting gate? If you care about your children, doesn’t that mean you care about everybody else’s?
No liberal peace and love; just common sense. Do you care that your neighbor inoculates his kids so that yours stay healthy? Why not inoculate them against ignorance?