Shame of shames, I missed out on the last 50 pages of this book. I liked it, of course I hope that's not bias talking. I think he did a pretty good job staying away from politics and party lines and he definitely criticized all the presidents back down to the early 1900s.
Mr. Denninger talks about how the relaxation of the federal law during the Reagonomics period resulted in the dramatic increase in debt and usurious loaning practices of the banks. It happened in small steps, as apparently such evil does happen (this is from my own experience). For instance, the book concerns itself with the housing bubble. As loans and mortgages were given to greater-risk people, the risk of default increased. This pushed up housing prices. In response, less people wanted to buy. So the banks redesigned loans to appeal to greater-risks. Less money down, smaller interest rate that default to higher ones after a period of time, and even selling off the mortgage to a third party, the banks skimmed money off of
every transaction they made. When the bubble went to pop, the government stepped in and bailed the banks out.
If the banks had so much money, why did they need to be bailed out? Well, because they leveraged out all their money in order to skim more. They took the money they earned and put it into these loans, not waiting for the return to lend it out again. In essence, the banks put themselves into debt and then used that debt to buy more money to put themselves further into debt.
While this sounds like a losing strategy (and it is) the banks understand that, esp with government intervention, this can continue for up to and over 50 years before the end forces them to shut down. While happens the profits they experience do end up in their own personal pockets, do end up paying bribes for less restricted banking laws to be placed into effect. Now, I know some here don't like her, but she is the most convenient and on hand reference I have for an explanation of this.
http://www.youtube.com/watch?feature=player_embedded&v=CaaciMNHUKAThe chart she uses came about straight out of the book.
Other things are discussed, including the 1920s depression, and how it fixed itself, the evolution of college and the reasons for the high college tuition and outrageous college debt, and the power of debt, leverage to purchause more assets with to leverage. In the end, which I mostly missed, he says he'd discuss solutions.
I find that this book states what both sides actually state. How many here blame the banks for our economic downfall? Many, that's who. I hear from all manner of people about how the banks (and [insert opposing partisan group]) ruin everything we had. This book I think should be read more. Yes, it is still a right-sided book. Yes, he does support 'silly things' like personal responsibility and free market and letting screw-ups take their lumps (after all we're all grownups), but if you're capable of looking past it or even sorting out the subliminal beliefs we all express in our communication than you should see knowledge gleaming at you. I found it confirmed by even my liberal professors and sources online, and hope to study the concepts of this book more thoroughly
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Topic: The Official Bay12 - 52 books challenge 2013 (Read 58942 times)