Plunder and Blunder: The Rise and Fall of the Bubble Economyby Dean Baker
Pub. Date: 01/01/2009
Publisher: PoliPointPress, LLC
For the second time this decade, the US economy is sinking into a recession due to the collapse of a financial bubble. The most recent calamity is likely to produce a downturn deeper and longer than the stock market crash of 2001. Dean Baker argues not only that competent economists should have recognized the developing housing bubble, but also that policy makers
For the second time this decade, the US economy is sinking into a recession due to the collapse of a financial bubble. The most recent calamity is likely to produce a downturn deeper and longer than the stock market crash of 2001. Dean Baker argues not only that competent economists should have recognized the developing housing bubble, but also that policy makers and the media cheerfully neglected those economists who did predict danger. Baker doesnt engage in 20-20 hindsight, but documents the fundamental policy changes since 1980 that destabilized the economy and eroded the broad prosperity of the post-war period. His expert analysis explains the outcomes clearly so we can prevent similar financial disasters in the future.
- PoliPointPress, LLC
- Publication date:
- Edition description:
- New Edition
- Sales rank:
- Product dimensions:
- 5.50(w) x 8.30(h) x 0.70(d)
and post it to your social network
Most Helpful Customer Reviews
See all customer reviews >
Dean Baker is co-director of the Center for Economic and Policy Research in Washington DC. He shows how Clinton's high-dollar policy blew up the $10 trillion stock bubble and also started the $8 trillion housing bubble. The government pushed people to build assets, as if you could buy yourself rich. The bankers banked on the bubble, governments and media pushed it, regulators didn't regulate it, and economists denied that it existed. The bull markets were a huge con. And it's really still all bull. For example, the Washington Post editorialised on 11 January 2008, "Nor is there any consensus that a recession, if one comes, will be severe; Goldman Sachs thinks it's likely to be short and mild." By October 2008, the crash had cost US families $5 trillion, $70,000 per homeowner. This is the first postwar recession caused by a fall in investment: nominal investment fell by $50 billion in 2000-01. This slump, unlike earlier ones, is not curable by lower interest rates. Clinton, to get elected, talked for two opposing policies - public investment and budget deficit cuts (just as Cameron and Brown do now). When elected, he did the latter, as the ruling class demanded. As Baker notes, "There has been extensive research on the economic impacts of reducing the federal budget deficit. The overall conclusion is that deficit reduction provides only a modest boost to economic growth." It would do nothing to increase demand: wages would rise by just 2% in total over the next ten years. Finance is supposed to steer money from savers to borrowers - which it fails to do - it is not an end in itself. We may want many things, but we don't want yet more financial deals. In the 1960s, the financial sector got less than 10% of all corporate profits, by 2004, more than 30%. But Baker notes, "The fewer people and resources we need to do our banking, to provide insurance, and to meet our other financial needs, the better off we are." What to do? Baker proposes - cut the value of the dollar, cut the incompetent and corrupt financial sector, hold the incompetents accountable, tax gambling in financial assets, stop the evictions, and increase government investment in industry.
I purchased this without knowing that it was not compatible with the simple touch and now I cannot return it.