Plunder and Blunder: The Rise and Fall of the Bubble Economy (PagePerfect NOOK Book)by Dean Baker
Plunder and Blunder chronicles the growth and collapse of the stock and housing bubbles, explains how policy changes since 1980 laid the groundwork for catastrophic—but completely predictable—market meltdowns, and offers prescriptions for avoiding these disasters in the future. Dean Baker argues not only that competent economists should have recognized the… See more details below
Plunder and Blunder chronicles the growth and collapse of the stock and housing bubbles, explains how policy changes since 1980 laid the groundwork for catastrophic—but completely predictable—market meltdowns, and offers prescriptions for avoiding these disasters in the future. 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 doesn’t engage in 20-20 hindsight, but thoroughly documents how fundamental policy shifts 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.
"Dean Baker warned us what was coming. Now we can read why Dean got it right when so many experts were blind. The story is intriguing—and deeply disturbing."
—William Greider, national affairs correspondent, The Nation, and author of Come Home, America
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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.