The failure of the economics profession to address our deeper problems theoretically is mirrored by the failure of other sciences on a more practical level. To wit: America’s best minds are still heading to Wall Street to an unnerving, even pathological degree—further evidence that finance remains the dominant sector of the economy.
There’s only one problem with [House Minority Leader] Boehner’s message: so far, the things that Republicans have said they want to do won’t actually boost employment or reduce deficits. In fact, much the opposite. By combing through a variety of studies and projections from nonpartisan economic sources, we here at Gaggle headquarters have found that if Republicans were in charge from January 2009 onward—and if they were now given carte blanche to enact the proposals they want to—the projected 2010–2020 deficits would be larger than they are under Obama, and fewer people would probably be employed.
We used Katrina as an opportunity to build—not rebuild, but build—a new school system.
This was the money that was supposed to get people rebuilding our housing, our hotels, our stores.
What does it mean to tell the truth about a war? Is it a lie, technically speaking, for the Administration to say that it has faith in Hamid Karzai’s government and regards him as a legitimate leader—or is it just absurd? Is it a lie to say that we have a plan for Afghanistan that makes any sense at all? If you put it that way, each of the WikiLeaks documents—from an account of an armed showdown between the Afghan police and the Afghan Army, to a few lines about a local interdiction official taking seventy-five-dollar bribes, to a sad exchange about an aid scam involving orphans—is a pixel in a picture that does, indeed, contradict official accounts of the war, and rather drastically so.
Michael Lewis’s The Big Short is considered the definitive history of the financial crisis. But to understand American finance, you need to understand Ace Cash Express as well as you do Goldman Sachs. Which is why Gary Rivlin’s Broke, USA is a necessary companion. While Lewis tells the story of mortgage-backed assets and the bankers who flogged them, Rivlin tells the story of the underlying mortgages and the folks who bought them. “To me, it was so counterintuitive,” Rivlin says. “People with no money in their pockets is good for business?” But they were profitable. By 1996, there were more payday lenders than all the McDonald’s and Burger Kings in the land combined.
Welders looking for an advance on a paycheck became unwitting cash cows for big banks. Schoolteachers taking out home loans became the collateral for leveraged bets on housing worked out in London and Greenwich, Conn. But before they were Wall Street grist, the working poor had to first become big business.
Unlike traditional banking, it wasn’t about finding good credit risks who could repay their loans promptly. Quite the opposite, actually. The central insight was that you wanted people who couldn’t quite stay ahead of the loan. Then you could use late fees and new loans to bleed them.