By Michael Hirsh
Why each president from Reagan via Obama has placed Wall highway ahead of major StreetOver the previous few a long time, Washington’s firmly held trust that when you make traders chuffed, a booming financial system will persist with has triggered an financial situation in Asia, hassle in Latin the US, and now a serious recession in the United States and Europe. How did the simplest and brightest of our time enable this to ensue? Why have those failures performed not anything to alter the free-market mantra of the Washington devoted? the reply has not anything to do with lobbyists and every little thing to do with ideology. In Capital Offense, veteran Newsweek reporter Michael Hirsh offers us a colourful narrative historical past of the period he calls the Age of Capital, telling the tale during the eyes of its key gamers, from Ronald Reagan and Milton Friedman via Larry Summers and Timothy Geithner. • according to the forged study and expert reporting of Newsweek Senior Editor Michael Hirsh• Takes you within high-level, closed-door conversations of most sensible White residence advisers and management officers akin to Alan Greenspan, Robert Rubin, Paul O’Neill, and others• Illuminates key figures and full of life interpersonal clashes, together with the clash among Larry Summers and Nobel Prize-winning economist Joe Stiglitz • bargains the most important insights on why President Obama took goodbye to paintings at the economy—and why he is probably not going a ways enough• Catalogs the missteps of 3 a long time of economic, regulatory, and fiscal recklessness, together with the dismantling of the Glass-Steagall Act, the S&L debacle, Enron, and the subprime loan meltdownAs we fight to emerge from the monetary problem, something turns out yes: Wall Street’s persevered dominance of the worldwide economic climate. Propelled into the lead through a iteration of Washington policy-makers, Wall road will proceed to stick sooner than them.
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Additional info for Capital Offense: How Washington's Wise Men Turned America's Future Over to Wall Street
Yet he later admitted he didn’t understand the market system he had shaped and dominated for eighteen and a half years. Robert Rubin—one of this new era’s best and brightest—performed brilliantly as a crisis manager during the 1997-1998 Asian contagion; yet somehow he could not see or appreciate its deeper causes, just as he would later miss the crisis developing under his nose as a senior counselor at Citigroup in the 2000s. Rubin always had a big heart and a gentle manner: he was a liberal Democrat who, as a young trader at Goldman Sachs, used to show up at New York community meetings on the inner-city poor.
But Born’s proposal—something that might send a chilling message to the markets—was the last thing Rubin needed right now. In the months leading up to the concept release, Rubin had been dealing with a global crisis unlike any the world had seen for quite a while. He had handled that masterfully too. But the Asian contagion was still going on, and he hadn’t had much time to reflect on what really caused it. Neither Rubin nor anyone else paid much attention to the fact that the Asian crisis was an early warning sign about the dangers of derivatives—and about the finance-dominated world they had created.
Ultimately Brooksley Born was driven from office. In the fall of 1998, in the conference committee on that year’s agricultural appropriations bill—which settled the CFTC’s budget—a provision was mysteriously added, one that had never been discussed before or hadn’t been in any of the bills before. No one knew exactly who introduced it, but the language was clear: the CFTC could take no action in the OTC derivatives market for six months. It just so happened that Born’s term was up in six months.