It’s been almost two years since then-Treasury Secretary Henry “Hank” Paulson showed up in front of the United States Congress and demanded they give him $700 Billion dollars to buy up “illiquid assets” from the nation’s largest banks.
Paulson’s 3-page proposal (see it here) soon became the “Emergency Economic Stabilization Act of 2008”, a 300 plus page bill that was originally rejected by the US House of Representatives on September 24, 2008. I can remember the reaction by the New York Times when the bill was defeated. EVERY story on Page 1 of the newspaper that day was about the bill’s failure to pass. In this article – “Talks Implode During a Day of Chaos; Fate of Bailout Plan Remains Unresolved”, we get a great quote from our former president, “dubya” :
“If money isn’t loosened up, this sucker could go down,” President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room.
Well, something eventually “went down” – the bill was attached to existing legislation before the Senate, where it passed a vote on October 1st and was subsequently approved by the house on October 3rd. You can find it online at the Government Printing Office’s website (where it’s listed as “Public Law 110 – 343 – Secure Rural Schools and Community Self-Determination Act of 2000”) here.
But it was that day that Hank Paulson showed up in Congress, essentially waving his proposal and declaring “the end of the world as we know it” were Congress not to write the $700 Billion check to the banks that remains etched in my brain – and was the catalyst for my struggle to answer the question: How does the ‘American Financial System’ actually work?
I’ve learned a lot since then – and would like to share with you some things that might help you “wrap your head around” both the ‘Financial Crisis’ specifically and the American Financial System in general.
First up is the wonderful animated short entitled “The Crisis of Credit Visualized”
If you prefer, you can watch it on YouTube here.
It was created by Jonathan Jarvis and is a brilliant explanation of some of the meta-factors that led up to the financial crisis. He’s got a good explanation of how he came to create it on his website here.
On that page Jarvis lists links to two NPR “This American Life” episodes which provided source material for him: “The Giant Pool of Money” and “Another Frightening Show About the Economy” . If you follow the links, you can download either episode from iTunes for 99 cents. I can’t recommend these two shows highly enough. They’re definitely worth the 2 bucks it will cost to listen to them.
Those two episodes spawned a new ongoing NPR show entitled “Planet Money” (the show’s blog is here). I don’t find “Planet Money” as consistently rewarding as the two “This American Life” episodes, but they often provide the type of insight on financial matters that made “The Giant Pool of Money” so brilliant. Simply by asking the types of questions that don’t get asked by traditional “financial reporters”, the the folks from NPR were able to draw out the underlying assumptions and/or unspoken realities of the financial world from their interview subjects.
The next video I’d like to share is a more recent “animated” short. This one is part of a series produced by the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA). British, their institution traces its founding to a coffeeshop in 1754. You can watch their Executive Director explain the organization here.
Entitled “The Crises of Capitalism”, it is an illustrated bit of a lecture by “radical sociologist” (RSA’s words) David Harvey, who’s taught Marx (Karl) for many years and currently teaches in the Phd program at the City University of New York. There is a great lecture of his entitled “A Brief History of Neoliberalism” available on You Tube (the first part is here). It’s in 5 parts (about 45 minutes total). Recorded before the most recent ‘Financial Crisis’, I highly recommend it as it provides a good historical background to the current situation. He’s written a book with the same title – the Amazon.com page is here.
The illustrator is Andrew Park, who has illustrated a number of other RSA lectures You can find all of them on YouTube here. I especially enjoyed the one where he illustrated Daniel Pink’s talk entitled “Drive”.
I hope you enjoyed these crisis/crises videos – I think they both provide a very clear view of the ‘big picture’ of the (Anglo-)American Financial System. Next week I’ll share more videos and links that hopefully will help broaden your perspective of this “Financial Crisis’ and its aftermath.