Michael Hirsh, author of Capital Offense: How Washington’s Wise Men Turned America’s Future Over to Wall Street, recently appeared on Morning Joe to talk about Wall Street’s pre-crisis, decades-long encroach upon Washington that would eventually end in financial crisis.
In his estimation, the gradual takeover was about 30 years in the making. It got underway when the ideals of free market revolution were sweeping mainstream economics and all common sense of boom and bust cycles — how markets are prone to wild swings of manias and panics – was abandoned to instead funnel increasing power to financial services in hopes of ever-greater returns and economic growth.
The outcome he describes is a “hollowing out of the middle class,” where Wall Street and Washington both played key roles in creating the “illusion of prosperity” while actually force-feeding the public with debt and artificially inflating asset prices. Until finally, the duped middle class — expected to sustain the US economy and even serve as “consumer of last resort for the whole world” — ended up broke.
This insightful clip came to our attention via a Naked Capitalism post covering Hirsh’s perspective on the roots of the financial crisis.
Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let?s Go Publications, Harvard Student Agencies, and The Harvard Advocate.
This was the dumbest analysis ever in this video ! Everyone knows that it was government that was the source of this country’s economic troubles through it’s constant and destructive distortions of the free market through institutions like the Federal Reserve, Fannie Mae, Freddie Mac, government backed student loans, high taxation, etc. politicians first cause the problems and then try to blame something other than their own failied policies. It’s an old game, but people still fall for it.
There you go again, drinking the kool-aid. The government is controlled by Wall St., and its called MONEY. The Federal Reserve was created by the BANKERS. HELLO?
The politicians work for the Bankers, always have, always will.
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Thing is, these disasters weren't the result of some sort of coordinated hit job. No. These companies simply tanked on crappy earnings announcements. And in case you've got a room-temperature IQ or less, you know poor earnings is not a good sign for the sector.