America’s forgotten recession

Tue, 09 Apr 2013 15:28:00 +0000

If you had to date the Great Recession, you might say it started in September 2008 when Lehman Brothers vaporized over a weekend and a massive mortgage-based Ponzi scheme began to go down. By 2008, however, the majority of American workers had already endured a 40-year decline in wages, security, and hope -- a Long Recession of their own.

In the 1960s, I met a young man about to be discharged from the Army and then, by happenstance, caught up with him again in each of the next two decades. Though he died two months before the Lehman Brothers collapse, those brief encounters taught me how the Long Recession led directly to our Great Recession.

In the late 1960s, I was working at an antiwar coffee house near an army base from which soldiers shipped out to Vietnam. One gangly young man, recently back from “the Nam,” was particularly handy and would fix our record player or make our old mimeograph machine run more smoothly. He rarely spoke about the war, except to say that his company had stayed stoned the whole time. “Our motto,” he once told me, “was ‘let’s not and say we did.’” Duane had no intention of becoming a professional Vietnam vet like John Kerry when discharged. His plan was to return home to Cleveland and make up for time missed in the civilian counterculture of that era.

Lehman’s toxic legacy

Sat, 15 Sep 2012 15:01:00 +0000

Four years ago today, Lehman Brothers collapsed as Hank Paulson and his colleagues made the fateful decision that free market principles demanded that at least one bank crippled by the deteriorating financial system had to be sacrificed at the altar of moral hazard. These “deciders” had no idea of the firestorm they were igniting. They did not foresee that the financial system that had evolved during 30 years of deregulation (based on specious economic theory and ideology) was so interconnected that it would collapse like a house of cards. Within a few weeks, the U.S. taxpayer was “all in” to the global banking network. The public focuses on the TARP bailout of the banks and AIG, but a few people understand that the risks taken on by the U.S. government made those amounts seem like chump change by comparison. The Fed effectively guaranteed the money market funds, all inter-bank lending and the commercial paper market. It even saved the European and Asian banks from failure by guaranteeing the foreign exchange markets.

Salon.com > Lehman Brothers

America’s forgotten recession

Lehman’s toxic legacy