“If you have already got 96 percent of what you want,” Ferguson told Salon, “why not take the remaining 4? That’s where the culture of American finance is right now, and I think it’s really dangerous for the country.”

For at least 30 years the United States has been headed on the wrong track, handing over more power and wealth to a tiny percent of the American population at the expense of everyone else. But Ferguson’s story isn’t just focused on the greed and recklessness of the elite. It’s also about their criminality. The bankers who wrecked the financial system broke the law. And yet, amazingly, not only have the vast majority of responsible parties not been convicted of any crime — they haven’t even been charged. There have been a few settlements of fraud allegations with the Securities and Exchange Commission and other regulatory bodies and a smattering of slap-on-the-wrist fines, but nothing that comes close to a proper reckoning for the massive hardship and economic destruction that they caused.

Ferguson’s glowering rage spares neither political party. Clinton gets the blame for completing the process of financial sector deregulation, and George W. Bush is lacerated for his general incompetence. But Barack Obama is showered with a particularly aggrieved contempt. Obama, writes Ferguson, came into office with more hope invested in him than in any recent leader, and then proceeded to “betray” and “screw” his supporters by declining to bring Wall Street to account for its misdeeds.

“Predator Nation” hits bookstores on Monday, just in time to cash in on the headlines generated by the latest banking atrocity — JPMorgan Chase’s massively failed derivatives bet.

“Predator Nation” is an angry book. Were you this angry before you started making the film “Inside Job”?

No, I absolutely was not. I remember the first time I got any kind of inkling of what was to come was in August or September 2007, when Charley Morris sent me a copy of a galley proof of his book, “The Trillion Dollar Meltdown.” It was scary and powerful, but I couldn’t bring myself to believe it. I remember calling Charley and saying, “You lay out a very convincing case but really, these people aren’t that crazy, they aren’t that stupid. They are regulated. Can it really be this bad?”

And he said: “You just wait.” And boy, he was right.

It’s not that I thought that investment bankers were like Mother Teresa. I knew that they weren’t. But the degree of nakedness and extremity of the dishonesty and its pervasiveness was a huge shock to me. It turned out that many banks, on a very large scale, and without any disclosure, had created and sold securities with the intent of betting on their failure. And this was done with the knowledge and approval of senior management of all these banks, including the oldest and most traditional.

How do you explain this behavior? How did we get to a point where it was routine for Wall Street bankers to behave in ways that most Americans would consider frankly immoral?

I think this has its roots all the way back in the 1970s and the beginning of the era of deregulation. But there was a kind of inflection point during the five-year period between 1997 and 2003 — the late Clinton and/or early Bush administration — when all the rules just went away. You went from a period, a regime, where people did have at least some concern about going to jail, to a point where everything is legal, and derivatives couldn’t be regulated at all and nobody went to jail for anything. And looking back I would say that this period definitely started under Clinton. You absolutely cannot blame this on George W. Bush.

You say that everything is now legal, but in your book you dismiss Obama’s argument that he could not prosecute Wall Street bankers for criminal behavior because what they did was technically not illegal as “complete horseshit.”

I should be more precise. I should have said, “where everything was perceived as being legal.” There was no perception that, even when you were in fact violating the law, that there would be any legal jeopardy or legal consequence to what you were doing. And that was part of my surprise when I was making “Inside Job.” I really was surprised that people would so overtly and explicitly do things that 20 years previously probably would have gotten them landed in prison.

One can certainly argue that the penalties and prosecutions following the S&L [Savings and Loan] and insider scandals of the 1980s were vastly insufficient. No doubt about that. But there still were consequences. I don’t know whether [junk bond king] Michael Milken would have still done everything he did, if he knew that he was going to spend two years in prison and have about half of his wealth confiscated. Maybe he still would have made that bet, but still, clearly he had a few unpleasant days. And now, nothing, just nothing.

In your book, you have a laundry list of things you believe the bankers could be prosecuted for, everything from securities fraud to perjury to RICO Act violations. And then you point out, more than once, that during the Obama administration there have been no arrests or indictments of any firms or senior executives “related to causing the bubble or the crisis.” What’s your explanation for this? Is it as simple as the Obama administration being captured by the financial sector?

I’m not President Obama’s psychoanalyst, so I can’t speak to what goes on inside his head. But that is what I would say of the Obama administration generally. In the book I go through the list of his personnel appointments and it’s pretty clear.

But how do we square that with the negative Wall Street reaction to bank reform? You devote only one sentence in your entire book to Dodd-Frank, calling it “weak and ridiculously complicated.” But even so, House Republicans have introduced nine bills trying to repeal parts or all of it, Romney is campaigning on repealing the whole thing, and Wall Street hates it and has tried to kill every last part of it. There is clearly antipathy against Obama from the financial sector now, from Jamie Dimon on down, that wasn’t there when he got elected. If he was truly captured, why the antipathy?

Well, there is some antipathy. But he just held a very successful fundraiser at the home of the president of private equity group Blackstone. So the antipathy is not universal.

But you know, when I was in academia and also when I was running a software company I had a fair amount of contact with portions of the financial sector, investment banking industry, and the venture capital sector. And certainly they were already pretty rapacious and pretty politically conservative. But they would never then have said and done the things that they say and do now. I recently was at a dinner in New York City and one of the people there was a very, very successful man who is on the borderline between venture capital and private equity. And this guy went into an extended rant about how he was at a disadvantage because he had to pay 15 percent capital gains taxes. When I was first dealing with venture capitalists in a significant way, the capital gains tax rate was 28 percent, and nobody was complaining. Then they got them reduced to 20 under Clinton, and then later 15 under Bush. Plus, they got a rollover provision so if they took the proceeds of a venture capital investment and rolled it over into a new venture capital investment it was tax-free. At that point, we’ve reached nirvana, what more could there be?

But now we’re in this environment where this guy was loudly and aggressively complaining that he has to pay 15 percent to the government. And if that’s where you’re at, then of course you are going to complain about Dodd-Frank. You are going to complain about everything. If you have already got 96 percent of what you want, why not take the remaining 4? That’s where the culture of American finance is right now, and I think it’s really dangerous for the country.

Do you find it alarming that even after this huge crisis and even with a lot of populist anger on both the right and the left focused on Wall Street, Mitt Romney is running for president while promising to further deregulate Wall Street and repeal Dodd-Frank, and the polls show him neck and neck with Obama?

That is true, but I don’t think that Romney is going to get votes primarily or even secondarily for that. Most of the votes he is going to get will be because he’s religious, he’s against gay marriage, et cetera, all of these allegedly “values” issues — things like that and wanting to reduce taxes. That’s why he is going to get a substantial fraction of the popular vote. The reason he says he wants to roll back Dodd-Frank is not to get votes, it is to get money.

Ninety-nine percent of your book tells a story of how we’ve gotten ourselves into a bigger and bigger mess, and then you’ve got about a page and a half discussing what could be done to fix it. But your solutions — a legitimate third-party alternative, controlling the influence of money in politics, real tax reform, fixing education — it’s just really hard to see how we get from our current problems to those bullet points.

Yes. And we’re not. Not right now. I think it’s going to take things getting worse, either slowly or fast. Either we continue to melt away for another 25 years and then finally people wake up, or there might be another crisis. And maybe that will be sufficient. We’ll see. I don’t know. I’d be interested in your own view of this. I’ve had debates with several of my friends on this question. If Obama had really had the balls to try to do the various kind of things that he’d promised to do, or kinda sorta almost promised to do during his campaign, if he really made an effort, how far do you think he could have gotten in 2009?

At this point, I’m in the camp that believes that American government is completely broken. And we didn’t really find out how broken it was until Obama came in. In your book, you talk about Obama coming in withoverwhelming majorities, but he really only had 60 votes in the Senate from July 2009, when Al Franken was finally sworn in, to January 2010, when Scott Brown took over Ted Kennedy’s seat. And even the things that Obama did get through had to pass muster with a handful of very conservative Democrats. Nebraska’s Ben Nelson had control over the entire government. It’s a completely dysfunctional system. I think Obama severely underestimated what he was facing when he came in, and picked the wrong strategy of trying to go bipartisan, but it’s not as if he had the freedom to do what he wanted that Roosevelt enjoyed when he became president in 1932.

But there are an awful lot of things that the president can do even without the Congress. He didn’t have to choose the people he chose. He didn’t have to choose the attorney general he chose or the head of the criminal division of the Justice Department that he chose. I think that if he had said, I’m going to allocate $500 million to a special prosecutor’s office, and we’re going to find out what the fuck happened here, he could have done that.

There’s some talk now that JPMorgan’s disastrous bet on credit default swaps might lead to tighter regulation. I have to say, it was bizarre to be speed-reading your book while the Morgan news was causing post-traumatic stress flashbacks to the worst days of the financial crisis. Does what happened there fit into the narrative of “Predator Nation”?

I rather think so, yes. Mr. Dimon has long been largely correctly regarded as the best, most judicious, most careful steward of a major global bank. That he and his bank could make a mistake like this does not bode well. One thing that has actually not been widely discussed, somewhat to my surprise, in the commentary about all of this, is that this mistake — which it appears will cost them between $2 billion and $5 billion — this occurred in a very forgiving economic environment. If they made a mistake like this in September 2008, then things could look really quite different.

Does it qualify as criminal behavior?

There is some suggestion of criminality in the lack of honesty on disclosure of the positions and their potential implications. I can’t say; we don’t know enough yet. It certainly is the case that JPMorgan, although more prudent than many other banks over the last decade, has frequently been just as dishonest. It has done a number of extremely unethical things, some of which I mention in the book. So it wouldn’t be a surprise if they had not been forthcoming about this.

Do you think it will make any difference in how banks are regulated?

I fear not. Honestly. I’m sure that Mr. Dimon is momentarily chastised, and that JPMorgan will not be making any similar bets in the next couple of years. But is it going to change the overall posture of bankers and banking and is it going to change the regulatory environment in any significant way? I tend to doubt that. Unfortunately.

So where does this leave us? Your book is filled with a strong sense of personal outrage. How do you personally feel about the prospect that the only thing that could get us out of the mess we’re in is yet another crisis, perhaps even worse than the one we just lived through?

Personally, I am very fortunate. I have a very blessed life. I made some money earlier, I’m basically pretty financially secure. I can’t have private jets and private islands but I don’t have to worry about having a roof over my head or being able to eat well, unlike many people in this country going forward. And I do work that I love. I love making movies, I love writing books. Personally I’m fine.

But the country is not. But this happens to countries. This is not the first country it’s happened to. It’s not even the first time it happened to the United States. We’ll see whether we come out of it. Last time it happened we came out of it, eventually. It took a long time and it was very painful but eventually we came out of it. Will that happen again or not, I don’t know, I honestly don’t.

A few highlights:

• Housing starts jumped in April to annualized rate of 717,000 a year. This represents a modest 2.6 percent increase over March, but a whopping 30 percent increase over a year ago. For most of the last three years housing starts have been bouncing along at the bottom — “moving sideways” as the econo-watchers like to say. But now one can make a case that a sustained rise is in place. That’s a big deal. New housing starts mean more construction employment and rising retail sales to fill those new houses.
• Industrial production rose 1.1 percent in April compared to March, and is 5.2 percent higher than a year ago. This is welcome news, because one of the more perturbing developments of the spring was a marked slowdown in industrial production in February and March.
• Gas prices on Wednesday were 18 cents a gallon lower than a month ago. It might not be appropriate to be too ecstatic over this news, since one of the factors depressing world oil prices is the prospect that Europe’s economic woes will deepend and China’s economic growth slow further. But the threat of higher gas prices had promised to act as a serious headwind to the U.S. recovery, and for now, we can scratch that worry off the list.

Does this mean it’s time to pop champagne bottles? Of course not. All we can really say with authority, as the always circumspect Capital Spectator notes, is that it is more difficult today to make the case “that a new downturn has started based on a preponderance of smoking guns in real time” that it was yesterday.

It may also already be too late for new data to make an impact on the political narrative. At this point in the election cycle, we’re getting pretty close to the stage where voter attitudes towards the economy have hardened firmly into place and won’t change all that much, no matter what happens to housing starts or industrial production between now and November. But politics aside, slow growth is better than no growth, and improving trends are a lot more fun to track than the alternative. The U.S. economy is significantly stronger than it was a year ago, and as of today, pointed in the right direction.

In the best of times, small business owners complain about taxes and regulations, and that is starting to happen again.

As we scour the economic landscape for any data point, no matter how tiny, that will help us glean some sense of what the future holds, the fact that business owners might be seeing an uptick in consumer demand could be significant. This is especially true after the disappointing April jobs numbers released 10 days ago provoked a new round of mild panic about U.S. economic prospects.

We’re going to learn a lot this week about whether the economy is faltering. Due up in the next couple of days are reports on housing starts, homebuilder confidence, retail sales and manufacturing strength in the industrial Northeast. We can also take some solace in the fact that the data arriving since the April labor report has been mildly encouraging. After two straight decent weekly jobless claim reports, the four-week moving average is once again pointed down again, after rising for four straight weeks. New job openings reached their highest level since 2008. Gas prices have been falling steadily. One housing market watcher even reported that home prices rose by a tad in March — though only by comparison with February.

It’s all very tentative, and even the most common best-case scenario predicts only slow growth for the rest of the year. But let’s go back to those job openings numbers again. Calculated Risk points out that “quits” — also known as “voluntary separations” — rose in March, and along with job openings, have reached their highest level since 2008.

People don’t quit their jobs if they’re feeling nervous about their prospects of finding new work. Put that data point together with the declining prominence of “poor sales” as a concern for business owners, and you can begin to construct a scenario in which the economic recovery is finding firmer footing.

But keep your eye on the reports coming out this week. If the data comes in worse than the consensus expectations, that firmer footing will suddenly be revealed as quicksand.

But for our purposes right now, all you need to concern yourselves with is Dimon’s monumentally disingenuous self-castigation. Because Dimon is not stupid. Under his tenure, JPMorgan has been the best-run of the big banks. So Dimon’s self-criticism gets it all backward. The fact that JPMorgan was so very stupid is so very scary because we can rest assured that just about everybody else is doing things even more idiotic.

The whole point of the infamous “Volcker Rule” included in the Dodd-Frank bank reform act is to restrict the banking sector’s ability to clobber the economy by doing dumb things. As the Huffington Post’s Mark Gongloff noted, if  a strict version of the Volcker rule had been in place, JPMorgan, quite possibly, would have been prevented from making a bet that would lose the bank $2 billion — or more.

However, the Volcker Rule is not yet in effect. The final details are still being hammered out, and the brutal truth is that financial sector lobbyists have almost undoubtedly ensured that the kind of “hedging” bet JPMorgan just made would be technically legal under the new rules. There’s a remote possibility that the blowback from Morgan’s disaster might strengthen the final version of the rule, but don’t hold your breath. The worst financial crisis in 80 years resulted in bank reform that at best can be categorized as tepid and perhaps fatally compromised. One bad stumble by JPMorgan that, lucky for us, doesn’t seem likely to ignite a system-wide crash isn’t going to make a dent in Washington regulatory policy.

On the other hand, there could well be real political repercussions. Because if anyone is going to come out of this mess looking even stupider than Jamie Dimon, it’s got to be Mitt Romney — the presidential candidate actively campaigning on a pledge to repeal Dodd-Frank.

Barack Obama has been rightly dinged from the left for his soft approach to Wall Street, but there’s a reason why Big Capital is shunning him and pouring money into Romney’s campaign. Romney’s answer to the financial meltdown is to do absolutely nothing; to abandon even any pretense of reining in Wall Street bad behavior, to return us to the pre-crash regulatory status quo.

That’s suicidal. The U.S. economy may well skip over JPMorgan’s folly without any serious long-term damage. But that’s not the point. What we learned from the financial crisis is that the real danger inherent in Wall Street’s endless orgy of speculative trading is the prospect that multiple bets could go bad simultaneously when there is a big external shock to the system — like the housing bust. That’s when a downturn becomes a crash.

I can’t say with certainty that Dodd-Frank will do a good job of protecting us from a replay of the great financial crash of 2008. But the prospect of electing someone as president who is promising Wall Street that he will let them blithely self-regulate? That seems even stupider than JPMorgan’s $2 billion bad bet.

For three decades the cost of attending college anywhere — public, private nonprofit, or for-profit, Ivy League school or community college — has risen significantly faster than the rate of inflation. But the sharp acceleration over the last 10 years — and particularly since the onset of the Great Recession — has stoked a new wave of widespread anxiety over an impending “crisis” in higher education. The unrelenting cost hikes also explain why government aid for college students has become such a hot topic in this presidential campaign year. Even as the government continues to print money and throw it into the breach, the hole just seems to gets bigger. Total student debt is now over $1 trillion and rising.

In fact, for some critics, access to “easy government money” is the real problem, not the solution. No less an authority than House Budget Committee Chairman Paul Ryan, explaining why he wants to cut Pell Grants and reduce the availability of government-backed student loans, claims “there is evidence that subsidized lending contributes to tuition inflation.” Just last month, Moody’s Analytics chief economist Mark Zandi told the Associated Press that government loans and subsidies don’t work because “universities and colleges just raise their tuition. It doesn’t improve affordability and it doesn’t make it easier to go to college.’’

For some of these critics, the solution to higher tuition costs is to take government out of the education equation altogether; to allow the market to provide “innovative,” cost-effective alternatives to old-school brick-and-mortar-style higher education. Online learning, for example, could theoretically provide students with a cheap end-around to the existing establishment. There’s an intuitive attraction to this approach that crosses party lines. We’ve already seen the Internet wreak havoc on the music business and publishing industry by fundamentally changing the economics of content delivery. Why can’t it do the same for education?

Maybe it can, and will, in the long run. But before signaling a full-scale retreat of government from the higher education fray, it’s important to look a little more closely at the simplistic claim that “easy government money” is fueling higher costs. While there are certainly some sectors of higher education in which there is a clear relationship between student loans and higher tuitions, for the great majority of college students the problem isn’t that the government is giving them too much money. Quite the opposite: It’s the collapse of direct government support for higher education that is the main driver of higher tuition costs.

“The reality is that student debt is not rising because the government is putting more money into higher education,” says Kevin Carey, policy director at Education Sector, a Washington-based nonpartisan think tank. “It’s rising because the government is putting less money into higher education.”

The first step in grappling with the rise in the cost of higher education requires understanding where students go to school. There are three main categories — public schools (which include both four-year public universities and two-year community colleges), private nonprofits (the Ivys, most liberal arts colleges, etc.), and the for-profits (Kaplan, University of Phoenix, Corinthian Colleges, aka “career schools”). Here’s the key statistic: Fully 70 percent of the 19 million undergraduates and 3 million graduate students enrolled in post-secondary education in 2010 attended schools considered to be in the public sector — by which it is meant that some portion of their funding comes directly from government.

The problem: The word “public” doesn’t mean as much as it used to. Direct state support for public colleges has cratered over the past 10 years, and really fell off the cliff after the financial crisis. Yes, tuitions have risen, but not by as much as state and local appropriations for higher education have fallen. Just between 2008 and 2009, for example, average tuition revenue at public research institutions increased by $369 per student, but the loss in state and local appropriations per student was $751. Similarly, at public community colleges, tuition revenue rose by $113 per student, while appropriations fell by $488. Since the recession of 2001, tuition hikes, as exorbitant as they have been, still haven’t kept pace with the fall in government support.

The bottom line: For the large majority of college students, rising tuitions have nothing to do with the availability of student loans or Pell Grants. What’s happening, instead, is that the burden of paying for college that was previously provided directly by government has now been shifted onto the backs of students, in the form of crippling debt.

The picture becomes a bit more complicated when one considers private nonprofits, which don’t get government support, but where tuitions have also been rising, if at a slower pace than at public schools. There’s an argument to be made that one explanation for why college costs have consistently risen faster than inflation over many decades has to do with the built-in resistance that the education sector has to the kind of productivity increases that result in lower prices in other industries. You can’t outsource teachers to China like you can iPhones or blue jeans. You need talent to operate a full-service college, and there’s a lot of competition for the talent, and so prices keep going up. While there are some problems with this argument — such as, do schools really need to have as many administrative personnel as teaching personnel? — the private nonprofit sector is where this argument seems to hold mostly true. Generally speaking, the private nonprofits are more or less immune to the same market forces that result in economies of scale elsewhere. This is particularly true for elite schools, where astoundingly high tuition gets tremendous public attention. So what? If you’re turning away 75 to 80 percent of your applicants, what possible reason do you have for lowering tuition? Quite the opposite: Keep hiking it! The kids will continue to apply!

Of course, deserved or not, our culture places a lot of value on a degree from an elite institution, which further maintains their ability to charge as much as the market will bear. The same is not true for the rapidly growing for-profit sector, which has burgeoned in size over the last 15 years despite not delivering much that anyone values.

One out of every 10 American college students now attends a for-profit school. And there is absolutely no question that those schools’ entire business model is built on the availability of student loans. Eighty to 90 percent of for-profit revenue comes from government aid — and it would probably hit 100 percent if not for a government regulation capping the total percentage of revenue allowed to come from government aid at 90 percent.

“It’s very, very clear,” says Carey. “The for-profits set their prices to whatever the maximum federal loan limit is. They charge as much money as students can borrow. ”

As has been amply documented, the for-profit sector also does a horrible job of actually educating students. For-profit students are more likely to drop out and much more likely to default on the debt they accumulated while failing to get a degree.

The dependence of the for-profit sector on government money poses a bit of a conundrum for Republicans who decry “easy government money,” because ideologically, Republicans are big fans of the for-profit sector, and fight hard to keep it free of government regulation and oversight. Yet it is precisely here that the system is most screwed up. When profit is the goal, and government looks the other way, students are the losers.

One informative, market-based method for comparing public, private and for-profit schools, suggests Lauren Asher, the president of the Institute for College Access and Success, is to look at the “net price” charged by institutions. Posted tuition rates don’t actually give a very clear picture of what a college actually costs to the person writing the check. The “net price” subtracts whatever grants are provided to the student directly by the school or government from total tuition (but does not include student loans).

The most recent data is eye-opening. The net price of attending one year at a four-year public school in 2009-2010 was $10,175. At a private nonprofit: $16,672. And at a for-profit school? A whopping $23,771. In fact, says Asher, the data indicates that in the last couple of years, the net price of attending public schools has held even and in some cases declined slightly, despite tuition hikes. Asher says that even as state appropriations plummet, schools are finding ways to cut costs and plow whatever cash they have available back into aid for low-income students. The data seems clear: If you’re looking for a bargain, your best bet is still state-supported education.

So what does all this mean in the big picture? In a perfect world, the easy answer would simply be to restore direct government support for higher education. There are still clear economic rewards to getting a post-secondary school degree, making government support of education a good investment for future economic growth and prosperity.

Unfortunately, in the realpolitik of today’s revenue-constrained, tax-averse governments, that simply isn’t politically feasible. Way back in 1978, California pioneered the future that we all currently live in when voters passed Proposition 13 and severely restricted the ability of the state to raise taxes. As a nation, we’ve voted with our taxpayer wallets: We are no longer willing to fund massive direct investments in our future.

Carey holds out hope for alternative providers of education that leverage the Internet’s huge advantages to provide instruction at low cost. Although some of the for-profits, most famously the University of Phoenix, have already been conducting classes online for years, they aren’t doing so with the goal of lowering costs for students, but rather to maximize their own profits. They’re essentially exploiting the Internet to deliver product as cheaply as possible on their own bottom line, but charging top-line prices to consumers that force massive borrowing.

There’s a clear role for government to play here, says Carey, both in restricting the abuses rampaging through the for-profit sector and in realigning incentives that constrict student and educational facility flexibility. For example, he notes, you can’t get a student loan to take a single calculus course from whichever professor might specialize in delivering the best online calculus course in the world. There’s no current way to get government aid for mixing and matching credits from different educational providers that can ultimately be assembled into a full degree.

Carey points to new, free online education initiatives from MIT, Harvard and Stanford that promise to revolutionize the education business by offering high quality at extraordinary low costs. These elite institutions pose no threat to their own operating model — there will always be plenty of students seeking the validation of a brick-and-mortar degree from Harvard, but they carry massive potential to destroy, or at least severely constrain, the for-profit model of education. We may one day look back at the current era and wonder how in the world the for-profit schools ever got away with charging such huge fees. And of course you won’t need a student loan to pay for a free online circuit engineering course put together by MIT.

How close that future might be is anyone’s guess. For now, you can’t get a transferable college credit from the MIT/Harvard initiative — exactly the kind of problem government needs to help solve. But for now, as Republicans and Democrats continue to squabble over how to pay for low interest rates on student loans or how much money to put into the Pell Grant program, we should remember that the real story here isn’t how much students are borrowing, but how little government is doing to help.