Understanding the financial meltdown

[…]if you want banks to make smart, prudent loans, you probably shouldn’t give money to bankers who sunk themselves by making a lot of stupid, imprudent ones.

When you shout at people “be confident,” you shouldn’t expect them to be anything but terrified.

These are two memorable quotes from a NYT Op-Ed piece called “The End of the Financial World as We Know It” published on January 3, written by Michael Lewis and David Einhorn. It’s the most terrifying thing I’ve read in years.

Episode 355 of NPR’s “This American Life” is called “The Giant Pool of Money,” and it’s one of the most informative, straight-forward and similarly frightening stories about the disaster. A must-listen. (If you don’t have an hour to spare, the 13 minute version from May 9 on All Things Considered, “Global Pool of Money Got Too Hungry” is similarly excellent.)

7 Responses to “Understanding the financial meltdown”

  1. Tomi Says:

    Thanks Stephen. I am interested in the real truth about our economy. I’ll definitely check these out. Also-Kimi mentioned an economist who thinks we won’t hit bottom until 2013. Do you know who this guy is and what is his website?

  2. Davis Freeberg Says:

    Planet money has probably covered the financial crisis better then anyone. If your time is limited, it’s the right one to be tuning into. They are very good at making complex issues seem simple and understandable. Michael Lewis is also very good, but I don’t always agree with his opinions. Still, I’d rather read a well thought out piece that I didn’t agree with, then a poorly written one that I did.

  3. Eric Warmenhoven Says:

    This American Life did a followup show called “Another Frightening Show About the Economy”, episode 365, in early October. Even more important to listen to than “The Giant Pool of Money”, I’d say.

  4. Stephen Says:

    Thanks Davis — not familiar with Planet Money, got a pointer to a good starting spot?

  5. Stephen Says:

    And I agree Michael Lewis is a good writer. I’ve had a soft spot for him ever since he wrote this.

  6. Davis Freeberg Says:

    Wow that’s really cool, I had no idea that Lewis wrote an article about TiVo. I know him from his book Liar’s Poker. It’s a good read, but his story does seem a little over the top sometimes. The Planet Money is created by the people behind this American Life. They do a daily blog and podcast that’s excellent. It’s in my short list folder.


  7. Stephen Says:

    Eric, thanks! That’s actually the one I was thinking about. Hmm, to edit or not to edit…

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