Financial Crisis

In the prologue to The Big Short: Inside the Doomsday Machine, Michael Lewis explains that he envisioned his first and perhaps most famous work, Liar's Poker, as a grim obituary for an industry that rewarded inexperience and greed. However, the byzantine banking industry continued to flourish, and young readers wrote Lewis to ask how they, too, could get into the game. His disappointment is palpable.

On Monday, President Barack Obama released a complimentary statement about Sen. Chris Dodd's latest proposal for financial reform, singling out its creation of "a new consumer financial protection agency to set and enforce clear rules of the road."

While members of Congress take their spring break, the debate over financial reform and, most relevantly, Sen. Chris Dodd's omnibus bill simmer here in Washington. Dodd's bill has raised any number of questions -- starting, most fundamentally, with "Are you with the banks or the consumers?" -- but perhaps the most confusing debate right now is over the previously obscure issue of prudential standards. (If you're just joining this debate, read my primer on the effort so far.)

The administration has made economic policy as if it believes that once financial institutions and financial markets are restored, credit will start flowing and growth will follow.

A Background to Short Selling
There are two dominant ways of making money off of a stock price change.  The most obvious way is to go "long" on the stock, meaning that the investor believes that a stock is undervalued and the price is destined to rise in the future.  So the investor buys this stock on the market, waits for the price to rise before selling the stock.  The profit is in the spread.

Go sit in the corner and think about what you’ve done, carbon!  You’re driving us all mad and keeping hundreds of financial wizards employed, trying to figure out why you never follow the price models.

Since 2005, Europe has had the European Union Greenhouse Gas Emission Trading System (ETS).  It’s a bizarre market that refuses to behave like that of other commodities – not like oil, natural gas or coal, nor like corn or pork bellies.  Currently, the most obvious quirk is that carbon allowances tr

If you thought the financial crisis marked a turning point in American history, and that Democrats and Republicans were committed to making TARP the bailout to end all bailouts, you'd be sadly mistaken. As Senator Chris Dodd's financial reform bill makes its way through the Senate, there is a broad conviction among experts that it will do little to prevent yet another financial crisis.

By now, it hardly counts as news when a prominent member of America's ruling class refuses to take responsibility for the havoc and misery his actions have wrought. In post-crisis America, dissembling and baroque exculpatory alternative histories have become a kind of patois among the best and brightest.

With healthcare reform passed, the next big legislative battle will be over financial regulation reform. Unlike the Affordable Care Act, which the nation followed from opening to closing credits, financial reform has been running in a largely empty theater. Many reporters and citizens find themselves walking into the show two-thirds of the way through, bewildered by its complexity. But the movie's not over yet, and the ending is undetermined. So it's important for progressives to understand the essential elements of financial reform.

On April 26, four of America’s leading social scientists convened to discuss economic inequality and the Great Recession, in a forum co-hosted with The Nation magazine. Amid worrying signs of resurgent inequality, they debated the problem in light of structural realities, political constraints, and global trends.