FINANCIAL CRISIS BOOKS-TWO GREAT OVERVIEWS

The Sunday May 18th  New York Times carried two wonderful overviews of two current books on the financial crisis. If you are following this odyssey both articles are most worthwhile. Gretchen Morgenson’s Fair Game column, Geithner Staying on Script  dissected Geithner’s Stress Test  self-defense book with precision!  In my view no reporter is better than Morgenson in getting to the bottom of  complex financial issues and her article is enlightening and the conclusions on point.  Writes Morgenson,

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“Mr. Geithner does do some introspection. “I did not view Wall Street as a cabal of idiots or crooks,” he writes. “My jobs mostly exposed me to talented senior bankers, and selection bias probably gave me an impression that the U.S. financial sector was more capable and ethical than it really was.” That’s as close as he gets to saying that he was wrong to trust — not question — bankers he encountered.

A final flaw: In his book, Mr. Geithner boasts that the bailouts he helped design have been profitable to taxpayers. But his calculations do not take into account the cost of capital that the taxpayers extended to the banks.

Concludes Morgenson

“As for the oversight mistakes that he and his regulatory colleagues made, Mr. Geithner essentially says “We were human.” But this fails to address head-on the possibility that he was a captured regulator, a man locked into the mind-set of the very bankers he was supposed to oversee.”

 

http://nyti.ms/1oADWtM

 

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The second article, written by Binyamin  Appelbaum, The Case Against The Bernanke-Obama Financial Rescue, reviews a new book by Atif  Mian and Amir Sufi titled House of Debt.  The authors flatly accuse Timothy Geithner and Ben Bernanke of focusing only on preserving the financial system ( the banks).  From Appelbaum’s  article ”

“If you actually look at the argument that people like Mr. Geithner make, they almost always point to financial metrics like risk spreads and interest rates,” he said. “But if you look at the real economy, it just tends to come out in our favor.” Millions of Americans remain unemployed almost five years after the formal end of the recession.”

 

http://nyti.ms/1lwE9YE

I have not as yet read either Stress Test or House of Debt.  These two overviews are great previews and set the table for two more good reads on this complex subject, a story which has no ending.

 

 

 

 

 

HOW THE OTHER HALF LIVES- KEEP PRINT JOURNALISM ALIVE AND WELL!

Jacob Riis’s book How The Other Half Lives, written in 1890, remains an outstanding example of the importance of investigative journalism and the continued vitality of the Fourth Estate.

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Jacob Riis was among the earliest of what Theodore Roosevelt later termed ” muckraker”, “taking the rake to uncover the most unpleasant conditions in American society.”  In Riis’s case, the issue was the plight of thousands of immigrants living and working in horrid conditions in the New York City tenements of the late 19th century. How The Other Half Lives is not a historical novel but rather a work of non-fiction, well researched reporting, personally witnessed by the journalist.

Riis was himself an  immigrant, born in Denmark among a family of fifteen children. He apprenticed as a carpenter in Copenhagen but discouraged by job availability he immigrated to the United States in 1870 at age  21.  Having caught a brief glimpse of the squalid living conditions among immigrants in New York’s tenement district, he left for western Pennsylvania and found work there as a carpenter. Perceived as being taken advantage of by his employers, he returned to New York as a salesman of flat irons whereupon he saw an advertisement for a Long Island newspaper looking for an editor. Thus, with no experience as a writer, he began his career in journalism.  He later accepted a position as a reporter for The New York News Association where he began writing with assignments covering both the rich and the impoverished. Riss was aware of conditions among the extremely poor in New York from his previous brief stay in and around the notorious Five Points. However, his job at the NYNA, the New York Sun and later in a big step up to the New York Tribune , he found a pulpit from which to begin informing the public on How The Other Half Lives .  Riis turned his print platform into a personal crusade, attempting  to alleviate the bad living and working conditions of the poor by exposing their horrid circumstances to the people who could make a difference, the middle and upper class of the city and its political establishment. Riis was perfectly willing to hold both the upper class and politicians accountable for the exploitation of men, women and children in both employment and housing. The pages of his early articles for Scribner’s Magazine and later in the complete volume How The Other Half Lives  are so vivid that uninformed critics, in disbelief, termed the details of his reporting an exaggeration and sensationalism.

Surely this work is an early reformist look at income inequality but  Riis referred to this large percentage of the New York City population as a class  unto itself, literally without identity or voice, enslaved by landlords who exploited their fears. The same people were recruited as the machinery of piecework in the early garment and cigar making industry at wages below any standards of decency.  The tenement  districts in New York exploded with thousands of men, women and children crowded into one or two rooms often without ventilation, sanitation or running water. Riss estimated that at one fifth of the city’s population lived under these conditions.

There is a major difference between Riis’s reporting and sensationalism. Riis spent months in the tenements, which were factories by day and barely livable sleeping quarters by night.  His research was impeccable and he was among the very first reporters to incorporate photo journalism into his stories, utilizing the newly invented flash to photograph his subjects in their darkened rooms. His work was the beginning of photo journalism, adding documentation to the written word.  The photos and editorial content had dramatic impact with his readers  and ultimately gained the attention of New York’s newly elected Police Commissioner, Theodore Roosevelt.  Riis became an advisor to Roosevelt, escorting him on nighttime  tours for the commissioner to see for himself how the poor were forced to live.  Many credit this educational relationship with Roosevelt as the beginning of the Progressive Movement, a hallmark of TR’s future  presidency.

After Roosevelt’s election he wrote this tribute to Riis. ” Recently a man, well  qualified to pass judgement, alluded to Mr. Jacob Riis as  ‘ the most useful citizen of New York.’  The countless evils which lurk in the dark corners of our civic institutions, which stalk abroad in the slums, and have their permanent abode in the  crowded tenement houses, have met in Mr. Riis the most formidable opponent  ever encountered by them in New York  City.”

How The Other Half Lives was first published as an article in Scribner’s  Magazine in 1889, but  while working for the New York Sun, Riis expanded the work into the book, complete with his photographs and published it a year later.  A much less famous work by Riis, Children of the Poor was published as a sequel in 1892. In it Riis wrote of children he had encountered while researching How The Other Half Lives.

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Riis was not alone among a new breed of investigative {muckraker) journalists.  In 1872 Julius Chambers wrote an expose of institutional horrors in Bloomingdale Asylum  and in 1887 Nellie Bly wrote Ten Days in a Madhouse a story of patient abuse in Bellevue Hospital.   By the turn of the 20th century McClure’s Magazine had assembled a group of new muckrakers including Ida Tarbell, Lincoln Steffens and Ray Stannard Baker, exposing the Standard Oil Trusts and labor unrest in the coal mines and steel mills.

One wonders  how slowly  reform among the immigrants of New York’s tenements may have come without the reporting of Jacob Riis.  How The Other Half Lives  punctuates the importance of  investigative journalism in the fabric of a democracy. In the 20th Century we saw the results of the journalistic work of the Washington Post’s  Ben Bradlee, Bob Woodward and Carl Bernstein in their reporting of Watergate.  Currently we are witnessing excellent journalism in the New York Time’s recent series Invisible Child, the brilliant work of reporter Andrea Elliott and the ongoing reporting of Times business journalist Gretchen Morgenson,  together with her book Reckless Endangerment.  

In this readers view, Television, the 24-hour cable news cycle and the endless world of blogs have a long distance to travel before coming close to the credibility and impact  of the work of Jacob Riis and those following in his footsteps.  If you are a  student of New York, treat yourself to a journey back to the nineteenth century and read How The Other Half Lives.  It will make you want to keep buying a newspaper, print or digital!

Occupy Wall Street? Two Insightful Books Morgenson and Rosner,Friedman and Mandelbaum

Anyone who questions the “why” in the Occupy Wall Street movement that is sweeping the nation and the world need only pick up a copy of Reckless Endangerment by Gretchen Morgenson and Joshua Rosner! ( See Gordon’s Good Reads July 16, 2011 blog post.)  The book did not predict that folks would be manning the barricades by October but I would assume the  Occupy Wall Street movement came as no surprise to these two  excellent reporters. Reckless Endangerment is a must read for all who are trying to put Occupy Wall Street in context.  The mantra ” We are the  Ninety-Nine Percent” will become abundantly clear after reading Morgenson’s and Rosner’s work.

Nor will the Occupy Wall Street movement come as any  surprise to readers of  Tom Friedman’s and Michael Mandelbaum’s That Used To Be Us, How America Fell Behind in the World We Invented and How we Can Come Back.  That Used To Be Us  places in focus the circumstances leading up to the economic and social turbulence in America.

Friedman and Mandelbaum cite four major challenges facing America: How to adapt to globalization, how to adjust to information technology, how to cope with large and soaring budget deficits and how to manage in a world of rising energy consumption and rising threats to the climate and environment.  Though That Used  To Be Us was written before Occupy Wall Street  it clearly enlightens the reader on the years of ignorance in all quarters leading up to the nations current economic straits.  Whereas Reckless Endangerment is an investigative chronology of  America’s financial meltdown, That Used To Be Us  meticulously peals back the covers of missed opportunities to right the ship by both government and business. The  How We Come Back  subtitle of the book brings forth big challenges and a hint of optimism but ironically it ties directly into the public protests of today.   Friedman and Mandelbaum call for an end to the political “gross irresponsibility” demonstrated during the budget crises. ” Anyone who proposes solutions that are not at the scale of the problem and don’t require immediate action is not serious. ” They call for  equipping the citizenry with the skills and tools essential for economic growth in a global economy, rebuilding America’s infrastructure,  and emphasize that ” cutting ”  is not the answer unless it is coupled with major tax increases to create hope for a future balanced budget. ” Anyone who says that we can restore order to our national finances today without raising taxes is not being serious.”

Global warming is a major subject in That Used to Be Us, and the twist is that the authors see global warming as a huge economic opportunity to get out in front of new technology with inventions and production that can lead America out of the Great Recession and place its future on a sound economic growth pattern. The authors  urge America to seize the green energy initiatives being undertaken in China and make them America’s own. Stop exporting our science and technology at our own expense, reference the authors.

Great books are timeless and many have been posted on Gordon’s Good Reads.  Reckless Endangerment and That Used To Be Us my not go down in the annals of literature  as timeless or iconic but in 2011 they are certainly timely and both add greatly to broadening ones understanding of this critical American crossroads.

My blog of last week on That Used To Be Us, promoted by last Sunday’s  New York Times Op-Ed by Tom Friedman was written with 100 pages of the book left to read. The finish line is an eye opener no matter what your politics.

Reckless Endangerment-Excellent Reporting-Pulitzer Worthy

Gretchen Morgenson has again distinguished herself as the finest reporter of financial matters in the  American free press.  The added research of Joshua Rosner raises the new book RECKLESS ENDANGERMENT to an even higher level of excellence and credibility. Recognition of the full title of this work is essential. RECKLESS-ENDANGERMENT, HOW OUTSIZED AMBITION, GREED, AND CORRUPTION LED TO ECONOMIC ARMAGEDDON.

Morgenson’s  and Rosner’s  investigative reporting and writing ( an appropriate description) ) not only tells this nearly unbelievable story but it is a statement about the importance of newspapers and journalists who are committed to upholding the tenants of a free press in a democracy.

The following paragraphs from  RECKLESS ENDANGERMENT  preview the depth to which the book travels to tell the story leading up to the  economic meltdown of 2008 and more disturbingly raises the prospect that at this very moment it may well be happening all over again.

“Just as drug lords know that their products pose hazards to their customers, the Wall Street firms packaging and selling mortgage pools to investors knew well before their customers did that the loans inside the securities had begun to go bad. But with the mortgage mania raging and profits still flowing the investment bankers had no interest in coming clean.”

“The Incident was the first of many times that the heads of organizations accused of improper conduct were not held accountable for the damage they did to shareholders and , later, to taxpayers.”

“Will a debacle like the credit crisis of 2008 ever happen again? Most certainly, because Congress decided against fixing the problem of too-big-to-fail institutions when it had the chance.”

Page by page with incredibly impressive detail , facts and substantiation, Morgenson and Rosner describe  the lead-up to the carnage to the American economy and citizenry, and to the financial crisis that the government is still facing.

There are pages in this book that you simply will not want to believe. However, you will! All of the economic meltdown characters are there with the ironic twist that nearly all of them are still controlling the levers of economic power. The list of key players in the meltdown who are still  on stage  spans pages 305-308!