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November 23, 2013

The assassination of the American Economy

When President Kennedy was assassinated, I was a sophomore at Penn State. During most of the 50 years following, even when my mother and I watched the Oliver Stone movie on television, I accepted the Warren Commission report that Lee Harvey Oswald acted alone; it seemed reasonable enough to blame one insane communist and crazy to imagine conspiracies.

Now in 2013, after decades of watching various government insanities, nothing seems too crazy, and I’d no longer bet on the Warren Commission being right. Rather than add to the many columns written for this anniversary of the Kennedy assassination, I’ll give you a column about the ongoing assassination of the American economy.

Full disclosure: I know almost nothing about Wall Street, about the stock and bond markets. So as I was looking for used adventure novels for Chip’s and my winter reading at the St. Andrew’s fall fair, I wasn’t interested when a church worker overseeing the book tables handed me Michael Lewis’ “The Big Short: Inside the Doomsday Machine”, insisting I must read it. Still, for the sale dollar, I was reluctant to reject his recommendation; once I started it, was reluctant to stop reading.

I missed this 2011 New York Times bestseller because, until I watched “Too Big to Fail” in 2012, I didn’t realize how essential it is to know what HBO promoted as “the true story behind the 2008 economic crisis.” The movie covers the 36 days of the near fiscal meltdown, caused by the crash of the subprime real estate market and allegedly resolved with the passage of the TARP bailout and, of course, the 2008 election of the Great Man himself, healer of all wounds financial and otherwise.

According to “The Big Short,” the “doomsday machine” was turned on in the 20th century; some say in 1999, when, according to Wikipedia, the repeal of the Glass–Steagall law “permitted Wall Street investment banking firms to gamble with their depositors’ money that was held in affiliated commercial banks.” I have absolutely no expertise here but wonder if doomsday didn’t become inevitable when someone in the early days of human history felt he needed to invent the word “greed.”

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