On the financial crisis & economic policy - Introduction

Abstract

The financial meltdown of 2007 to 2009 was surely a great spectacle. Mighty names toppled like that statue of Saddam Hussein. Lehman Brothers, with a history spanning a century-and-a-half, just disappeared. Bear Stearns and even Merrill Lynch–the same Merrill Lynch that had taught generations of small investors to be “bullish on America”–were sold off at discounts suitable for used furniture. AIG was rescued in the nick of time, but only with $182 billion of U.S. government assistance. Trillions of dollars of investors’ wealth simply evaporated. One could think, “Oh, well, easy come, easy go.” But still, trillions of dollars? It was a spectacle all right, but why did it really matter to the rest of us, who count ourselves merely as citizens of the republic?