13 Bankers

Yesterday on CNBC, economist Steve Liesman and blowhard Rick Santelli were discussing the current state of the economy and Santelli proclaimed "The question isn't how we got here.  The question is the best way to move forward."  Just as George Bush never wanted to play "the blame game" by looking at the screw ups that contributed to 911, Katrina, the War in Iraq, and the financial meltdown, Santelli doesn't care to consider why the economy is in the shape it is today.  The reason is simple, Santelli is an Ayn Rand loving libertarian who thinks that markets should be left free to work without government and he has no interest in discussing the fact that this ideology is precisely what led to the crisis in the first place. 

13 Bankers: The Wall Street Takeover and the Next Financial Meltdown by Simon Johnson and James Kwak is an excellent book that I would recommend to anyone who wants to understand how we got to where we are.  Simon Johnson is a former chief economist with the International Monetary Fund.  In that role, he had the chance to observe third world oligarchies whose financial systems were looted by government insiders and their cronies.  Before the IMF would assist such countries it demanded real reforms in their banking systems and it required that the costs of those reforms fall upon those who had caused the problems, or at least upon some of those who had caused the problems. In the United States, however, the mega-banks that caused the financial crisis have for the most part emerged bigger and more powerful than ever.

Unlike the third world countries where oligarchies control government policy through corruption, the mega-banks built their power in large part by selling the laissez-faire ideology that less regulation is always better and that any financial innovation that succeeds in the market is necessarily good for the economy.  Of course the revolving door between Wall Street and the regulators combined with generous campaign contributions didn't hurt, but in large measure, Wall Street was allowed do run wild without government interference because the conventional wisdom on both sides of the aisle among Congressman, Senators, regulators, and Presidential administrations was that what was good for Wall Street was good for America.