I'm yet to read an article by Matt Taibbi where he doesn't drop the F-bomb somewhere -- but when it's the sixth word in the article, you know he's upset.
And with good reason. He goes into gory details of what happened at AIG and how a AAA-rated company let itself be submerged by toxic instruments, how those instruments were enabled by laws passed by people like Phil Gramm (by the way, lets stop blaming the Bush administration over this crisis: many of the crucial legislative and regulatory changes occurred on Clinton's watch), how much influence firms like Goldman Sachs have over policy (a large number of Fed and Treasury officials have been their alumni), and most of all, how Wall Street is using the crisis to line its own pockets. Go read it.
(I had no major expectations of Obama, but I must say I'm pretty disappointed so far. He seems to have no coherent vision of what to do about all this, and the recent 90% tax on bonuses must count as the rankest and most useless form of populism.)
Question for any economists reading this: Once upon a time, you decided whether or not to buy a stock by comparing its price with the earnings of the company, estimating the dividends you would get, and comparing with other investment options. Somewhere along the way, the goal of investment changed into something rather different: buy a stock in the hope that its price will rise, and sell it. It doesn't matter if it is ridiculously overvalued: if the market is going up, buy. What exactly was wrong with the old model, and how many mutual fund managers actually looked into the strengths of the companies in their portfolios before putting their customers' money into them? I can see that, in boom times, such a cautious strategy would "underperform" -- that is, Rediff Money would not list your mutual fund among the top ten that "outperformed" the Sensex by vast amounts that year. But does nobody think of the long term? (And I'm not even getting into derivatives, futures, hedge funds, and so on.)