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Plunder and Blunder: The Rise and Fall of the Bubble Economy Paperback – January 1, 2009
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Top Customer Reviews
The author correctly shows that the Securities and Exchange Commission (SEC),which is supposed to regulate the now collapsed investment banks ,was packed with appointees who were actually trying NOT to regulate .The same goes for the Federsl Reserve System (FRS).Except for the years 1938-1952,the FRS has been run by the big,giant private commercial banks.Too many FRS board members in Washington viewed themselves as cheer leaders for the speculative practices of the major banks.
Academia provided the intellectual fig leaf with a pseudo scientific theory called the Efficient Market Hypothesis(EMH).Read more ›
Dr. Baker explains how an increasing share (perhaps 25 percent of corporate profits) of our economy is dominated by finance. Deregulation of finance during the 1970's and beyond allowed lenders to circulate a staggering amount of money throughout the world. American manufacturing began to seriously decline in the 70's and the trade deficit ballooned. Productivity growth in the United States was very low in the 70's, through the Reagan-Bush Sr. years and Clinton's first term. Then, for unknown reasons, productivity started to pick up substantially. Investors began to speculate in the stock of emergent companies involved in the internet and related fields, which drove the stock prices of these companies into the stratosphere, even as few of the companies were actually registering any profit. The impressive stock market performance of these companies versus their poor performance in the real economy was reflected in the Price to Earnings (PE) ratio. In the past, according to Baker, the PE was around 14 to 1. But in 2000, it reached 30 to 1.Read more ›
And then there is the greed aspect - the plunder element. Investment and commercial bank executives knew - or if they didn't, their incompetence defies belief - that they were raking huge fees off the sale of asset bubbles, based on bogus securities. Or in the case of AIG, based on the sale of credit default swaps, a form of securities insurance, that they had no intention of making good on. Households, pension funds, and the like have lost trillions in the real wealth that they invested in now deflated assets, only to see that wealth now held by those executives, who in the author's words, are borderline criminals. Who can disagree with the author's call for accountability, although there is no chance of that occurring?
The financial sector has become an increasingly huge component of our economy. Thirty percent of corporate profits in the US were attributed to that sector in 2004, a huge increase over bygone eras.Read more ›
Most Recent Customer Reviews
Dean Baker is not in the same league with many of the people who have written about the economic crisis. Read morePublished on January 15, 2014 by doug k
This is another excellent book by Dean Baker. His grasp of economic issues and the ability to go behind the hype is truly outstanding. Read morePublished on July 3, 2013 by A Recent Lefty
This is a good analysis of recent financial bubbles and a set of
recommendations for the preventing future ones. It's especially
usable because it is concise. Read more
Getting screwed is one thing, but not being able to understand how it happened makes it worse, as much of the American public knows after living through the financial scandals of... Read morePublished on May 28, 2010 by J. L LaRegina
Dr. Baker's basic argument is that the 1970s were an economic golden age and that any changes made since that time are responsible for all current economic problems. Read morePublished on March 1, 2010 by Mark bennett
Dr. Dean Baker should be America's Federal Reserve Chairman or at least the Secretary of Treasury. The hacks, Ben Bernanke and Timothy Geitner, respectively cannot hold a candle... Read morePublished on January 9, 2010 by Norm
This book is short and to the point: How did the stock bubble of the 1990's and the housing bubble of the 2000's contribute to two successive recessions? Read morePublished on December 22, 2009 by Brad Averill
Dean Baker is co-director of the Center for Economic and Policy Research in Washington DC. He shows how Clinton's high-dollar policy blew up the $10 trillion stock bubble and also... Read morePublished on August 17, 2009 by William Podmore