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Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present Hardcover – Deckle Edge, May 31, 2011
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A Washington Post Notable Nonfiction Book of 2011
“A fascinating and deeply disturbing tale of hypocrisy, corruption, and insatiable greed. But more than that, it’s a much-needed reminder of just how we got into the mess we’re in—a reminder that is greatly needed when we are still being told that greed is good.”
-Paul Krugman and Robin Wells, The New York Review of Books
“Compelling . . . Important . . . Ambitious in its scope and frequently persuasive in its arguments, Age of Greed abounds with powerful men, ugly fights, infamous scandals, twists and turns, and, true to the book’s title, lots of shameless cupidity.”
-David Greenberg, The Washington Post
“The timing could not be better for a book like Age of Greed . . . A solid review of half a century of economic history . . . A commendable compendium.”
-Adam Lashinsky, San Francisco Chronicle
“Excellent . . . Straightforward . . . We owe Madrick thanks for what he has done.”
-Richard Parker, The American Prospect
“A compelling and worthy read. Madrick is an able journalist; an excellent and cogent storyteller in a field that often defies the straightforward plot or easy explanation—economics.”
-Michael Winship, Salon.com
“Richly detailed and often riveting . . . Clear and compelling . . . A must-read.”
-Glenn C. Altschuler, The Huffington Post
“Bold . . . Readers will find worthwhile stories in these pages.”
-Sebastian Mallaby, The New York Times Book Review
“If you are going to read one book on the financial crisis, this might well be the one to choose.”
-Tom Streithorst, Prospect
“Madrick pulls no punches . . . Readers who want to understand where we are, how we got here, and some possible outcomes will repay their investment in reading time if they pick up this new volume.”
-(Fredericksburg) Free Lance-Star
“Madrick’s explanation of how greed arose throughout American society contains large dollops of originality . . . Age of Greed is lucid and compelling because of its character-driven nature.”
-Steve Weinberg, Dallas Morning News
“Meticulous . . . Madrick makes a good case—and financial news junkies will savor it.”
-Carl Hartman, Boulder Daily Camera
“Persuasive . . . Vivid . . . As a comprehensive survey of the way institutions work together to create wealth for a few individuals and destroy it for a mass of others, Age of Greed deserves attention.”
-Margaret Quamme, The Columbus Dispatch
“Jeff Madrick has written one of those rare, wonderful books that allow us to understand a huge and important historical development that we may not have realized was a coherent and coordinated series of events. Madrick’s account of Alan Greenspan’s ideologically-driven mistakes alone is worth the price of admission, but it is but one course in a feast of wonderful reporting and writing. If you want to know what has happened to your country, read this book.”
-Robert G. Kaiser, author of So Damn Much Money: The Triumph of Lobbying and the Corrosion of American Government
“Jeff Madrick’s devastating biography of greed is rife with carefully documented cautionary tales of the rich, greedy and unregulated, which collectively constitute the definitive answer to Milton Friedmanesque laissez faire economics.”
-Victor Navasky, author of Kennedy Justice
“Honore de Balzac wrote long ago that behind every great fortune lies a great crime. Now in Jeff Madrick’s important new book, Age of Greed, we are introduced to some of the best and brightest moneychangers in the murky world of high finance.”
-Gay Talese, author of A Writer's Life
“Who’s responsible for the laying waste of our economy—making the rich far richer and everyone else economically insecure? Madrick does more than name names. He tells us who did what and how they did it—the ideologues, demagogues, corporate titans, and crooks. A wonderfully insightful but deeply troubling account of the movers and shakers who toppled America.”
-Robert B. Reich, author of Aftershock: The Next Economy and America’s Future
“The economic disaster of 2008 was not an accident of God but a man-made event. In writing about the financiers, bankers, brokers, free-market philosophers, hedge fund managers and government officials who together engineered the fundamental and profound, almost revolutionary shift in the American economy that culminated in the events of 2008, Jeff Madrick provides his readers with a new and startling account of recent economic history. The individual chapters are riveting but the genius of this book is that Madrick's whole is even greater than the sum of its manificent parts. This is a book that bears reading by everyone with an interest in the American economy and the American future.”
-David Nasaw, author of The Chief: The Life of William Randolph Hearst
“Ideas and policies, like people, have parents and grandparents and in Age of Greed we learn of the men (and they are all men) whose ideas and actions begat three decades with almost no income growth for the vast majority, mountains of debt and fabulous riches for themselves and their peers. Jeff Madrick provides a powerful story of the damage done to our nation by hubris, delusions and lust for money.”
-David Cay Johnston, author of Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill)
“An excellent, thought-provoking book.”
About the Author
Jeff Madrick is a regular contributor to The New York Review of Books, a former economics columnist for The New York Times, and editor of Challenge magazine. He is an adjunct professor of humanities at The Cooper Union, and senior fellow at the Roosevelt Institute and at the Schwartz Center for Economic Policy Analysis, The New School. His previous books include The End of Affluence and Taking America, and he has written for The Washington Post, the Los Angeles Times, Institutional Investor, The Nation, and The American Prospect. He lives in New York City.
Top customer reviews
Beginning in the late 1950s and early 1960s financiers began to pressure the US government to ease or eliminate many of the provisions to regulate the financial markets that had been put into place during the New Deal. Their efforts began to bear fruit in the 1970s, when both Republican and Democratic Administrations and Congresses, heavily influenced by advice from wealthy bankers and brokers, agreed to dismantle most of the regulatory structure. This deregulatory process gained strength in the 1980s and 1990s, again at the hands of both parties, and finally bore fruit in the 2000s when the markets collapsed and came close to dragging the entire world into another Great Depression. Like most people, I remember those frightening days all too well, but I didn't fully understand what was going on and I certainly didn't know what to expect in the future.
Jeff Madrick has done an excellent job of chronicling the financial decisions and decision makers of the last four decades. He provides many short but thorough biographies of the principal actors, some well known or infamous like Ivan Boesky and Michael Milken, others less public but still important like Lewis Uhler and Walter Wriston. Having this background information makes the decisions of Arthur Burns, Paul Volcker, Alan Greenspan, and the eight presidents since 1970 more understandable and also more disheartening. Throughout the book Madrick returns to the main moral: while the men who gambled with the economy often made vast fortunes and gained enormous prestige, the middle class saw their pay stagnate, their pensions shrivel, and their houses lose value. The solution is obvious, but Madrick delineates it carefully: the regulatory structure that shriveled during the "good times" must be reinstated and strengthened, and future political leaders need to spend less time listening to Wall Street and more time on Main Street.
Madrick refutes other explanations for the crisis, such as that no one saw the problems coming, or that it was a "systemic" failure that was not caused by one person or one entity.
He gives credit where credit is due to those who caused the problems. He says that by keeping interest rates artificially low, Fed Chairman Alan Greenspan "fed ever-rising levels of debt at investment banks that aggressively expanded trading and other speculative activities." He adds that "Much of Wall Street was run like a hedge fund." And he tells us that "Citicorp and Merrill became the largest issuers of the riskiest mortgage securities, surpassing earlier leaders, such as Bear and Lehman...." Per Madrick, "individual bankers made personal fortunes....Accounting fraud reached new heights...."
The author also gives credit to what saved us: "The only reason a far worse recession did not occur was the expensive government rescue package." "A bottom was found only when the federal government made hundreds of billions of dollars available to the firms to shore up their collapsing finances." He tells us that it was TARP that "calmed the markets," and that, in total, the federal government had more than $12 trillion "on the line." He tells us that "the Keynesian response did work."
But Americans lost nearly $12 trillion in real estate and stock-market equity in this crisis, some of which has since been regained in the stock market, but not in home values. But why did all this have to happen? The author tells us that it was caused by a culture of greed that began, in earnest, in the 1970s, which is where the book begins.
The age of greed is started by haters of the New Deal and of Franklin D. Roosevelt. They have no need for a powerful central government. Their first political spokesperson of note was Barry Goldwater. In the private sector, it was banker Walter Wrister, who set the precedent for pushing banks into high-risk deals, expecting the federal government to bail them out if they got in trouble. He took enormous risks to push First National City Bank through periods of near illiquidity to the point of a bank "too big to fail." It eventually would become Citibank.
There is a chapter on Milton Friedman and the role he plays in opposing Keynesian theory. He argues that with reduced government and lower taxes the poor would be better off, this being right out of the Republican playbook of today. Per the author, "The big prize for Friedman would have been to have conclusively shown that The Great Depression was caused by the fall of the money supply - that is, caused by an error in the Federal Reserve policy." Sounds just like Ron Paul, huh? Another Friedman quote: "The great achievement of capitalism is not the accumulation of property, it has been the opportunities it has offered men and women to extend and develop and improve their capacities." What this line of thinking does not include, of course, is the risk that greed and the accumulation of wealth would become the prime driving factor, as we enter the age of greed. Per the author, Friedman "helped turn the people against government, in general."
Then there are chapters about the development of corporate acquisitions and how all that worked. Investment bankers began to make enormous profits. And once it got started, the banks got interested in playing the game, as well. Joe Flom, as the leader of this movement, gets a chapter in the book.
Ivan Boesky gets a chapter, too, as does Ronald Reagan. We're also given the history of Sam Walton and Wal-Mart, which was built on a model that expected employees to qualify for food stamps and Medicaid, as Walton became the richest American, with $20 billion, way back in 1985.
And the author tells us that author Tom Peters promoted the idea that the best companies had lean staffs and were cost-effective. Jack Welch at GE was the epitome of this philosophy, as he institutionalized layoffs, by firing about 30% of GE's workers over a five-year stretch. In 1984, he was named Fortune's "toughest boss in America" award. He turned GE from a company that primarily built things, to one that made most of its money via financial ventures. The author sees Welch as a key player in the age of greed: "Welch made GE into a bank....Seven years later, the banks in America nearly collapsed."
Michael Milken gets a chapter, as does Alan Greenspan. George Soros and the hedge funds get one, as well. The collapse of Long Term Capital Management and the use of derivatives are discussed. And Sandy Weill of Citicorp gets a good bit of attention, perhaps as the one who personified greed more than any other player. Madrick is not kind to Weill and his ilk, saying, "It was on tightly run operations, rather than on new products or innovative ideas, that many of the billionaires of the age of greed made their fortunes." But Weill felt that "he and others like him deserved the money they made." To them, the way to make money was through the use of risk. Weill would be worth as much as $2 billion when he retired in 2002.
But make no mistake, the author's thesis is that "The 1990s though 2002 was the most corrupt decade since the 1920s - and one of the most corrupt in American business history." It was built on an "infrastructure of corruption." Welch used pension overfunding to supplement quarterly earnings at GE. Stock options to executives were not counted as expenses. Shenanigans at Enron sent Jeffrey Skilling and Andy Fastow to jail. Enron's bankruptcy would be the largest in U.S. history, only to be overshadowed later by those of WorldCom, then Lehman.
Angelo Mozilo of Countrywide Mortgage gets a chapter near the end of the book. He built the company up to market value of about $25 billion before the subprime disclosures forced the company to be taken over by Bank of America for about $4 billion. As Countrywide was making a mess of things, per Madrick, "regulators were nowhere to be found."
It was the "Age of Greed," built on a sea of sand. It led to the worst financial collapse since The Great Depression. We need books like this one to help up stop this kind of history from ever repeating itself. The book is full of details and not that easy to read, but it is worth a read, if you have the time and energy.