Romney, Mitt/wealth
Delphi and, 664
misunderstanding bubble finance, 557–558, 559, 570–571
See also Bain Capital
Roosa bonds (US), 251
Roosevelt, Franklin D.
“bank holiday,” 150, 158
banking crisis and, 138–139, 150
Exchange Stabilization Fund (ESF), 188–189
gold price and, 161–162, 187–189, 190
gold standard, 139, 140–142, 149, 157, 158, 161–162, 189–190, 192, 194
Hoover and, 138, 139, 155–156
internationalist advisors, 192
London Economic Conference (1933) and, 139, 144–145, 187, 190, 191
miracle legend, 150
“monetary economics” and, 160–163
monetary policies (World War II), 131, 196–197, 199–204
panic responsibilities, 156–159
policies, 89
See also Great Depression; New Deal
Roosevelt, Teddy, 317
Rostenkowski, Dan, 310
Rosy Scenario errors, 91–95
Rove, Karl, 50, 446, 536, 673
Rubin, Robert, 21, 332, 399
Rumsfeld, Don
defense spending, 689, 690
Ford administration, 305
Russell 2000 index, 654–657
Russian default (1998), 15, 16, 62, 332–334
Ryan, Paul
auto industry bailout and, 620
blaming Obama for recession, 556–557
budget, 222, 552–553, 554, 675, 689
S&P futures contracts
during 2000s, 329–330, 341, 363–365, 481
growth rate (1990s), 329, 334
launch, 313
panic of October 1987, 314–315, 318, 320
portfolio insurance, 313, 317–318
problems with, 305, 313
Safire, Bill, 120
Salomon Brothers
in 1980s, 385–386, 387–388
financial futures, 301–302, 306–308
mergers, 398
“profitability,” 385–386
Salomon, William, 306
Samsung, 516, 517
Samuelson, Paul, 174–175, 595n
Sanders, Bernie, 19
Sarbanes-Oxley statements, 473, 708
Savings/savers
Fed strategies’ effects on, 496
household consumption/debt vs., 371–373
Schlesinger, Arthur, Jr., 150
Schlesinger, James, 600
Schultze, Charles, 132
Schwartz, Alan, 392
Schwarzman, Steve, 11
Schweiker, Richard/plan, 101–103
Seevers, Gary, 312
Shadow banking system, 375, 376, 478
Shale oil production, 522, 694–695
Shearson and Co., 306, 398
Shelby, Richard, 621
Shiller, Robert, 428
Shultz, George
background, 121
floating currency and, 120, 123, 281, 284, 292
monetary advice to Nixon, 106, 119, 120, 121, 122, 123, 127, 131, 265
welfare state and, 219
Simon, Bill
Ford administration, 20, 127, 305
Melamed financial futures, 305, 306
monetary beliefs, 20, 127–128, 129
Simon, Paul, 309
Six Day War, 252
Skilling, D. Van, 568
Smith, Adam, 160, 191, 274, 317, 416
Smith, Al, 141
Smith Barney, 388, 398
Smithsonian Agreement (1971), 282–283
Smoot-Hawley tariff bill, 138, 144, 190
Snyder, John W., 206–207
Social insurance
abolishing, 708–709
block-grant proposal and, 553
financial crisis aftermath, 590–591
future costs/problems, 686–688, 692
means-testing and, 172, 173, 175, 553, 554, 709
payroll tax, 173–174, 175
Peak Debt and, 648
problems, 173–175, 553, 648, 676–677, 686–688
Reagan and, 103–105
Romney-Ryan and, 552, 553–554
spending, 174, 553
stimulus (after 2008 financial crisis), 591, 593, 594, 595, 611–612
See also specific types
Social Security
description/problems, 172–175
Greenspan/Reagan rescue plan, 98, 99–100, 101–104
New Deal origins, 172, 174, 175
Nixon’s “double indexing” provision, 100–101, 131, 173
See also Social insurance
Social Security Act (1935), 172
Société Générale, 7, 10
Solutions
federal agencies to eliminate, 709
free market/state separation, 708–709
honest public finance and, 674–676
Keynesian doctrine and, 673, 674, 676–677
means-tested safety net, 709, 710
Omnibus Amendment, 707–708
overview, 672–674
steps overview, 706–712
Solyndra, 600–602
Soviet Union
collapse/aftermath, 75, 78, 86
crop failure (1963–1964), 247
Sower, Mark, 482
Speculative finance
beginnings, 286–287, 288–289
description, 289
futures markets beginnings, 286–288
hedging, 288, 289, 292
pork-belly markets, 286–287
See also Financial futures
Sprague, Oliver, 198
Sprinkel, Beryl
background, 263, 301
financial futures, 302
“monetarist cone,” 263
St. Germain, Freddie, 177–178
Stage Stores Inc., 562–563, 564
Staples, 563–564
“Starve the beast” myth, 87, 99
Starwood Hotels and Resorts, 534
Steagall, Henry B., 176, 178
See also Glass-Steagall
Stein, Herb, 123, 219, 311, 315
Stemberg, Tom, 563
Stimulus (after 2008 financial crisis)
debt and, 589, 593
description, 167, 591–597
education, 593, 594, 595–596
electric vehicles/batteries development, 602–607
ERP (“Economic Recovery Payment”), 592–593
inequities, 591–592, 593
legislation, 584
light rail, 610–611
Medicaid, 593, 594
MWP (“Making Work Pay”), 591–593
needs and, 611–612
New Deal and, 139, 140
payroll taxes and, 592, 593, 594
process, 588–589
project examples/funding amounts, 608–609
roads, 609–610
social insurance and, 591, 593, 594, 595, 611–612
Solyndra, 600–602
special interest groups and, 593–594, 595–596
state/local funding vs. federal funding, 597
tax credits, 592
Stock buybacks
company examples, 456–458, 459, 460–470, 472
company executive pay, 457–459, 464–465
effects (summary), 470–471, 478
Fortune top companies, 466–467
“prosperity” illusion with, 467, 471
role/description, 455–456, 457–458, 478
“sunset” strategies and, 459, 460
taxes and, 457–458, 459–460, 467
Stock market bubbles
ADC loans, 325
Bernanke ignoring, 449–450
capital gains changes, 590
company examples, 354–359, 487–489
early 2000s downturn and, 373–374
following 1987 crash, 322, 328–329
Greenspan bubbles (summary), 479
Greenspan/Federal Reserve and, 322–325, 329–332, 345–346, 361–364, 375
, 448–449, 450–451
Greenspan ignoring, 330–332, 335–336, 337–338, 340, 358–360, 449
household finances and, 361–364
mortgages, 324, 376
NASDAQ index, 329–330, 336, 337, 346, 365, 481
savings vs., 337–338, 359–360, 361, 362, 363, 364
Stock market crash (October 1987)
comparison to 2008 financial crisis, 577–578
description, 303, 305, 314–315, 326, 403
Greenspan and, 303, 305, 314–317, 318, 319, 320–321, 350
meaning of/ignoring, 318–321
Stock markets
bull market culture (1980s–2000), 343–344, 349–353
crash (1929–1930), 137, 146, 150, 344–345
“exit” transactions, 509
“free market” illusion (by 2007), 475–477
Japan’s “zaitech” theory/effects, 210–211
margin (brokers’) loans, 209–210
meltdown (2000–2001), 345–346, 374, 505, 577–578
Panic of 1907, 366–367, 700
“price discovery” and, 476, 503
transformation to gambling (summary), 478–479
See also specific events; Wall Street companies
Stockman, David
Blackstone, 11, 512, 516, 560
Collins & Aikman, 572–576, 660–661
indictment/dropped charges, 571, 573–574
Reagan administration, 73, 94, 100, 107, 263, 405, 416, 588, 690
Salomon Brothers, 385, 387
Stone, James, 310
Strong, Benjamin, 208, 700–701
Subprime mortgages. See Housing bubble (1990s–2000s) and subprime mortgages
Suez Canal closing, 252
Summers, Larry
financial crisis/bailout (2008), 399
junk bonds, 526
stimulus, 139, 167, 592, 594
SunAmerica, 9
Taft, Robert, 689
TARP (Troubled Asset Relief Program) bill/vote, 3, 32, 33–34, 45, 49, 55, 57
Tax Reform Act (1986), 451
Taylor, Maxwell, 216
Taylor rule, 63
TBTF. See “Too Big to Fail” (TBTF)
Technology boom
examples/description, 354–358, 451–453
impacts and, 325–326, 328
peak, 329
tax rates, 451–453
Telecom companies and stock market, 356
Telser, Lester G., 163–164
Tennessee Valley Authority (TVA), 159
Tesla Motors
federal funding, 604, 605, 606–607
stimulus, 602
stock prices, 605–606
Thomas Amendment
AAA and, 160
ESF, 189
Fisher and, 183, 186–187, 188
gold standard and, 140, 141, 186, 187–188, 190, 193
money printing and, 184, 185–186
options description/problems, 184–188, 193
Thomas, Elmer, 183, 185, 187
Tillerson, Rex, 458, 459
Time magazine, 249, 250
Time Warner Inc
AOL merger, 465, 466
M&A deals, 457, 465–466
stock buybacks, 457
stock prices, 465–466
Tobin, James, 247–248
“Too Big to Fail” (TBTF)
“contagion” and, 13
financial crisis (2008) and, 3
LBOs and, 526
panic of 1987
and, 315–316, 319
post-LTCM Federal Reserve actions, 334–335
solution to, 13
Wall Street mergers, 397
Tower, John, 71, 72, 73
Toxic assets
description, 22
investment banks, 22–23
Toys R Us Inc., 514, 515–516
TPG, 523, 529
Trade credit, 661
Trade deficit
Nixon and, 117–118
US 1991–2000, 61
Travelers, 388, 398
Traylor, Melvin, 156
Treasury bill futures
“interest rate futures,” 306
Melamed and, 301–306
Treasury bill standard
beginnings, 276–278
British consol comparison, 382–383
effects, 375
Friedman and, 273, 277–278
Triumph of Politics, The (Stockman), 107
Troubled Asset Relief Program (TARP) bill/vote, 3, 32, 33–34, 45, 49, 55, 57
Truman, Harry
budget/taxes and, 84, 96, 214–215, 216, 220, 221–222, 231
financing Korean War, 195, 204–205, 232
monetary policy, 206–207
Tugwell, Rexford, 155, 156–157
TXU Corporation
background, 520
LBO, 518–519, 520–522, 523
Tyco, 483–484
Unemployment rate
future and, 687–688
Nixon presidency, 113
See also Jobs market
Velvet Revolution (1988), 75, 78
Verizon M&A deals, 524
Veterans bonus payment (1936), 163–164
Vietnam War
conventional forces and, 76, 216
deficit spending, 205, 217, 247, 256, 257, 258
unemployment rates, 228
Volcker, Paul
Federal Reserve term, 207
firing of, 111, 266, 348
gold standard and, 282, 283–284
inflation and, 88, 92, 94, 95, 105, 111, 112, 132–133, 263–264, 266, 293, 313, 346–347, 348, 383, 404
monetarist cone and, 263 1981–1982, 584
reappointment, 264
speculators and, 332
Wachovia Bank
Extended Stay America financing, 539, 540, 541, 542
financial crisis (2008) and, 544–545
as mega-bank, 393, 399
Wagner Act (1935), 159, 160
Wal-Mart
effects on other stores, 514, 515, 562, 564
Main Street America and, 649–650
Wall Street companies
accounting changes, 472–474
financial crisis/main street banks vs., 27–32, 35
financial futures beginnings, 301–303
fiscal cliff and, 668, 679, 680, 681, 691
“gambling” continuation after 2008, 542–545, 546–547
“investment” illusion, 485–486
“operating earnings”/“earning ex-items,” 472–474
prime brokerage operations, 493–494
trading/clearing function, 493
See also Stock markets; specific companies; specific individuals
Wall Street/Federal Reserve
August 2007 to 2008 financial crisis, 475–477
bond dealers and, 321–323
changes needed, 672
Fed as hostage, 338–340, 375–376, 475, 477–479, 500
Fed assumption of control, 338–340
loss of checks/balances (summary), 477–479
monetizing government debt, 322
See also Stock market bubbles; specific events
Wall Street growth
bond market, 382, 383–384, 385–387
Federal Reserve ignoring problems, 393–394, 398–399, 400, 401–403
interest rates, 384, 385
“investment banking” houses (overview), 384–387
junk assets, 391–393, 400, 401–402, 403
LTCM bailout and, 390–392
M&A deals, 456, 462
mega-banks/mergers, 393–399
mergers false claims, 394–397, 462, 511
See also specific companies
Wall Street Journal, 307, 561
Wallace, Henry, 155
Walton family, 599, 600
Wanniski, Jude, 88
Warburg, James, 143
Warren, George F., 161, 162
Warsh, Kevin, 378–379
Washington
Mutual, 27
“Wealth effects” doctrine
Federal Reserve, 13–15, 20–21, 26, 211–212, 366, 374, 380, 393, 428, 463, 467, 477
US Main Street economy (after financial crisis) and, 631, 633, 634, 637, 649, 652–653
Wealth tax, 710–711, 712
Weill, Sanford
background, 306, 398
Citigroup, 394, 540
Melamed and, 306
Weinberger, Caspar
defense budget, 72, 80–83
welfare state, 219
Welch, Jack, 356–357, 468, 472
Wells Fargo, 393
Wesley Jessen, 568–569, 570
Western National, 9
White, Harry Dexter, 237
Whole Foods, 649, 650
Wigmore, Barrie A., 157–158
Williamhouse, 565, 566
Willis, Parker
crash of 1929 and, 345
Federal Reserve design, 176, 208, 209, 268
Wilson, Charles, 220
Woodin, William, 156, 161
Works Progress Administration (WPA), 163–166
WorldCom, 479–480, 481
WPA (Works Progress Administration), 163–166
Wright, Jim, 308–309
Yellen, Janet, 657, 658
Yeltsin, Boris, 71
ZIRP (zero-interest-rate policy), 369, 546, 585, 630, 643, 644, 657
ABOUT THE AUTHOR
© CARYL ENGLANDER
DAVID STOCKMAN was elected as a Michigan congressman in 1976 and joined the Reagan White House in 1981. Serving as budget director, he was one of the key architects of the Reagan Revolution plan to reduce taxes, cut spending, and shrink the role of government. He joined Salomon Brothers in 1985 and later became one of the early partners of the Blackstone Group. During nearly two decades at Blackstone and at a firm he founded, Stockman was a private equity investor. Stockman attended Michigan State University and Harvard Divinity School and then went to Washington as a congressional aide in 1970. He is also the author of the number one bestseller The Triumph of Politics.
PublicAffairs is a publishing house founded in 1997. It is a tribute to the standards, values, and flair of three persons who have served as mentors to countless reporters, writers, editors, and book people of all kinds, including me.
I.F.STONE, proprietor of I. F. Stone’s Weekly, combined a commitment to the First Amendment with entrepreneurial zeal and reporting skill and became one of the great independent journalists in American history. At the age of eighty, Izzy published The Trial of Socrates, which was a national bestseller. He wrote the book after he taught himself ancient Greek.
BENJAMIN C. BRADLEE was for nearly thirty years the charismatic editorial leader of The Washington Post. It was Ben who gave the Post the range and courage to pursue such historic issues as Watergate. He supported his reporters with a tenacity that made them fearless and it is no accident that so many became authors of influential, best-selling books.
ROBERT L. BERNSTEIN, the chief executive of Random House for more than a quarter century, guided one of the nation’s premier publishing houses. Bob was personally responsible for many books of political dissent and argument that challenged tyranny around the globe. He is also the founder and longtime chair of Human Rights Watch, one of the most respected human rights organizations in the world.
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