Ten Cent Econ
An Econ Instructor's Guide to the 2008 Financial Crisis

I have developed this page as a resource and guide for my Lane Community College Economics students. My intention is to provide links to internet based media which provide reliable and clear explanations of the crisis. There is little on this page that is my own analysis. Rather my intent is to highlight some of the clearest presentations of the issues as a guide to aid students in understanding these complex issues. Much of the material presented here may be copyrighted, however, it all falls with in Fair Use guidelines. I have tried to identify sources for all copyrighted material.


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Background Information







Online radio, video, article, and blog links:

October 29, 2010


October, 2009
The Warning, Frontline, PBS, October 20, 2009. Excellent video documentary on the deregulation of the derivatives market, the collapse and bailout of Long-Term Capital Management, the precursor of the 2008 fiancial collapse. Online video approx. 60 minutes; podcast 23 minutes. Multiple valuable links including a timeline of de-regulation and financial crisis from 1987 to 2009.

Andrew Sorkin's 'Inside Story' On Financial Collapse, Fresh Air, NPR, October 20, 2009. Financial journalist Andrew Ross Sorkin talks with Fresh Air host Terry Gross about his investigation into what really happened one year ago, during the financial collapse and bailout. Podcast 40 minutes.

September 28, 2009
April 13 - April 26
Fighting America's Financial Oligarchy, Simon Johnson, Fresh Air, NPR radio podcast 45 minutes.


March 30 - April 12, 2009
Recession Economics 101, Interview of Mark Thoma & Tim Duy, UO professors, KLCC, radio podcast approx. 1 hour. Excellent intro. level summary. When you go on to the UO take these professors.

March 15 - 29, 2009

Anatomy of a Bank Takeover, All Things Considered, NPR, March 26, 2009 Radio podcast 13 minutes. Brilliant explanation, if you have any confusion this will clear up the issue of nationalization. You may want to read the entry in the Economics Primer section or follow-up with other links to nationalization below.
Frank Partnoy: Derivative Dangers, Fresh Air, NPR, March 25, 2009 Radio podcast, 40 minutes. Frank Partnoy is a professor at the University of San Diego Law School. In his 1997 book FIASCO: Blood in the Water on Wall Street, Partnoy detailed how derivatives — financial instruments whose value is determined by another security — were being used and abused by big financial firms. Partnoy used his experiences as a derivatives trader at Morgan Stanley to give the book an insider's perspective.In addition to FIASCO, he's the author of Infectious Greed: How Deceit and Risk Corrupted the Financial Markets.
Crisis Predicted by Repeal of Glass-Seagall in 1999.  A must read of another prediction of the crisis as reported in the NYT, November 5, 1999:

The opponents of the measure gloomily predicted that by unshackling banks and enabling them to move more freely into new kinds of financial activities, the new law could lead to an economic crisis down the road when the marketplace is no longer growing briskly.

''I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010,'' said Senator Byron L. Dorgan, Democrat of North Dakota.


       Scrutinizing AIG Spending, Fresh Air, NPR, March 16, 2009 Radio podcast, 43 minutes.


March 1- 14, 2009

February 22 - 28, 2009
Bad Bank, Adam Davidson, Alex Blumberg, Ira Glass, This American Life, February 27, 2009 Radio podcast, 59 minutes. The collapse of the banking system explained.
February 15-21, 2009
Volcker: Crisis May Be Even Worse than Depression, CNBC, Rueters, February 20, 2009  Paul Volcker, former FED Chairman (1979-87) appointed by Pres. Carter and Pres. Reagan and current advisor to Pres. Obama, states concern about the rapid rate of decline in the US economy as well as its spread internationally. He also states that there is no inherent benefit of "financial innovation", the ability of investment banks and financial institutions to develop new and complex products such as credit default swaps and derivatives. States one of the sources of the crisis is the slow response of policymakers to regulate  the  global financial markets.




Inside the Meldown, Frontline, PBS February, 16, 2009  Frightening summary of the collapse of U.S. banks starting with losses in sub-prime mortgages in the Summer of 2007 leading to the collapse of Bear Sterans in March 2007, followed by Fannie and Freddie Mac, Lehman Bros, the world's largest insurance company AIG and culminating in the passage of TARP in October 2008. Captures the frenzy and unpreparedness of the FED (Bernanke and Geithner) and especially the US Treasury (Paulson). Excellent supporting pages provide a Timeline and transcripts of interviews.
 

February 1 - 7, 2009



Act Fast Or Else - What we should nationalize troubled banks sooner rather than later, Newsweek, February 6, 2008  Probably the best, quickest way to clean up the banking industry. The government provides capital to salvageable banks by buying shares, dismisses failed executives, appoints new executives committed to reviving the bank and the market. Unsalvageable banks are dissolved shareholders and investors lose. Creditors are partially or wholly protected. Valuable assets of the banks are sold off. Taxpayers are paid off first. Once banks recover the government sells its shares in the private market for a modest profit. Taxpayers are protected. The problem: is it politically viable given the hysterical reaction to "nationalization" or "socialization"?
Playing Politics When the Economy Burns, Robert Reich, February 5, 2009 Excellent explanation as to why government spending stimulates the economy and tax cuts do not. It sounds partisan but it is straight from Intro. to Macro. texts.


January, 2009
Drastic Times, The Economist, Jan. 8, 2009.
Summary of a study of the average declines in 19 major financial crises. The study was presented at the American Economic Association's annual meeting January 3, 2009. The article also summarizes the perspectives of the "major hitters" in American economics, all of whom concur that major long term decline will occur. Almost all support a major stimulus package.

Stimulus Plan: The need and the size, Robert Reich, January 6, 2009
Excellent summary of the Keynesian argument for a large, quick stimulus ($900billion by his estimate). Reich is the former economic advisor and Secretary of Labor under Pres. Clinton.


December, 2008



November, 2008
What went wrong inside the major investment banks (Solomon Brothers, Goldman Sachs, Lehman Brothers, et cetera) and the credit rating agencies (Moody's, Standard and Poore) that contributed to the collapse of the derivatives market, from the perspective of inside traderswho were both critical of the industry's operations and predicted the collapse. This can be a tedious read, but is fascinating, funny, infuriating and very enlightening.


October, 2008


Radio podcast, 57 minutes.

September, 2008




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