Greed is good. At least for the upper 1%.

LAMBERT: And best yet for the upper .1%

Oh, I don't know...

I was working in the tangentally related real estate inductries in the 90's, and I recall vividly the lament that people with low income and / or poor credit couldn't afford homes. Not on the business side, mind you, but from the liberal activists. I imagine there was some complicitness between the activists and the bankers to loosen credit.

As far as these hedge funds and mortgage bundles go, I think this is a modern phenomena that regulation hasn't caught up to yet. Laws weren't deregulated to allow this to happen - no laws existed in the first place - but I'll stand corrected on that. Yes, they should be required to have capital requirements. Should they be bailed out? Probably not. I don't know where you would stand on that and yet maintain idealogical consistency.

Right wing radio - which I listen to and have a good ear for its quality or lack thereof - has been consistent and outspoken on this. Rush, Levin, Beck, Lewis - all belittle the economic stimulus package, and question the wisdom of bailing out Bear Stearns. Its the mainstream media thats been absent or not willing to accurately portray who is actually being foreclosed on because they want to dress this crisis in some sort of populist rhetoric.

LAMBERT: Well, I'm not the expert. But Greenberger's point in the Gross interview was precisely the opposite of what you are saying. There were regulations, and the Gramm bill -- authored by financial industry professionals -- stripped away several key safeguards. There were others, but his point was that one opened the flood gates.

As for "complicitness" between lefty activists and the average banker/mortgage broker ... what was the last time those two bowled together?

I refreshed my memory of the 1999 act. You heard the Gross interview and I didn't, but I'd be personally be hard pressed to link the act with the current crisis. You mentioned the privacy aspects. The other largest change was probably to allow financial institutions of various types to merge with each other.

LAMBERT: Listen to the interview. Fairly typical for a 262-page bill, the devil(s) were in the details.

I just read the Frontline chromology - which is outstanding as far as that goes. It centers on Weill and Citi but basically details a 40 plus year effort to loosen and then repeal Glass-Steagall. So, whether this was shoehorned into an omnibus bill or not, I'd hardly characterize the effort as a surreptitious effort done under the cover of night. And I remember it well for the big deal it was at the time, Citi merging with Travellers, the whole cult of Sandy Weill.

LAMBERT: You again? Is it a slow day at 108 World Headquarters? "Surreptitious" and "under the cover of night"? No. Right there in the open was a gigantic, numbingly complicated piece of legislation authored by the industry that knew pretty much exactly what it wanted to do with its new freedoms. Anyone could read it -- if they had the time, the inclination and the grasp of the jargon.

I'll listen to the interview.

What I'm looking for, and whats been absent from the mainstream journalists, is the history of these terrible mortgage products. How and why they were invented, and who they were supposed to serve.

LAMBERT: Well, your last question is what interests me.

Then why don't you ask some of your "mainstream" reporter friends why their media employers won't touch it?

LAMBERT: The few I've talked to don't know much about it.

I am a step or two (or three) behind you in understanding this stuff. And I am going to listen to that Terry Gross interview. But this piece by Paul Solman on PBS at least helped me understand a bit about the basics. Nothing about the Modernization Act but at least some background on some of the players. Here's the link to Solman: http://pbs-newshour.onstreammedia.com/cgi-bin/visearch?user=pbs-newshour&template=template.html&query=solman&keywords=solman&category=blank&submit.x=57&submit.y=13

LAMBERT: Thanks.

The only media outlet that I have seen cover this well is the Wall Street Journal. Yes, they lean right on the editorial page, but the rest of the reporting has been solid.

Today they highlighted how the ratings firms have essentially been bought out and lost their neutrality. How else were subprime mortgages being bundled into AAA rated financial instruments? That failure was outside of the federal legislative changes.

I agree that the reporting has been terrible otherwise. The Strib has gone to showing sad stories of people losing their homes (same people who treated their homes like ATMs). I don't think the Strib has enough talented people left to tackle a story of this depth. On the other side, the banks were tripping over themselves to give anyone 100% financing for homes, almost like feeding crack to an addict.

Real Estate is a big advertiser with the Strib, right up their with car dealers. Do they have the guts to go after the mortgage companies, real estate agents, bankers, etc?

And where was the Fed through this? Greenspan should have seen this coming and should have pulled currency out of the markets. He also should have added more oversight to the markets. Now he Fed is throwing more money to save the companies that created the mess.

My ultimate anger is at the executives that killed companies by taking stupid risks for little reward. For examples locally see Moneygram and ResCap.

LAMBERT: Again, I'm not going to pretend to be an expert here. But the "financial products" for kiting debt back and forth like a casino wasn't discovered laying on a sidewalk in front of Bear, Stearns. They were created by smart people with a great deal of expertise in how the market and D.C. works. I would like to know more about them.

I finally had a chance to listen to the Fresh Air piece. What struck me as noteworthy is Greenberger's belief that the mortgage meltdown and the Bear Stearns bailout are only the tip of the recession/depression iceberg. In fact, it may have been the only time I've heard a learned commentator actually use the dreaded D word.

My listen coincided with a conversation I had with a conservative friend who likes to describe himself as a believer in the free market. What's the theory, I keep asking myself, that if capitalism is allowed to proceed without regulation and restraint, that we all somehow live better lives? That's nice in theory, I guess, but today's robber barons on Wall Street make John D. Rockefeller look like Desmond Tutu. I'm guessing that it will take another Great or near-Great Depression to again learn the lesson that an unregulated investment environment in which everyone thinks they can strike it rich is never more than a house of cards. Shame on Congress and the 'regulators' for putting the country in this precarious position once again.

LAMBERT: And point of aggressive, finger-pointing journalism is to provide the history that we at least have a chance of learning from.

I'm sure the bloggers are all over this one.

LAMBERT: Not as much as I'd like.

For another take on the prospect of a global recession, you may want to listen to last Friday's "To The Point" from KCRW in Los Angeles, a daily interview show that is the equal of Fresh Air with fewer overtones of marijuana being smoked in the background.

LAMBERT: Less pothead meandering out of LA? Man, things have changed.

I am fairly conversant with finance and economic matters, and I agree that the media generally does a poor job of explaining the economic problems. However, the best explanation I have encountered this past year was also an NPR program - This American Life - in an episode entitled "The Giant Pool of Money", which recently won a Peabody Award. It makes these difficult subject matters fairly understandable. If you go to the show website you can listen to the program (streaming) or download a PDF transcript. I recommend doing both. The 3 subsequent episodes on this web page are also well worth listening to.

http://www.thislife.org/Economy.aspx

LAMBERT: This is excellent. i also highly recommend Terry Gross's conversation with Michael Greenberger: http://www.npr.org/templates/story/story.php?storyId=94686428