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Non-Fiction > Review - An Empire of Wealth

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Lee Holz An Empire of Wealth An Empire of Wealth by John Gordon

An Empire of Wealth is a comprehensive but highly readable economic history of the United States from the colonial era through 2001. Its highlight is the penetrating yet balanced and fair analysis of the effects of government policies over that period of time both successes and failures.
It’s too bad the book couldn’t cover the last eleven years. We’ve had the bursting of the real estate bubble created by the federal government’s inane subsidizing of home ownership through the tax code and such misguided fiascos as Fannie Mae and Freddie Mac. These errors were compounded, abetted and encouraged by Greenspan’s insane deregulation of the financial markets and financial institutions. The latter, facilitated by the mindless and innately corrupt rating agencies, resulted in the mindboggling leveraging of the capital of financial firms and institutions by means of an alphabet soup of new “products” (CBOs, MBSs, CDSs, etc.). This leverage in the form of a cornucopia of “derivatives” (unsecured, unregulated “securitized” instruments, most rated AAA, that no one understood) fueled by greed and a complete disregard of any sense of fiduciary duty turned an inevitable correction in real estate prices and housing construction into the Great Recession. A descent into total economic chaos of unimaginable dimensions was narrowly averted by the quick and courageous actions of Presidents Bush and Obama, the new fed chairman Bernanke and new Treasury Secretary Geithner and the acquiescence of a stupefied and fearful Congress (that now criticizes the rescue).
Now we teeter along the edge of the abyss faced with the mother of all bubbles: the nearly unmanageable sovereign debt of Europe and the United States. One almost despairs because one political party can’t stop spending on counterproductive regulations and initiatives and the other is determined to repeat the errors of the Great Depression. Neither is willing to address the problem of entitlements in a reasonable or constructive way (both have rejected Simpson-Bowls). One wonders whether democracy will survive the inevitable economic implosion. Let’s hope John Steele Gordon is around to write another excellent book about it.


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