This financial crisis brewed over decades of bad decisions, and, in Vanity Fair, economist Joseph Stiglitz makes sure credit is given where due:
- In 1987 President Reagan appointed anti-regulation Alan Greenspan to a regulatory post.
- Greenspan offered the markets a "flood of liquidity" that boosted inflation and caused two financial bubbles.
- The Glass-Steagall Act was repealed in 1999, allowing commercial banks to become high-risk borrowers.
- President Bush's tax cuts failed to bolster the economy, so the Fed lowered interest rates.
- Soaring oil prices forced the US to spend hundreds of billions, funded through loans.
- Accounting legislation ignored stock options, whose arbitrary value allows for balance sheets to be superficially inflated.
- Treasury Secretary Henry Paulson haphazardly bailed out companies this fall, and still hasn't "addressed the underlying reasons" for frozen credit.