After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead by Alan S. Blinder

After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead by Alan S. Blinder

PART I
IT HAPPENED HERE

1

WHAT’S A NICE ECONOMY LIKE YOU DOING
IN A PLACE LIKE THIS?
We came very, very close to a global financial meltdown.
—FEDERAL RESERVE CHAIRMAN BEN S. BERNANKE
Did anyone get the license plate of that truck?
That’s how many Americans felt after our financial system spun out of
control and ran over all of us—almost literally—in 2008. The U.S.
economy was crawling along that summer, with employment drifting down,
spending weakening, and the financial markets suffering through a gut-

wrenching series of ups and downs—mostly downs. The economy was
hardly in great shape but neither was it a disaster area. It wasn’t even clear
that we were headed for a recession, never mind the worst recession since
the 1930s. Then came the failure of Lehman Brothers, the now-notorious
Wall Street investment bank, on September 15, 2008, and everything fell
apart. Yes, the license plate of that truck read: L-E-H-M-A-N.
Most Americans were innocent bystanders who didn’t know where the
truck came from, why it was driven so recklessly, or why the financial
traffic cops didn’t protect us better. As time went by, shell shock gave way
to anger, and with good reason. A host of financial manipulations that
ordinary people did not understand, and in which they played no part, cost
millions of them their livelihoods and their homes, bankrupted many
businesses, destroyed trillions of dollars’ of wealth, brought the once-

mighty U.S. economy to its knees, and left all levels of government gasping
for tax revenue. If people felt as though they were mugged, it’s because
they were.
The financial “accidents” that took place between the summer of 2007
and the spring of 2009 had severe consequences, which Americans
experienced firsthand. But most citizens are baffled, and many are

After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead by Alan S. Blinder