Joe Nocera on the Crisis and All the Devils Are Here

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4.7 • 4.3K Ratings

🗓️ 20 December 2010

⏱️ 61 minutes

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Summary

Joe Nocera, New York Times columnist and co-author with Bethany McLean of All the Devils Are Here, talks with EconTalk host Russ Roberts about the origins of the financial crisis. Drawing on his book, Nocera identifies many people he considers devils for contributing to the crisis and a few angels who tried but failed to stop it. The discussion covers the history and development of securitization and the peculiar incentives created by securitization and the relative lack of regulation of the securitization process. The conversation also includes a discussion of whether past bailouts contributed to the crisis.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	another information related to today's conversation. Our email address is mailadicontalk.org. We'd
0:33.6	love to hear from you.
0:36.7	Today is December 13, 2010, and my guest is Joe Noceira, New York Times columnist, and co-author
0:45.9	with Bethany McClain of all the Devils are here, the Hidden History of the Financial Crisis.
0:51.8	Joe, welcome to Econ Talk.
0:53.6	Thanks for having me, Russ.
0:55.1	Why did you call the book The Hidden History of the Financial Crisis? What do you reveal here
0:59.4	that you think is important for understanding what's what happened?
1:03.2	Well, I guess the way we were thinking about it is the following. In the wake of the crisis,
1:14.1	most of the journalism and early literature really focused on the event surrounding the
1:22.6	beginning of the Bear Stearns collapse following through those hairy weeks in September when
1:30.1	it looked like the financial world was about to come to an end. We thought that the second
1:36.8	draft of journalism should go back further and go a little deeper in terms of trying
1:42.7	to understand where all this stuff came from. What was the evolution that led us to collateralized
1:52.0	debt obligations, synthetic CDOs? How is the rubble of likes of which the country has
2:00.8	rarely seen? The growth of a subprime industry that was largely out of control and so on and
2:06.5	so forth. Rather than simply taking a starting point that these elements all existed and then
2:15.0	suddenly out of nowhere, it all blew up.
2:19.8	I want to say I think that's a very fair characterization of the book as the non-author of the book.
	...

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