PBS's 2009 Document "The Warming"

Here is the first of six chapters in PBS's documentary The Warning which was first shown in October 2009.

Watch the full episode. See more FRONTLINE.

This is an excellent review of how major players like Alan Greenspan, Lawrence Summers, Robert Rubin, and Arthur Levitt blocked the attempt by Brooksley Born to regulate the derivatives market, a market that rose to $60 trillion and burst in 2008 to create The Great Recession. AIG went bust because it backed so many derivatives and had no cash to cover them when the bet went wrong. The whole mess was a prefect example of why the right wing mantra of "deregulate, deregulate, deregulate" was dangerous. It also showed that the economic philosophy, so-called rational choice, is a utopian academic construction with no real relevance in the real world. It is a fine theory with wonderful math and allows for elegant models, but it is useless -- worse, it is misleading -- when applied to the real world.

I like the past in Chapter 2 which first establishes that Alan Greenspan had no interest in regulating and believed there could be no fraud because Wall Street and the banks are "big boys" who can look after themselves and handle risk. But the documentary shows how even in the early 1990s this blew up with derivatives at Bankers Trust. Despite this, the Clinton and Bush administrations allowed the bubble to grow bigger and to demolish even more regulations in their push to "deregulate, deregulate, deregulate".

This PBS documentary does a marvelous job of walking through the various bits of evidence that things were out of control and the economy was heading for rocky shoals of 2008. Watch all six of the chapters the PBS documentary The Warning.