A more timely book I can not think of. The mortgage world is in tatters, banks are falling in ever increasing numbers, and our flagship automotive industry is going cap in hand to the government begging for a bail out package.
Plunder makes for a very interesting read, it takes a long hard look at what led up to the current crisis, and maybe more importantly explores the actual people responsible, yes there are individuals that can be identified.
Danny explains that the entire fiasco has been fueled by greed at all levels of the financial and even to a certain extent government levels. Deregulation played a large hand in the house of cards, it provided the method that created the subprime lending environment.
So what is subprime lending? I have to admit that prior to reading Plunder I really did not know. Subprime is just a word, and one that I had assumed had some connection to prime lending rates, I was wrong. It actually has its roots in the credit worthiness of the borrower. By tailoring loans with a sliding scale of interest rates, and over valuing credit worthiness many more people could qualify for loans than using traditional methods. This sounds like a risky business, but not so said the banks, they made their money in the up front fees then sold the paper en mass to larger institutions as asset backed.
Many would say this was a Ponzi scheme, it could only survive as long as three conditions were met. The borrower kept on increasing his purchasing power, i.e. made more money to meet the increased debt load that he was incurring. Secondly, house prices continued to rise, which increased the equity of of property. And thirdly the economy continued to grow at a predictable rate. A problem in any one area would cause trouble, a problem in all three areas would spell disaster. Well, house prices started to drop, the economy slowed, and wage increases slowed.
To add further trouble food and fuel shortages led to a steep increase in price. Suddenly the entire fabric of our economic system is at risk. As foreclosures increased, the ‘asset backed’ notes that had buoyed Wall Street for a decade became a huge millstone.
Danny Schechter makes many salient observations, why didn’t the government act while there was still an opportunity to be proactive? Why didn’t the main stream media at least get the message out? Well the government had little interest in further eroding voter confidence, Iraq and 9/11 had already taken their toll, the economy seemed the one area where they could still strut their stuff. The media on the other hand had no reason to be the bearer of bad news, much of their revenue came from advertisements from companies selling subprime loans.
One of the most revealing aspects of Plunder is to be found in the preface section. Danny talks about the difficulty of finding a publisher. He is hardly a beginner in the media game, he has published a number of other books, has directed a number of documentaries, and has been active in TV for many years, yet he encountered great animosity over this particular book.
Plunder is well worth seeking out, Danny Schechter does a very good job of dissecting the current dilemma. he also is not shy about naming the actual culprits. You can pick up your copy from Amazon.
Author Resource:-
Simon Barrett is the senior editor for http://www.bloggernews.net and maintains a personal blog at http://zzsimonb.blogspot.com. Now semi retired in the depths of Mississippi he has plenty of time to read books by up and coming authors.
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