Capital Offense: How Washington's Wise Men Turned America's Future Over to Wall Street - Hardcover

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MICHAEL HIRSH is Newsweek's National Economics Correspondent. He has covered international affairs for more than two decades, from several continents, and now writes an online column entitled "The World from Washington." His 2003 cover story, "Bush's $87 Billion Mess," was one of three that earned Newsweek the 2004 National Magazine Award for General Excellence.

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Advance Praise for Capital Offense

"To understand the slow, steady shift of power from Washington to Wall Street, you have to connect the dots year by year, across decades. For that you need a seasoned veteran like Mike Hirsh, who has used deep sourcing, a long memory, and his razor-sharp critical sensibilities to show how the tide slowly turned from public good to private gain. In this amazing book, Hirsh shows definitively how Wall Street won and America lost."
Ron Suskind, author of The Way of the World

"In this brilliantly crafted narrative, Hirsh pins the financial crisis on the hubris of key economic policymakers in Washington who, through a mix of training, background, and philosophy, allowed themselves to be persuaded that the less regulation of Wall Street, the better. Balanced? Not necessarily. Fascinating? Definitely."
Kenneth Rogoff, coauthor of This Time Is Different

"In this riveting narrative, Michael Hirsh shows how the road to the Great Recession of 2008 2010 was paved with mistaken assumptions, sleepy regulators, hubris, misplaced faith in markets and that we may be headed down the same road again. Hirsh is masterful at weaving economics, politics, and personalities into a great story that illuminates how we got here and how we must act to avoid the next crisis."
Steve Weisman, author of The Great Tax Wars

"A vivid, insider account of how elite policymakers became intellectual hostages to free market fundamentalism and set about giving Wall Street the keys to the global economy. Michael Hirsh draws on firsthand knowledge of Washington's elite to describe the ideological and personality struggles that gave 'free market' fundamentalism a Stalinist stranglehold over policy. A deft account of how men who should have known better wrecked the economy."
Yves Smith, author of ECONned

"This is a fascinating inside account of the political dynamics and personalities of the crew who wrecked the economy. Remarkably, as Capital Offense points out, the same group is still calling the shots today, which makes people very concerned."
Dean Baker, author of False Profits

Aus dem Klappentext

For the last thirty years, it has been the mantra of Washington, Wall Street, and economic academia: The fastest way to economic growth is to make financial markets happy. The few economists and government watchdogs who took exception to this theory or pointed out some of the dangerous trends that accompanied it were either castigated, dismissed as cranks, or ignored. How could this happen? How could five successive presidents from both parties pursue and expand an economic policy that hollowed out the American economy and produced the worst economic catastrophe since 1929?

In Capital Offense, Newsweek's Michael Hirsh takes you inside the lives of the key people who gave us this era of free-market finance, beginning with its creator and earliest promoter, economist Milton Friedman, and its adoption by the conservative movement. He explores Friedman's vast influence on the Reagan administration, where his theories first became government policy (known as Reaganomics and Supply Side economics), and follows its continuation through the first and second Bush administrations, with the Clinton era sandwiched in between. In addition, he explains why this disaster-inducing ideology is still alive and well under President Barack Obama.

Hirsh takes you inside high-level, closed-door conversations of top White House advisors and administration officials such as Alan Greenspan, Robert Rubin, Paul O'Neill, and others. He illuminates key figures and lively interpersonal clashes, including the fierce and ongoing conflict between Larry Summers and Nobel Prize winning economist Joe Stiglitz, a staunch opponent of free-market theory. He also offers crucial insights on why President Obama took so long to work on the economy and why his policies, while far better than nothing, may not be nearly enough to sustain a long-term recovery.

This solidly researched and skillfully reported exposé catalogs the missteps of three decades of fiscal, regulatory, and financial recklessness, including the dismantling of the Glass-Steagall Act, the S&L debacle, Enron, and the subprime mortgage meltdown. It also explains why the Clinton administration failed to heed the warning sounded by the Asian financial crisis of 1998 and why then Treasury Secretary Rubin dismissed a very explicit warning about the dangers of a new type of financial instrument known as derivatives.

As we struggle to emerge from the financial crisis, Wall Street's continued dominance of the global economy remains a significant barrier to recovery, and America's reemergence as a major manufacturing and industrial power seems ever more unlikely. Capital Offense combines a clear and insightful account of how we reached this point with thoughtful suggestions of what can be done to change course.