On October 3, This American Life ran a piece on the financial meltdown and the bailout bill. It’s been getting some good press, and for good reason. I highly recommend it; I’ve been trying to follow the whole mess at it’s developed, and this is really the most lucid explanation of some difficult (and scary) concepts I’ve come across. Download it from the TAL site, or find it at the iTunes Music Store. You’ll learn something; I certainly did. You might even be able to explain it to your friends.
Alex Blumberg and NPR’s Adam Davidsonâ€”the two guys who reported our Giant Pool of Money episodeâ€”are back, in collaboration with the Planet Money podcast. They’ll explain what happened this week, including what regulators could’ve done to prevent this financial crisis from happening in the first place. You can learn more about the daily ins and outs and join the discussion on the Planet Money blog.
Host Ira Glass goes to Union Square, a 15-minute subway ride from Wall Street, where it doesn’t look like we’re on the edge of an economic abyss. (3 minutes)
Act One. The Day the Market Died.
Alex Blumberg and Adam Davidson recount the 36-hour period, two weeks ago, when the credit markets froze. Plus, what itâ€™s like now for businesses to get short-term loans, and how the hardship is spreading to every sector of the economy. (16 minutes)
Act Two. Out of the Hedges and Into the Woods.
One more confusing financial product thatâ€™s bringing down the global economy. And one of way to think about this product is this: If bad mortgages got the financial system sick, this next thing youâ€™re about to hear about, helped spread the sickness into an epidemic. These are “credit default swaps.” Alex explains. (19 minutes)
Act Three. Swap Cops.
Ira talks with Michael Greenberger, a former commodities regulator, who tells the story of when it was decided not to regulate credit default swaps. And how that decision was emblematic of the way we didnâ€™t regulate a lot of the toxic financial products weâ€™re hearing about now. (8 minutes)
Song: “Bankrupt on Selling,” Modest Mouse
Act Four. What’s Next?
Ira and Adam answer the question: Was the $700 billion bailout bill signed into law today a good idea or a bad one? (10 minutes)