Atrios suggests you dust off some Galbraith, which I'm always happy to agree with. But I'd also recommend Roger Lowenstein's When Genius Failed
, which examines the 1998 collapse of Long-Term Capital Management. The issues there are similar enough that it provides a good vantage point on the current election. Both the financial side, and the magnitude of the idiocy. In the opening scene, the New York Federal Reserve calls an emergency meeting of investment bank CEOs in the hopes of forcing one or more to bail out LTCM. The concern is that LTCM is so heavily leveraged that their collapse could bring down Wall Street. "This one obscure arbitrage fund had amassed an amazing $100 billion in assets virtually all of it borrow -- borrowed, that is, from the bankers around [the] table," writes Lowenstein. "As monstrous as this indebtedness was, it was by no means the worst of Long-Term's problems. The fund had entered into thousands of derivatives contracts, which had endlessly intertwined it with every bank on Wall Street...If Long-Term defaulted, all of the banks in the room would be eft holding one side of a contract for which the other side no longer existed. In other words, they would be exposed to tremendous, and untenable, risks. Undoubtedly, there would be a frenzy as every bank rushed to escape its now one-sided obligations and tried to sell its collateral from Long-Term."Sound familiar? Oh, and the key players in the scene, the responsible lenders who would never get involved in the chicanery of this reckless hedge fund? Among others, Merrill Lynch, Lehman Brothers, and Bear Stearns. They saw this happen merely a decade ago. But then, it was only one reckless hedge fund. 10 years later, it's every bank in the room. 
