The Crash of 1929: Are We on the Verge of a Repeat?

[A senior adviser to President Bush] said that guys like me were ''in what we call the reality-based community,'' which he defined as people who ''believe that solutions emerge from your judicious study of discernible reality.'' I nodded and murmured something about enlightenment principles and empiricism. He cut me off. ''That's not the way the world really works anymore,'' he continued. ''We're an empire now, and when we act, we create our own reality. And while you're studying that reality -- judiciously, as you will -- we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors ... and you, all of you, will be left to just study what we do.'' -- Ron Suskind, "Without a Doubt," New York Times

The hypermarket beckons

News flash: The American economy is a hyperreality engineered by Ph.D.s working hand-in-hand with colluding media multinationals, political officials and some of the biggest names in business -- and the banks that invest in them. In other news, greed is still good.

Of course, the idea that Wall Street is corrupt is as old as Wall Street itself. After all, the immortal "Greed is good" aphorism was muttered by a white-collar criminal in the 1987 movie named after Wall Street, which was directed by a guy, Oliver Stone, who made his name in postmodern cinema and political agitation. In fact, a film of the same name came out in 1929, the year of the stock market crash. And so the narrative replicates.

Speaking of replicants, Oliver Stone is a man who tackled not only labyrinthine presidential conspiracies in the 1991 film JFK but also the numb pathos of 9/11 in last year's World Trade Center. Indeed, Wall Street indirectly tackled the junk bond and insider trading economic screw-jobs that riddled the '80s like so many overpriced, overly puffy hairdos. Stone envisioned the film as Crime and Punishment on Wall Street, which was only partially fitting for the time because there was a ton of crime and very little punishment.

And the more things have changed, the more they have stayed the same. Indeed, only the nomenclature has been altered. Instead of junk bonds and insider trading, we have hedge funds and private equity takeovers. And instead of Gordon Gekko and Wall Street, we have Fox News mogul Rupert Murdoch and, soon, the Wall Street Journal.

In the 1980s, guys like Michael Milken and Ivan Boesky -- who anticipated the "Greed is good" phrase with a 1986 commencement speech at Berkeley in which he stated, "Greed is all right. ... I think greed is healthy" -- were riding high on schemes that failed. Both served as inspirations for Stone's Wall Street scumbag Gordon Gekko, but both got off with a few years in prison and a few hundred million dollars lost. Milken shaved a 10-year sentence down to two, and in 2007, still had a net worth of about $2 billion. Roll the happy ending.

But the hyperreality does not end there, and by hyperreality I mean simply a reality that exists outside the one you live in, whoever you are. It can come in many forms. Film is one such simulation, network and cable news is another, and our two-party political machine, as Ron Suskind explains in the quote at the top of this article, is a finer-tuned one still. But they all collide and collude in the social space of Wall Street and its various markets, on the internet and on the trading floors of the New York Stock Exchange and onward.

Take Milken's favored high-yield junk bonds, for example, which are basically bonds that are rated below investment grade by ratings organizations like Standard and Poor's or Moody's and therefore subject to not only a much higher risk of default or other cash-sucking crashes but also higher paydays if you can make them work. To do that, you need a little help from your friends and unsuspecting investors, which is why Boesky and Milken went to jail for suckering friends and strangers into dense schemes that went nowhere.