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Letter from American History - August 2010

By American History editors 
Originally published by American History magazine. Published Online: June 03, 2010 
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Wall Street Madness

"Let Wall Street have a nightmare and the whole country has to get them back in bed again," Will Rogers once joked. As the current recession unfolded, the U.S. government eased Wall Street's subprime mortgage nightmare by bailing out banks deemed too big to fail. The banks woke up to huge new profits and paid out record bonuses. No wonder Americans who are struggling to find jobs, deal with exorbitant credit card interest charges and live off shrinking 401(k)s are angry as hell. In this month's cover story, "Upside-Down Bailout," H.W. Brands ventures through a Wall Street rabbit hole to the 1890s, another period of hard times when Americans were angry as hell about crushing un-employment and a credit catastrophe brought on by rampant speculation on railroads and land. But in that crisis, the institution deemed too big to fail was the U.S. Treasury. And the bailout was funded by the undisputed king of Wall Street: J.P. Morgan. The story of how Morgan kept the Treasury from going bankrupt, but stirred up even more anger toward Wall Street in the process, is a paradoxical parable for our times.

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