Of crucial importance once things even out is knowing the real history of what happened, writes Stiglitz, so that the right corrections can be worked out. History belongs to the victors--so that may affect what we get told, So this piece is important. Of course, this is one view, but from someone who has been pretty accurate so far.

What were the critical decisions that led to the crisis? Mistakes were made at every fork in the road—we had what engineers call a “system failure,” when not a single decision but a cascade of decisions produce a tragic result. Let’s look at five key moments.
....
No. 1: Firing the Chairman
In 1987 the Reagan administration decided to remove Paul Volcker as chairman of the Federal Reserve Board and appoint Alan Greenspan in his place.
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No. 2: Tearing Down the Walls
The deregulation philosophy would pay unwelcome dividends for years to come. In November 1999, Congress repealed the Glass-Steagall Act—the culmination of a $300 million lobbying effort by the banking and financial-services industries, and spearheaded in Congress by Senator Phil Gramm.
....
No. 3: Applying the Leeches
Then along came the Bush tax cuts, enacted first on June 7, 2001, with a follow-on installment two years later. The president and his advisers seemed to believe that tax cuts, especially for upper-income Americans and corporations, were a cure-all for any economic disease—the modern-day equivalent of leeches.
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No. 4: Faking the Numbers
Meanwhile, on July 30, 2002, in the wake of a series of major scandals—notably the collapse of WorldCom and Enron—Congress passed the Sarbanes-Oxley Act. The scandals had involved every major American accounting firm, most of our banks, and some of our premier companies, and made it clear that we had serious problems with our accounting system. Accounting is a sleep-inducing topic for most people, but if you can’t have faith in a company’s numbers, then you can’t have faith in anything about a company at all. Unfortunately, in the negotiations over what became Sarbanes-Oxley a decision was made not to deal with what many, including the respected former head of the S.E.C. Arthur Levitt, believed to be a fundamental underlying problem: stock options.
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No. 5: Letting It Bleed
The final turning point came with the passage of a bailout package on October 3, 2008—that is, with the administration’s response to the crisis itself. We will be feeling the consequences for years to come. Both the administration and the Fed had long been driven by wishful thinking, hoping that the bad news was just a blip, and that a return to growth was just around the corner.

Only two Vanity Fair screen pages, but dense with info.

Via Molly Ivors at Eschaton.

analysis and depressing in how clear it all seems now. I guess I'm selfish in saying, "I saw this coming", but, I'll say it anyway. How many of us wondered how the hell people were going to pay for things they acquired on credit w/out any cash flow? Probably all of us.

I'm hoping Stiglitz will write the article entitled "How we get out of this shitpile".

"wicked high interest rates"... are you from MA?

The corruption doesn't seem to be hereditary. Apparently, the two senior employees who tipped off the FBI were Madoff's sons:

The complaint did not name the two senior employees. But according to people familiar with the matter, they are Mr. Madoff's sons, Andrew and Mark. Mark Madoff is the firm's senior managing director and chief compliance officer. Andrew Madoff is its director of trading.

Santander reports euro2.33B exposure in Madoff case

Spain's Banco Santander, the euro zone's largest bank by market capitalization, said it has a total exposure of euro2.33 billion ($3.1 billion) to the alleged investment fraud by Bernard Madoff in the U.S.

A Santander fund called Optimal Strategic US Equity had commissioned Madoff to handle investments by some of its clients, the bank said in a statement late Sunday.

Santander said euro2.01 billion of the exposure through Optimal Strategic US Equity were investments by institutional investors and international private banking customers.

The remaining euro320 million, the large majority of which are structured products partially linked to the performance of Optimal Strategic, are part of the investment portfolios of Santander private banking customers in Spain.

Banco Santander said it has a position of euro17 million of its own money exposed to the alleged fraud.

...

They recently bought Sovereign Bank here, and own a bunch of UK banks too.

Madoff sold influence in Washington --

... The lobbying firm Dow Lohnes Government Strategies filed paperwork on Dec. 12, terminating its lobbying contract with Bernard L. Madoff Investment Securities. That ended more than 10 years of Madoff lobbying in Washington, in which his investment firm spent more than $400,000 to influence the federal government.

But lobbying is just a piece of Madoff’s influence in Washington. His family has contributed nearly $400,000 to political committees. And his niece, Shana Madoff Swanson, who serves as a compliance attorney at his firm, is married to a former high-ranking Securities and Exchange Commission official, Eric Swanson.

Swanson was the assistant director in the SEC’s Office of Compliance Inspections and Examinations’ market oversight unit in Washington. ...