Naked Capitalism is not for the fainthearted.

Over time, I’ve come to conceive of Naked Capitalism as an effort to promote critical thinking through the medium of a finance and economics blog. In December 2006, I started writing because there was an obvious underreporting in the US of the severity and extent of the underpricing of risk in all credit instruments. It didn’t take any great insight to recognize that. It’s hard to state emphatically enough how obvious it was to someone with reasonable financial markets experience who simply read the Financial Times and Bloomberg that the official narrative was a crock.

It was not hard to discern that the unprecedented “wall of liquidity” and the conviction among professionals that they could nevertheless make a safe exit when the time was right was going to end badly. But what was novel about the unwinding was that instead of ratcheting down over a period of years, like Japan after its real estate and stock market bubbles, the international financial markets suffered increasingly severe seizures, culminating in the upheaval of September and October 2008.

As a result of this crisis, the ambit of “finance and economics” has widened considerably. The dislocations of that cataclysm did not lead to fundamental reforms but instead to concerted efforts to restore status quo ante. That approach had entrenched the position of powerful and often predatory large international financial institutions and exacerbated income inequality via stealth bailouts to crippled firms, which have the side effect of perpetuating the use of asset bubbles to compensate for stagnant worker wages.

The meltdown also showed the high cost of the economic restructuring that began in the 1970s and accelerated in the Reagan/Thatcher era. Most people in advanced economies do not realize that we are in the midst of a finance-led counter-revolution. In parallel to the enclosure movement of the early capitalist era, which turned formerly self-supporting peasants into wage slaves, we are now in the midst of a large scale, concerted campaign to reduce the bargaining power and pay of ordinary workers relative to investors and elite technocrats. We believe this effort is not only detrimental to most citizens, but is ultimately destructive to the capitalists classes, since highly unequal societies produce worse outcomes on virtually all broad measures, such as crime rates, longevity, and educational attainment. Indeed, inequality exacts a cost in terms of the health of even the top cohort. But this cohort seems to define its self-interest in narrow economic terms.

With the help of a growing group of dedicated and skilled writers, we are chronicling this transition and doing what we can, in our small way, to fight it. That often takes the form of parsing propaganda, decomposing complex financial structures and legal agreements, and following the money to inform and educate readers about what is going on beneath the surface of major news stories. We regularly criticize government officials and their amplifiers in academia and the media, particularly those who promote policies that favor entrenched interests and the wealthy while pretending they are good or necessary for ordinary people.

With the help of an active and informed commentariat, we are shedding light on the dark and seamy corners of finance. We hope you’ll join us in this effort.