Many of us were shocked when Wall Street collapsed faster than futures in pager sales.

Steve Fraser certainly wasn't.

The 63-year-old historian—who's speaking Wednesday, April 15, in Portland—is the author (most recently) of Wall Street: America's Dream Palace. His 2008 book ably draws on past financial collapses to sum up Wall Street as the "land of financial wilding," where "today's confidence man is tomorrow's financial seer, a boulevard of endless opportunity and endemic disaster."

And now that Americans and our 401(k)s are immersed in the "disaster" part of the equation (Oregon's unemployment rate hit a record 12.1 percent in March), WW asked Fraser how the hell we got here, whether we'll ever get out, and how he's doing with his investments.

WW: How do you explain to a financial idiot like me what's happened with Wall Street?

Steve Fraser: The funny thing is, not only do you not understand it, not only do I not understand it, but the guys who designed the system don't understand it. What's happened the last year and a half is the consequence of what's happened over the last quarter-century. You have a financial system, less and less regulated by public authority, engaging in reckless, arcane, hard-to-decipher forms of investment.

How'd that happen?

The institutions trading these securities were not being watched. This was not accidental. There were deliberate decisions to deregulate the marketplace beginning really in the Reagan years but continuing through the Clinton administration. It's more global and intricate than anything that preceded it. But in some ways, it's not unlike the kind of crisis that gripped our country and world in the 1930s.

Is it human nature that this is happening?

I don't [think so]. We had the Great Crash of 1929, and we as a nation reacted with institutions that tried to control that tendency to engage in reckless and even criminal speculation. And it worked. We went through a long period from World War II to the junk-bond era of the '80s with no great panics and big busts. That's not an accident. But we wanted to free up the market because the "market knows best." And so we dismantled all this stuff. And we deregulated this industry and that one. And then we got a recurring series of crises.… Maybe there's larceny in the human heart. But we can as a society control it. Or we can turn a blind eye. And I think that's what happened.

Why'd President Clinton and the Democrats go along with that shift in the '90s?

The Democrats had suffered ideological defeat with the Reagan revolution. Central to that was "let's dismantle big government" and "the free market is our champion." The Democrats increasingly began to tailor their own politics to get elected in a country that had come to have an almost unchallenged faith in the free market and had become quite hostile to big government. It's Clinton himself who says, "The era of big government is over."

How much is President Obama a departure from that philosophy?

That's a tale yet to be told. On one hand his budget hearkens back to an activist government. On the other hand, the bailout plan is essentially a continuation of something that started under Bush. And the people he appointed to preside over that are part of the old Clinton, Republican-lite, market-friendly persuasion. A lot will depend on the country. Obama reacted to growing popular anger over the bailouts. And the anger is reasonable and righteous.

Why has no populist leader emerged to ride that wave of anger?

That's the $64,000 question. If you looked at our country in 1932, flat on its back, 25 percent unemployment…you would see virtually no sign of populist discontent. But by 1934 you would have seen it all over the country. My answer to that question is, be patient.

When will the economy recover?

If the government plays a more activist role, a bigger stimulus role, nationalizing the banks…maybe three, four, five years. But that requires the political will. That's what happened in the 1930s. The New Deal became more adventurous.

Do you have investments in the market?

Just passively. I have a 401(k). I don't watch it. I don't want to look at it.


Steve Fraser will speak at First Congregational Church, 1126 SW Park Ave., as part of the 2009 Illahee Lecture Series. 7:30 pm Wednesday, April 15. $19. Call 222-2719 or visit for details.