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Reporting on the Phantom Financial Economy

Accompanying Simon Johnson’s remarkable, must-read Atlantic article, “The Quiet Coup,” is this chart:johnson-chart.gif

What’s not noted here — or in most traditional media coverage of the meltdown — is something that everyone should understand. These profits were an illusion in the end. They existed just long enough, purely on paper but not in any long-term reality, to boost stock prices in these companies and to give executives the excuse to pay themselves extravagant salaries and bonuses and, if they were really smart, to unload their stock at high prices.

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