Thinking Through a Crisis
posted by Frank Pasquale
I’m trying to think through the larger lessons of the current economic turmoil. Though I can’t get to them immediately, these books are on the reading pile:
David A. Moss, When All Else Fails: Government as the Ultimate Risk Manager.
Frank Partnoy, Infectious Greed: How Deceit and Risk Corrupted the Financial Markets.
Robert Brenner, The Boom and the Bubble: The US in the World Economy.
Sheldon Wolin, Democracy Incorporated.
In the meantime, this interview with John Bogle is interesting, as is this with Gretchen Morgenstern.
Any other book/article recommendations from readers?
September 27, 2008 at 4:27 pm
Posted in: Economic Analysis of Law
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Responses (7)
Sarah Lawsky - September 27, 2008 at 8:04 pm
For historical perspective:
Larry Mitchell, The Speculation Economy
And for a close look at the details of how this sort of thing happens:
Mathew Padilla and Paul Muolo, Chain of Blame: How Wall Street Caused The Mortgage and Credit Crisis
Roger Lowenstein, When Genius Failed: The Rise and Fall of Long-Term Capital Management
A.J. Sutter - September 28, 2008 at 1:31 am
@@ Another book for details, which is also surpisingly entertaining, opinionated, and unafraid to consider big-picture issues, is:
Janet M. Tavakoli, Structured Finance and Collateralized Debt Obligations, 2d ed., in the Wiley Finance series. Tavakoli’s manuscript was finished around January of this year, publication was earlier this month. The book is directed to professional financial practitioners, but there is a lot of valuable information and commentary for generalists as well. A really outstanding book, and humorous to boot.
@@ Some excellent big-picture commentary has come from overseas. An editorial by Denis Olivennes in the 2008/09/25 issue of Nouvel Observateur, “Mort à crédit?” makes some very simple but apt observations about the American reliance on debt generally. (Title alludes to that of a novel by collaborationist author L.-F. Céline, usually translated as “Death on the Installment Plan”.) The cover story in the same issue also has a good big-picture view: “10 clés pour comprendre la crise” (”10 keys for understanding the crisis”), by economist Michel Aglietta. (I tried to embed links to these stories, but they may require subscription to access; my links didn’t work from this page. The print issue should be available at newsstands in US now or next week.)
Another interesting essay appeared last week on the website of German weekly Die Zeit, from former German foreign minister Joschka Fischer, “Sozialismus à la George W. Bush!”, which also points out the historical association of economic crises like the present one with war soon after.
@@ Finally, there seem to be a zillion French books distinguishing among various forms of capitalism, but one of the more recent ones is
La guerre des capitalismes aura lieu (”The War of Capitalisms Will Occur,” March 2008) by the Circle of Economists under the direction of J.-H. Lorenzi.
pds - September 28, 2008 at 2:27 am
i recommend the wolin book. The title may be off putting for most but its the work of one a serious world-class thinker.
Robert Hockett - September 28, 2008 at 3:27 pm
Three other works worth considering here: Bob Shiller’s new ‘The Subprime Solution’; Charles Morris’s ‘The Trillion Dollar Meltdown’; and Riccardo Rebonato’s ‘Plight of the Fortune Tellers.’
For more on FHA and its GSE siblings, the privatizaton of the latter of which have proximately caused our present mess, I’ll plug my own ‘A Jeffersonian Republic by Hamiltonian Means,’ available at http://ssrn.com/author=602726. Now that Fannie and Freddie have been re-federalized, I think they should be used to get us out of the mess that their ill-designed privatizations have got us into, per my proposal favorably noted by Neil this past Friday.
Regards all,
Robert H
A.J. Sutter - September 28, 2008 at 10:26 pm
I’d disagree about Shiller’s book. For one thing, there isn’t any serious discussion of derivatives. His attitude towards “financial innovation” is way too forgiving. And some of his proposals, such as government-subsidized financial advice, are freighted with ludicrously high expectations. E.g., he expects that financial advisers paid by the hour would have been able to foresee the subprime meltdown that, a couple pages earlier, he forgives Greenspan and Bernanke for not having been able to foresee. It’s a comforting book for those who want to think of the current times as a kind of road-bump in business as usual. Even ignoring that it would be hard to find the dough for some of his proposals in light of the bailout a/k/a workout plan devised after he finished his book, I don’t think Shiller’s suggestions will help to shift peoples’ thinking as radically as it ought to be shifted.
Morris’s book is a good, concise overview of the history of the subprime mess to late 2007/early 2008. But I think many of the views he expresses already sound a lot like Frank’s posts on various topics. Soros’s book, despite its many quirks and autobiographical point of view, actually has a couple of moments here and there that depart from conventional American categories for thinking about the problem.
Mike - September 29, 2008 at 7:43 pm
To put the question at the most general level, take a look at Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism. Klein describes how the Chicago School of Economics captured economic policy here and around the world.
Robert H - October 1, 2008 at 6:10 pm
One may certainly disagree with some of Shiller’s proposals – I do – but the book is nonetheless worth reading now. It’s a quick read and nevertheless has much good material on the real estate bubble, which Shiller has been warning about now for years. (The Case-Shiller index of house prices, the only such that exists, was developed in the main by Shiller himself.) Nor does Shiller give Greenspan or Bernanke a pass – quite the contrary. The financial counseling he advocates, moreover, is not at all extravegant and indeed is already offered by FHA. Indeed the principal fault that one might find with Shiller’s book is its proposing a new HOLC, when the original HOLC was phased out two years after its founding (it lasted 1933-35) precisely because FHA took over its functions. It still does that job for those who have not resorted to under-policed subprime mortgage loans offered by ’shadow bank’ originators like Countrywide.
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