Cover image for The financial crisis : who is to blame?
Title:
The financial crisis : who is to blame?
Personal Author:
Publication Information:
Cambridge, UK ; Malden, MA : Polity Press, c2010
Physical Description:
vi, 229 p. ; 23 cm.
ISBN:
9780745651637

9780745651644

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35000000002984 HB3717 D384 2010 Open Access Book Book
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30000010265186 HB3717 D384 2010 Open Access Book Book
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Summary

Summary

There is still no consensus on who or what caused the financial crisis which engulfed the world, beginning in the summer of 2007.

A huge number of suspects have been identified, from greedy investment bankers, through feckless borrowers, dilatory regulators and myopic central bankers to violent video games and high levels of testosterone among the denizens of trading floors. There is not even agreement on whether the crisis shows a need for more government intervention in markets, or less: some maintain that government encouragement of home ownership lay at the heart of the problem in the US, in particular.

In The Financial Crisis Howard Davies charts a course through these arguments, and the evidence advanced for each of them. The reader can thereby assess the weight to be attached to each, and the likely effectiveness of the remedies under development.


Author Notes

Sir Howard John Davies is the current Chairman of the Royal Bank of Scotland and the former Director of the London School of Economics. He also teaches courses on the regulation of financial markets and central banking at the Paris School of International Affairs at Sciences Po.


Reviews 1

Choice Review

"Get me a one-handed economist" was President Truman's plea, having tired of being told, "On the one hand, on the other hand" (OTOH, OTOH). Davies (director, London School of Economics, with a distinguished career in both the UK government and private sectors) conforms to the OTOH, OTOH model, but in a most positive way. In myriad brief chapters, Davies discusses the many conflicting views of the causes of the recent financial crisis. Were the low interest rates during 2003-04 a result of world economic conditions or an engineered US monetary policy? Were hedge funds and their short-selling significant contributors to the crisis? Did the unwieldy US regulatory structure, with diffused responsibility among various federal agencies, make a difference? Would the presence of the Volcker Rule, now enshrined in US financial regulation, have prevented the meltdown? How about US government-sponsored entities, mark-to-market accounting rules, and oversized Wall Street bonuses? And so on for 38 chapters. Davies's work will be of immense value to those who value inquisitiveness and an open mind, i.e., serious students, be they professionals or students. They will also benefit from the brief chapter-end bibliographies. This reviewer has already strongly recommended this book to his financial crises course undergraduate students. Summing Up: Highly recommended. Upper-division undergraduates through professionals. J. Prager New York University


Table of Contents

Introduction
A The Big Picture
1 Frankenstein's monster: The end of Laissez-faire capitalism
2 The rich get richer - the poor borrow
3 The savings glut - global imbalances
4 Too loose for too long - US monetary policy
B The Trigger
5 Minsky's Moment
6 The sub-prime collapse - a failure of government?
C The Failures of Regulation
7 A capital shortage
8 Procyclicality
9 The Canary in the Coal Mine: off-balance sheet vehicles
10 The taxi at the station: liquidity
11 The Blind Mind and The Elephant: US Regulation
12 SEC- RIP?
13 Financial Weapons of Mass Destruction: Derivatives
14 Federal Mortgage Regulation
15 Casino banking: the end of the Glass-Steagall Act
16 Too big to fail
17 Lighting the Touchpaper: Light touch regulation
18 There were three people in the marriage: UK regulation
19 Lack of Coordination
20 Paradise lost: offshore centres
D Accountants, auditors and rating agencies
21 Shoot the Messenger: fair value accounting
22 Tunnel Vision: the auditors
23 Conflicts of interest: credit rating agencies
E Financial Firms and Markets
24 Breaking the chain: originate to distribute
25 Too complex to trade: derivatives
26 Disaster Myopia: risk management
27 The Roach Motel: corporate governance
28 Blankfein's bonus: pay and incentives
29 The Vampire Squid
30 A plague of locusts: hedge funds
31 Short Selling
F Economics and Finance Theory
32 The death of economics
33 Inefficient markets
34 An ethics-free zone: business schools
G Wild Cards
35 The watchdog didn't bark: the media
36 Greed is bad
37 Lara Croft: video games
38 Hormones and Finally
39 A combustible mixture