Items related to Debt Spiral
Debt Spiral is the only book you need to understand the financial crisis of 2007-2009. Excessive debt and its twin, excessive financial leverage, were the culprits, but that is a superficial answer. What caused the excessive debt and leverage is the story. It is a story that goes back to laws enacted in the Depression and progresses through seven decades of public policies that meant to do right but ended up setting the stage for the most recent financial crisis. Macroeconomic imbalances, including federal budget deficits and adverse trade flows set the stage. Federal Reserve Board policies pumped up the boom. Complex financial instruments backed by subprime loans helped to create a housing bubble. The rating agencies turned the switch on the whole shebang. When the bad loans came to light, the public and institutions quickly lost confidence in overleveraged banks, and the financial world ground to a halt.
"synopsis" may belong to another edition of this title.
About the Author:
Martin Lowy, author of High Rollers: Inside the S&L Debacle, a New York Times Notable Book of the Year, and three other books, has studied banks and bank regulation for four decades. Originally a practicing corporate and banking lawyer, he became a banker, author, and high-tech entrepreneur. As a lawyer, he represented banks and regulators, as well as corporations and a an international accounting firm. This extensive and varied background gives him a unique perspective on what made the crisis of 2007 through 2009 so severe. He is a graduate of Amherst College and Yale Law School.
Review:
Few thought it would ever happen again, but it has: a financial crisis so large and deep that it nearly brought the world economy to its knees. Since late 2007, the U.S. and global economies have suffered their largest downturns since the Great Depression, with bleak prospects for a rapid recovery.
How could something like this have happened? Wasn t our financial system supposed to be the most sophisticated in the world? Weren t we told that our banks were as well capitalized as they had been in a long time? Weren t the various automatic stabilizers and shock absorbers introduced since the Depression deposit insurance, social security, unemployment insurance, Medicare and Medicaid supposed to keep our economy from ever free-falling again?
Yes, yes, and yes but none of these facts were able to prevent the financial crisis and Great Recession of 2007-09. By now, if course, it is widely recognized that the rapid development and growth of the subprime mortgage market, and the widespread expectation of ever-rising residential real estate prices which it fueled, provided the spark for a major financial explosion when real estate prices in fact quit rising in late 2006. But the financial conflagration that followed would not have been possible without an extraordinary increase in credit, and thus leverage, throughout the financial system. As a result, when losses from securities backed by subprime debt began to mount, too many financial institutions banks included had too little capital to absorb the pain. National firefighters throughout the developed world, central banks, had to step in with unprecedented amounts of financial water cash to keep the financial firestorm from consuming the world economy.
If we are to have any chance of avoiding something like what has just happened from repeating, then we must first understand why why the subprime mortgage got out of control and why Americans and their financial institutions became too highly leveraged.
Martin Lowy comes to the task of providing answers with impressive credentials and much experience. For over 40 years he has studied and written about the nation s financial system, while providing legal counsel to many financial institutions. He has seen too many financial failures up close and personal. He never wants the nation to have to go through what it has experienced in these past few years.
He has brought this passion and experience to you, readers who want answers to the questions I have briefly posed here, and to many others he raises in these pages.
Many of Mr. Lowy s conclusions are controversial (even though they are neither far left nor far right) and I do not agree with all of them. But he is right to focus on countercyclical solutions and on creating competitive markets. He also is right to closely examine government subsidies for banks and housing to determine whether they are warranted.
But regardless of whether you will agree with Mr. Lowy s conclusions, his presentation of the history of this crisis should be read by anyone who wants to understand what happened. He writes clearly, with humor, and in a manner that ordinarily intelligent readers can understand and enjoy. He focuses on and explains the main points about what happened: (1) the changes in the mortgage market and the rise of the originate to sell model, (2) the pivotal role played by the rating agencies, and (3) the importance of the leverage in the banking system and financial system more generally in transforming a mortgage market event into a worldwide systemic crisis.
The financial world is a complicated place, even after the meltdown just experienced. It helps to have a guiding hand explain it to us. Martin Lowy is an excellent guide, and this is his and your guidebook. Robert E. Litan
Kauffman Foundation
Brookings Institution --Preface to Debt Spiral
"About this title" may belong to another edition of this title.
- PublisherPublic Policy Pr
- Publication date2009
- ISBN 10 0615319122
- ISBN 13 9780615319124
- BindingPaperback
- Edition number1
- Number of pages353
(No Available Copies)
Search Books: Create a WantIf you know the book but cannot find it on AbeBooks, we can automatically search for it on your behalf as new inventory is added. If it is added to AbeBooks by one of our member booksellers, we will notify you!
Create a Want