The Financial Crisis and the Free Market Cure: Why Pure Capitalism is the World Economy's Only Hope

by Allison, John

• ISBN13: 9780071806770
• ISBN10: 0071806776
• Edition: 1st
• Format: Hardcover
• Copyright: 2012-09-27
• Publisher: McGraw-Hill Education

Summary

PRAISE FOR THE FINANCIAL CRISIS AND THE FREE MARKET CURE "Required reading. . . . Shows how our economic crisis was a failure, not of the free market, but of government." Charles Koch, Chairman and CEO, Koch Industries, Inc. " The Financial Crisis and the Free Market Cureis a sophisticated yet accessible analysis of the causes and solutions to America's financial meltdown." Ed Crane, President Emeritus of the Cato Institute "An indispensable contribution to the debate about the future of the American economy." Arthur Brooks, President, American Enterprise Institute "No one is better equipped to understand what is going on today and the causes of the financial crisis. Please pay attention to what he says here." Bernie Marcus, Chairman, The Marcus Foundation, and cofounder, Home Depot "Allison explains the unintended consequences of government policies and their impact on the financial crisis . . . and recommends practical steps to improve the economy and individual liberty." James M. Kilts, former Chairman and CEO, Gillette Company "[This is] the best, deepest explanation of what caused the crisis and the consequences of our government's response to it." Yaron Brook, President and Executive Director, Ayn Rand Institute "John Allison is superb with his comprehensive and thought-provoking explanation for our current economic crisis and a clear and compelling path to a brighter future." Steve Reinemund, Dean, Wake Forest University Schools of Business, and retired Chairman and CEO, PepsiCo Did Wall Street cause the mess we are in? Should Washington place stronger regulations on the entire financial industry? Can we lower unemployment rates by controlling the free market? The answer is NO. Not only is free market capitalism good for the economy, says industry expert John Allison, it is our only hope for recovery. As the nation's longest-serving CEO of a top-25 financial institution, Allison has had a unique inside view of the events leading up to the financial crisis. He has seen the direct effect of government incentives on the real estate market. He has seen how government regulations only make matters worse. And now, in this controversial wake-up call of a book, he has given us a solution. The Financial Crisis and the Free Market Curereveals: Why regulation is bad for the marketand for the world What we can do to promote a healthy free market How we can help end unemployment in America The truth about TARP and the bailouts How Washington can help Wall Street build a better future for everyone With shrewd insight, alarming insider details, and practical advice for today's leaders, this electrifying analysis is nothing less than a call to arms for a nation on the brink. You'll learn how government incentives helped blow up the real estate bubble to unsustainable proportions, how financial tools such as derivatives have been wrongly blamed for the crash, and how Congress fails to understand it should not try to control the marketand then completely mismanages it when it tries. In the end, you'll understand why it's so important to put "free" back in free market. It's time for America to accept the truth: the government can't fix the economy because the government wrecked the economy. This book gives us the tools, the inspirationand the cure.

Table of Contents

Introduction
1 Fundamental Themes
2 What Happened?
3 Government Monetary Policy: The Fed as the Primary Cause
4 FDIC Insurance: The Background Cause
5 Government Housing Policy: The Proximate Cause
6 The Essential Role of Banks in a Complex Economy: The Liquidity Challenge
7 The Residential Real-Estate-Market Bubble and Financial-Market Stress
8 Failure of the Rating Agencies: The Subprime Mortgage Market and Its Impact on Capital Markets
9 Pick-a-Payment Mortgages: A Toxic Product of FDIC Insurance Coverage
10 How Freddie and Fannie Grew to Dominate the Home Mortgage Lending Business
11 Fair-Value Accounting and Wealth Destruction
12 Derivatives and Shadow Banking: A Misunderstanding
13 The Myth that “Deregulation” Caused the Financial Crisis
14 How the SEC Made Matters Worse
15 Market Corrections Are Necessary, but Panics Are Destructive and Avoidable
16 TARP (Troubled Asset Relief Program)
17 What We Could Have—and Should Have—Done
18 The Cure for the Banking Industry: Systematically Move Toward Pure Capitalism
19 Some Political Cures: Government Policy
20 Our Short-Term Path and How to End Unemployment
21 The Deepest Cause Is Philosophical
22 The Cure Is Also Philosophical
23 How the United States Could Go Broke
24 The Need for Principled Action
25 Conclusion
Notes
Index
Acknowledgments