The Financial Crisis Who is to Blame?

by Davies, Howard

• ISBN13: 9780745651644
• ISBN10: 074565164X
• Edition: 1st
• Format: Paperback
• Copyright: 2010-09-07
• Publisher: Polity

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 Biography

Howard Davies is the director of the London School of Economics and Political Science.

Table of Contents

Introduction

The Big Picture

Frankenstein's monster: The end of Laissez-faire capitalism

The rich get richer - the poor borrow

The savings glut - global imbalances

Too loose for too long - US monetary policy

The Trigger

Minsky's Moment

The sub-prime collapse - a failure of government?

The Failures of Regulation

A capital shortage

Procyclicality

The Canary in the Coal Mine: off-balance sheet vehicles

The taxi at the station: liquidity

The Blind Mind and The Elephant: US Regulation

SEC- RIP?

Financial Weapons of Mass Destruction: Derivatives

Federal Mortgage Regulation

Casino banking: the end of the Glass-Steagall Act

Too big to fail

Lighting the Touchpaper: Light touch regulation

There were three people in the marriage: UK regulation

Lack of Coordination

Paradise lost: offshore centres

Accountants, auditors and rating agencies

Shoot the Messenger: fair value accounting

Tunnel Vision: the auditors

Conflicts of interest: credit rating agencies

Financial Firms and Markets

Breaking the chain: originate to distribute

Too complex to trade: derivatives

Disaster Myopia: risk management

The Roach Motel: corporate governance

Blankfein's bonus: pay and incentives

The Vampire Squid

A plague of locusts: hedge funds

Short Selling

Economics and Finance Theory

The death of economics

Inefficient markets

An ethics-free zone: business schools

Wild Cards

The watchdog didn't bark: the media

Greed is bad

Lara Croft: video games

Hormones and Finally

A combustible mixture

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