Lessons from the Financial Crisis: Causes, Consequences, and Our Economic Future

Description

The world's best financial minds help us understand today's financial crisisWith so much information saturating the market for the everyday investor, trying to understand why the economic crisis happened and what needs to be done to fix it can be daunting. There is a real need, and demand, from both investors and the financial community to obtain answers as to what really happened and why. Lessons from the Financial Crisis brings together the leading minds in the worlds of finance and academia to dissect the crisis. Divided into three comprehensive sections-The Subprime Crisis; The Global Financial Crisis; and Law, Regulation, the Financial Crisis, and The Future-this book puts the events that have transpired in perspective, and offers valuable insights into what we must do to avoid future missteps. Each section is comprised of chapters written by experienced contributors, each with his or her own point of view, research, and conclusionsExamines the market collapse in detail and explores safeguards to stop future crisesEncompasses the most up-to-date analysis from today's leading financial mindsWe currently face a serious economic crisis, but in understanding it, we can overcome the challenges it presents. This well-rounded resource offers the best chance to get through the current situation and learn from our mistakes.Content: Chapter 1 Leverage and Liberal Democracy (pages 1–8): George BraguesChapter 2 A Property Economics Explanation of the Global Financial Crisis (pages 9–15): Gunnar Heinsohn and Frank DeckerChapter 3 Of Subprimes and Sundry Symptoms: The Political Economy of the Financial Crisis (pages 17–22): Ashok BardhanChapter 4 The Political Economy of the Financial Crisis of 2008 (pages 23–29): Roger D. CongletonChapter 5 The Global Financial Crisis of 2008: What Went Wrong? (pages 31–36): Hershey H. Friedman and Linda Weiser FriedmanChapter 6 The Roots of the Crisis and How to Bring It to a Close (pages 37–42): James K. GalbraithChapter 7 Enron Rerun: The Credit Crisis in Three Easy Pieces (pages 43–50): Jonathan C. LipsonChapter 8 The Global Crisis and Its Origins (pages 51–57): Peter L. SwanChapter 9 Four Paradoxes of the 2008–2009 Economic and Financial Crisis (pages 59–67): John E. MarthinsenChapter 10 Understanding the Subprime Financial Crisis (pages 69–75): Steven L. SchwarczChapter 11 The Origins of the Financial Crisis (pages 77–85): Martin N. Baily, Robert E. Litan and Matthew S. JohnsonChapter 12 Ten Myths About Subprime Mortgages (pages 87–93): Yuliya DemyanykChapter 13 The Financial Crisis: How Did We Get Here and Where Do We Go Next? New Evidence on How the Crisis Spread Among Financial Institutions (pages 95–102): James R. Barth, Tong Li, Lu Wenling and Glenn H. YagoChapter 14 A Decade of Living Dangerously: The Causes and Consequences of the Mortgage, Financial, and Economic Crises (pages 103–107): Jon A. Garfinkel and Jarjisu Sa?AaduChapter 15 Making Sense of the Subprime Crisis (pages 109–117): Kristopher S. Gerardi, Andreas Lehnert, Shane M. Sherlund and Paul WillenChapter 16 Miraculous Financial Engineering Or Legacy Assets? (pages 119–124): Ivo PezzutoChapter 17 The Making and Ending of the Financial Crisis of 2007–2009 (pages 125–131): Austin MurphyChapter 18 The Subprime Mortgage Problem: Causes and Likely Cure (pages 133–138): Ronald D. UttChapter 19 Sequence of Asset Bubbles and the Global Financial Crisis (pages 139–145): Abol Jalilvand and A. G. (Tassos) MalliarisChapter 20 The Past, Present, and Future of Subprime Mortgages (pages 147–154): Shane M. SherlundChapter 21 Fha Loans and Policy Responses to Credit Availability (pages 155–161): Marsha Courchane, Rajeev Darolia and Peter ZornChapter 22 The Single?Family Mortgage Industry in the Internet Era: Technology Developments and Market Structure (pages 163–173): Forrest PafenbergChapter 23 Speed Kills? Mortgage Credit Boom and the Crisis (pages 175–180): Giovanni Dell'ariccia, Deniz Igan and Luc LaevenChapter 24 Subprime Mortgages: What We have Learned from a New Class of Homeowners (pages 181–189): Todd J. Zywicki and Satya ThallamChapter 25 Rating Agencies: Facilitators of Predatory Lending in the Subprime Market (pages 191–196): David J. ReissChapter 26 A Primer on the Role of Securitization in the Credit Market Crisis of 2007 (pages 197–207): John D. MartinChapter 27 Incentives in the Originate?to?Distribute Model of Mortgage Production (pages 209–216): Robert W. KolbChapter 28 Did Securitization Lead to Lax Screening? Evidence from Subprime Loans (pages 217–224): Benjamin J. Keys, Tanmoy Mukherjee, Amit Seru and Vikrant VigChapter 29 Tumbling Tower of Babel: Subprime Securitization and the Credit Crisis (pages 225–230): Bruce I. JacobsChapter 30 The Incentives of Mortgage Servicers and Designing Loan Modifications to Address the Mortgage Crisis (pages 231–237): Larry Cordell, Karen Dynan, Andreas Lehnert, Nellie Liang and Eileen MauskopfChapter 31 The Contribution of Structured Finance to the Financial Crisis: An Introductory Overview (pages 239–246): Adrian A.R.J.M. Van Rixtel and Sarai CriadoChapter 32 Problematic Practices of Credit Rating Agencies: The Neglected Risks of Mortgage?Backed Securities (pages 247–257): Phil HospChapter 33 Did Asset Complexity Trigger Ratings Bias? (pages 259–265): Vasiliki Skreta and Laura VeldkampChapter 34 The Pitfalls of Originate?to?Distribute in Bank Lending (pages 267–273): Antje Berndt and Anurag GuptaChapter 35 Behavioral Basis of the Financial Crisis (pages 275–282): J. V. RizziChapter 36 Risk Management Failures During the Financial Crisis (pages 283–291): Michel CrouhyChapter 37 The Outsourcing of Financial Regulation to Risk Models (pages 293–299): Erik F. GerdingChapter 38 The Future of Risk Modeling (pages 301–306): Elizabeth SheedyChapter 39 What Happened to Risk Management During the 2008–2009 Financial Crisis? (pages 307–316): Michael Mcaleer, Teodosio Perez?Amaral and Juan?Angel Jimenez?MartinChapter 40 Risk Management Lessons from the Global Financial Crisis for Derivative Exchanges (pages 317–323): JAYANTH VARMAChapter 41 Regulation and Financial Stability in the Age of Turbulence (pages 325–336): David S. BieriChapter 42 The Financial Crisis of 2007–2009: Missing Financial Regulation Or Absentee Regulators? (pages 337–343): George G. Kaufman and A. G. MalliarisChapter 43 The Demise of the United Kingdom's Northern Rock and Large U.S. Financial Institutions: Public Policy Lessons (pages 345–354): Robert A. Eisenbeis and GEORGE G. KAUFMANChapter 44 Why Securities Regulation Failed to Prevent the Cdo Meltdown (pages 355–360): Richard E. MendalesChapter 45 Curbing Optimism in Managerial Estimates Through Transparent Accounting: The Case of Securitizations (pages 361–367): Stephen Bryan, Steven Lilien and Bharat SarathChapter 46 Basel II Put on Trial: What Role in the Financial Crisis? (pages 369–376): Francesco Cannata and Mario QuagliarielloChapter 47 Credit Rating Organizations, Their Role in the Current Calamity, and Future Prospects for Reform (pages 377–382): Thomas J. Fitzpatrick and Chris SagersChapter 48 Global Regulation for Global Markets? (pages 383–389): Michael W. Taylor and Douglas W. ArnerChapter 49 Financial Regulation, Behavioral Finance, and the Global Financial Crisis: In Search of a New Regulatory Model (pages 391–399): Emilios AvgouleasChapter 50 Why Financial Conglomerates Are at the Center of the Financial Crisis (pages 401–410): Arthur E. WilmarthChapter 51 Corporate Governance and the Financial Crisis: A Case Study from the S&P 500 (pages 411–418): Brian R. CheffinsChapter 52 Secondary?Management Conflicts (pages 419–426): Steven L. SchwarczChapter 53 The Financial Crisis and the Systemic Failure of Academic Economics (pages 427–436): David Colander, Michael Goldberg, Armin Haas, Alan Kirman, Katarina Juselius, Brigitte Sloth and Thomas LuxChapter 54 Fannie Mae and Freddie Mac: Privatizing Profit and Socializing Loss (pages 437–442): David ReissChapter 55 Disclosure's Failure in the Subprime Mortgage Crisis (pages 443–450): Steven L. SchwarczChapter 56 Federal Reserve Policy and the Housing Bubble (pages 451–459): Lawrence H. WhiteChapter 57 The Greenspan and Bernanke Federal Reserve Roles in the Financial Crisis (pages 461–466): John RyanChapter 58 The Risk Management Approach to Monetary Policy: Lessons from the Financial Crisis of 2007–2009 (pages 467–473): Marc D. Hayford and A. G. MalliarisChapter 59 Reawakening the Inflationary Monster: U.S. Monetary Policy and the Federal Reserve (pages 475–481): Kevin Dowd and Martin HutchinsonChapter 60 The Transformation of the Federal Reserve System Balance Sheet and Its Implications (pages 483–491): Peter StellaChapter 61 Systemic Risk and Markets (pages 493–500): Steven L. SchwarczChapter 62 The Transmission of Liquidity Shocks During the Crisis: Ongoing Research into the Transmission of Liquidity Shock Suggests the Emergence of a Range of New Channels During the Credit Crisis (pages 501–507): Nathaniel Frank, Brenda Gonzalez?Hermosillo and Heiko HesseChapter 63 Credit Contagion from Counterparty Risk (pages 509–516): Philippe Jorion and Gaiyan ZhangChapter 64 Only in America? When Housing Boom Turns to Bust (pages 517–524): Luci EllisChapter 65 The Equity Risk Premium Amid a Global Financial Crisis (pages 525–535): John R. Graham and Campbell R. HarveyChapter 66 Australia's Experience in the Global Financial Crisis (pages 537–544): Christine Brown and Kevin DavisChapter 67 Collapse of a Financial System: An Icelandic Saga (pages 545–550): Tryggvi Thor HerbertssonChapter 68 Iceland's Banking Sector and the Political Economy of Crisis (pages 551–558): James A. H. S. Hine and Ian AshmanChapter 69 The Subprime Crisis: Implications for Emerging Markets (pages 559–568): William B. Gwinner and Anthony B. SandersChapter 70 The Long?Term Cost of the Financial Crisis (pages 569–578): Murillo Campello, John R. Graham and Campbell R. HarveyChapter 71 Coping with the Financial Crisis: Illiquidity and the Role of Government Intervention (pages 579–586): Bastian Breitenfellner and Niklas WagnerChapter 72 Fiscal Policy for the Crisis (pages 587–594): Antonio Spilimbergo, Steven Symansky, Olivier Blanchard and Carlo CottarelliChapter 73 The Future of Securitization (pages 595–600): Steven L. SchwarczChapter 74 Modification of Mortgages in Bankruptcy (pages 601–607): Adam J. LevitinChapter 75 The Shadow Bankruptcy System (pages 609–616): Jonathan C. LipsonChapter 76 Reregulating Fannie Mae and Freddie Mac (pages 617–623): Dwight M. JaffeeChapter 77 Would Greater Regulation of Hedge Funds Reduce Systemic Risk? (pages 625–632): Michael R. King and Philipp MaierChapter 78 Regulating Credit Default Swaps (pages 633–639): Houman B. Shadab