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How Markets Fail: The Logic Of Economic Calamities (2009)

by John Cassidy(Favorite Author)

4.03 of 5 Votes: 3

ISBN

0374173206 (ISBN13: 9780374173203)

languge

English

genre

History & Biography

publisher

Farrar, Straus and Giroux

review 1: By far THE best macro economic explanation of the Great Recession and financial service's impact to overall economy. Markets do fail and government-intervention is essential for capitalism (and financial services more specifically) to NOT take the whole country off the cliff. Capitalism work fine, except that aggregation of individual's rational decision (e.g. maximize bonus) may not be rational for the society as a whole (e.g. 30:1 leverage, CDO, sub-prime...). Econ 101 for the adults.
review 2: Great book. Well researched and historical describing how our free market economic policies have lead us through generations of bubbles, crisis, and other financial crisis. He reviews Adam Smith, Hayek, Milton Friedman and others. Cassidy is a journalist and econom... moreist who writes for the New Yorker. He contends that economics has evolved into an almost pure quantitative field that fails to consider how out of touch with reality the field has become. Flawed markets do not always generate good outcomes. (No kidding.) Individuals are not rational. Markets are not stable and predictable. (Again no kidding.) He blames Greenspan for the housing bubble because he kept interest rates too low too long encouraging over buying and because he believed the mortgage market was self regulating. He promotes Hyman Minsky's reality/behaviorial economic theory that the markets are inherently unstable and promote busts and bubbles. He believes as did Keynes and others that markets cannot regulate themselves and need to have government oversight. less

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