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A Failure Of Capitalism: The Crisis Of '08 And The Descent Into Depression (2009)

by Richard A. Posner(Favorite Author)

3.67 of 5 Votes: 2

ISBN

0674035143 (ISBN13: 9780674035140)

languge

English

genre

History & Biography

publisher

Harvard University Press

review 1: A fine account of the financial crisis, though I could have done without Posner's irrelevant jibes about "adversarial unions." Also, while I tend to agree that the financial crisis was precipitated by easy credit and the decades-long trend toward deregulation, it seems a bit convenient to have a confident diagnosis for now but then to say that we shouldn't re-regulate until after the crisis is long-over because only with hindsight will we have a clear picture of the causes of the depression. As a piece of writing, the organization isn't terribly clear, and Posner's has a tendency to repeat himself a lot. Then again, this isn't an attempt at a masterpiece. It's more of a current-events primer, and I think it serves its purpose in that sense.
review 2: Two takeaw... moreays:1. Posner makes a convincing argument that the actions of the various players in the financial crisis were not inept or irresponsible but rather quite rational. In his view, any one player (individuals or firms) could fully appreciate the fact that their actions were risky and their leveraging could even lead to bankruptcy. However, any one failure/bankruptcy might not be catastrophic, at least not for an individual person or firm. It's only the regulators, who should be expected to be focused on systemic risk, ie, the risk that one or several failures could lead to a catastrophic implosion. Consequently, he lays much of the blame for the crisis on ineffectual regulation.From this line of reasoning comes the most profound of Posner's conclusions: the modern financial system, due to its complexity and interconnectedness requires a robust regulatory regime. This from an author famous for his free-market ideals.2. Posner also addresses the issue of why it's difficult to prevent catastrophes -- things that seem obvious in hindsight rarely are and when a crisis is averted, there's a good chance it's not appreciated or even noticed. In addition to the recent crisis, Posner offers the Perl Harbor attacks as another example.Overall, 'A Failure of Capitalism' is insightful for these conclusions but otherwise only a fair book. Posner should get credit for diligently presenting a host of aspects relating to the crisis, but this rehash is mostly for those not already familiar w/ the modern US financial system. Further, Posner wrote the book while the crisis was still unfolding. As a result, the book was written in a hurry, and it shows. The style is often rambling and not as organized as it might otherwise have been. less

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