Reviewing the financial crisis

November 26, 2016 01:00 PM
The 2008-2009 Financial Crisis unleashed more than havoc on the U.S. housing sector.

The 2008-2009 Financial Crisis unleashed more than havoc on the U.S. housing sector. It also produced a litany of books recounting the details and events that transpired. This month, we’re recapping the four books to trade, and one to fade. Oh yeah, and we’re going to leave Michael Lewis off the list, given that he has dominated this category with The Big Short, Flash Boys, and his upcoming book, The Undoing Project: A Friendship That Changed Our Minds.

four to trade…

Too Big to Fail: After six years, this Wall Street tell-all remains the standard bearer of the Financial crisis. Andrew Ross Sorkin’s research and story are so detailed that one must ask if the author was wire-tapping half the banks and Hank Paulson’s office. Despite its intimidating length, Sorkin’s writing style offers a swift recount of not only what happened, but the egos and personalities of the core players. Roughly 40 pages of notes and sources provide greater evidence of financial journalism at its finest. 

13 Bankers: This book does what others can’t in producing a point where we must reflect on where institutions went wrong and where the bubbles have originated. It also provides a clearer understanding of how financial institutions pushed for greater liberalization of over-the-counter derivatives and the expansion of the financial sector since the days of Thomas Jefferson. You’ll feel bad again for Brooksley Born whose position paper on over-the-counter derivatives was blocked by those “13 bankers” during the Greenspan years.
 

 

This Time is Different: Kindleberger and Aliber’s Manias, Panics, and Crashes (first published in 1978) has been dubbed the “go-to” book on the history of financial crises, but Carmen Reinhart and Kenneth Rogoff unleashed a stunning recap of financial crises dating back hundreds of years. Exhausting economic analysis dates back to currency challenges in Italy and the United Kingdom in the 13th century. The book has roughly 100 pages of data appendices, setting the tone for future writers to follow. This is a fantastic book on human psychology.

The Subprime Solution: Robert Shiller’s short book was likely finished in August 2008 before the collapse of Lehman Brothers, which makes it all the more intriguing. The focus on behavioral economics and irrational exuberance have unleashed a torrent of new literature on the subject, from focuses on valuation practices to greater emphasis on how to improve forecasting techniques. His solutions to fixing our markets wouldn’t be cheap (i.e. subsidizing financial advisors for lower and middle-class families), but he receives points for thinking outside the box.

 

…and one to fade

The Courage to Act: Ben Bernanke self-congratulates himself for his hard work after failing to recognize the financial crisis right in front of him. Need proof? Look at the title.

About the Author

Garrett Baldwin is the Managing Editor of the Alpha Pages and the Features Editor of Modern Trader. An author and Baltimore native, he earned a BS in journalism from the Medill School at Northwestern University, an MA in Economic Policy (Security Studies) from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University.