Understanding Financial Crises: The Economics, Politics, and Greed of the Most Spectacular Bubbles and Crises of the Past Century

Contents\nAcknowledgements\nPreface — Regulatory Capture\n1. What are Bubbles and Financial Crises?\n	1.1 Introduction\n	1.2 A Conceptual Framework of Financial Crises\n	1.3 Bubbles and Models of Bubbles\n		1.3.1 Rational models: Symmetric information\n		1.3.2 Rational models: Asymmetric information\n		1.3.3 Behavioral models: Heterogeneous beliefs\n		1.3.4 Behavioral models: Limits of arbitrage\n	1.4 Implications of Crashing Bubbles\n	1.5 International Implications\n	1.6 Conclusion\n	Additional Reading\n2. Key Properties of the Financial System and Financial Securities\n	2.1 Introduction\n	2.2 Key Players in a Free-Market Economy\n	2.3 Key Properties of Bonds\n	2.4 Key Properties of Stocks\n	2.5 Overview of the Financial System\n	Additional Reading\n3. Commercial Banking and Banking Crises\n	3.1 Prologue\n	3.2 Commercial Banks and the ‘ Money Multiplier’\n	3.3 Bank Runs\n	3.4 Central Banks as Lenders of Last Resort\n	3.5 From Bank Runs to Banking Crises\n	3.6 Basel Accords for Banking Regulation\n	3.7 Epilogue\n	Additional Reading\n4. The Roaring Twenties and the US Bubble of 1929\n	4.1 From Recession to Expansion\n	4.2 Back into the Stock Market\n	4.3 The ‘New Economy’ of the Roaring Twenties\n	4.4 The Crash\n	Additional Reading\n5. The ‘Great Depression’ in the US\n	5.1 Introduction\n	5.2 Rage\n	5.3 New Rules\n	5.4 The Political System\n	5.5 The Gold Standard\n	5.6 Economic Policy\n	5.7 Global Effects\n	5.8 Could the Government Do Better?\n	5.9 The Dust Bowl\n	Additional Reading\n6. The Crisis of Confidence in Corporate America, 2001–2004\n	6.1 Introduction\n	6.2 Background\n	6.3 Destructive Symbiosis between Managers, Politiciansand Auditors\n	6.4 The Politics\n	6.5 The Price\n	6.6 Legal Response and the Need for Better Regulations\n	6.7 Was the Enron Regulator Captured?\n	6.8 Social Response\n	Additional Reading\n7. The Internet Bubble\n	7.1 A ‘New Economy’, Again\n	7.2 Vague Valuations\n	7.3 Financial Analysts: Roles and Incentives\n	7.4 Stock Options\n	7.5 The Mania\n	7.6 Where Were the Regulators?\n	Additional Reading\n8. When Banks Manipulate their Stock Prices: Israel’s Systemic Banking Crisis\n	8.1 Background\n	8.2 An Economy in Transition\n	8.3 The Motivation and Practice\n	8.4 The Macroeconomic Environment\n	8.5 The Crash Unfolds\n	8.6 Ineffective Regulation\n	8.7 The End\n	Additional Reading\n9. The Tequila Crisis and its Hangover\n	9.1 Introduction\n	9.2 A Brief Explanation of International Accounts\n	9.3 Mexico\n	9.4 The Price of a Fixed Exchange Rate Policy\n	9.5 The Tequila Crisis Unfolds\n	9.6 Argentina’s Bankruptcies\n	Additional Reading\n10. Japan and the East Asian Tigers\n	10.1 Japan: From Feudal Agriculture to a Global Industry Leader\n	10.2 Overheating with Easy Lending\n	10.3 The Burst of the Bubble and its Cost\n	10.4 The East Asian Tigers\n	10.5 The Lessons\n		10.5.1 Financial liberalization\n		10.5.2 Hedging and fl exibility\n		10.5.3 Speculators on the guard\n	Additional Reading\n11. The US Real Estate Bubble\n	11.1 Background\n	11.2 Affordable Housing\n	11.3 Securitization is Born\n	11.4 NINJA Loans\n	Additional Reading\n12. Incentives, Regulatory Capture and Collapse\n	12.1 Introduction\n	12.2 The Role of the Fed\n	12.3 Regulatory capture and the Gramm–Leach–Bliley Act\n	12.4 Private-Label MBS\n	12.5 Incentives\n	12.6 The Role of Hybrid Loans\n	12.7 The Crash Unfolds\n	12.8 Should the Government Have Stepped In?\n	12.9 Conclusions of the Inquiry Commission\n	12.10 Were th e Regulators Captured by the Industry?\n	Additional Reading\n13. Shadow Banking, the Collapse of Investment Banking and the Rescue of AIG\n	13.1 Introduction\n	13.2 The Increasing Size and Complexity of the Financial System\n	13.3 The Shadow Banking System\n	13.4 Money Market Funds and Repos\n	13.5 Unclear Boundaries\n	13.6 Bear Stearns and BNP Paribas\n	13.7 Lehman Brothers and Merrill Lynch\n	13.8 AIG\n	Additional Reading\n14. New Regulations\n	14.1 The US Financial Crisis Inquiry Commission\n	14.2 The Dodd–Frank Act\n	14.3 Criticism and Alternatives\n	14.4 Executive Pay\n	14.5 About Ideology\n	Additional Reading\n15. Global Implications of the Credit Crisis\n	15.1 Introduction\n	15.2 Global Linkages\n	15.3 Financial Fragility\n	15.4 Dubai\n	15.5 Iceland\n	Additional Reading\n16. Regulatory Capture and Corruption vs. Integrity and Stability\n	16.1 Introduction\n	16.2 Regulatory Capture, Loss of Integrity and Loss of Value through Financial Crises\n	16.3 Executive Pay\n	16.4 Incentives\n	16.5 Lobbying, Politicians, and Regulation\n	Additional Reading\nBibliography\nIndex