Extremely timely given growing fears about the possibility of another financial crash.
HOW OUTSIZED AMBITION, GREED, AND CORRUPTION LED TO ECONOMIC ARMAGEDDON
by Gretchen Morgenson and Joshua Rosner ‧ RELEASE DATE: May 24, 2011
New York Times business correspondent Morgenson (The Capitalists' Bible, 2009, etc.) and investment consultant Rosner combine their expertise in a fresh look at the causes of the 2008 mortgage meltdown.
"Will a debacle like the credit crisis of 2008 ever happen again?" ask the authors, answering, "most certainly." They put a heavy blame on Congress, which failed to fix the problem when it could and now remains silent on how to resolve the insolvent mortgage agencies. They also set out to identify the "powerful people whose involvement in the debacle has not yet been chronicled" (many of whom are still active), and the "key incidents that have seemed heretofore unrelated." Morgenson and Rosner focus on the ties between government and private finance through James A. Johnson, chief executive officer of Fannie Mae from 1991 to 1998, and from 1999 to the present, a director at Goldman Sachs. Johnson transformed Fannie Mae into a political force and lobbying influencer, a strategy that "would be mimicked years later" by Countrywide Financial, Goldman Sachs, Citigroup and others, and by Bill Clinton's Secretary of the U.S. Treasury Robert Rubin. The authors show how changes in law and regulation unnoticed at the time—Sen. Chris Dodd's amendment to the 1991 FDICIA Act, Alan Greenspan's 1992 ending of Federal Reserve oversight of primary dealers, further regulatory changes in 2001—paved the way for the multitrillion-dollar disaster. The final chapter retraces the crisis and shows how the New York Fed and Fed Reserve tried to downplay what was becoming evident to some of its own makers.
Publisher: Times/Henry Holt
Review Posted Online: April 4, 2011
Kirkus Reviews Issue: March 15, 2011
Categories: GENERAL BUSINESS | BUSINESS | ECONOMICS
Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our...
THINKING, FAST AND SLOW
by Daniel Kahneman ‧ RELEASE DATE: Nov. 1, 2011
A psychologist and Nobel Prize winner summarizes and synthesizes the recent decades of research on intuition and systematic thinking.
The author of several scholarly texts, Kahneman (Emeritus Psychology and Public Affairs/Princeton Univ.) now offers general readers not just the findings of psychological research but also a better understanding of how research questions arise and how scholars systematically frame and answer them. He begins with the distinction between System 1 and System 2 mental operations, the former referring to quick, automatic thought, the latter to more effortful, overt thinking. We rely heavily, writes, on System 1, resorting to the higher-energy System 2 only when we need or want to. Kahneman continually refers to System 2 as "lazy": We don't want to think rigorously about something. The author then explores the nuances of our two-system minds, showing how they perform in various situations. Psychological experiments have repeatedly revealed that our intuitions are generally wrong, that our assessments are based on biases and that our System 1 hates doubt and despises ambiguity. Kahneman largely avoids jargon; when he does use some ("heuristics," for example), he argues that such terms really ought to join our everyday vocabulary. He reviews many fundamental concepts in psychology and statistics (regression to the mean, the narrative fallacy, the optimistic bias), showing how they relate to his overall concerns about how we think and why we make the decisions that we do. Some of the later chapters (dealing with risk-taking and statistics and probabilities) are denser than others (some readers may resent such demands on System 2!), but the passages that deal with the economic and political implications of the research are gripping.
Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our minds.
Pub Date: Nov. 1, 2011
Review Posted Online: Sept. 4, 2011
Categories: BUSINESS | LEADERSHIP, MANAGEMENT & COMMUNICATION | PSYCHOLOGY
More by Daniel Kahneman
by Daniel Kahneman & Olivier Sibony & Cass R. Sunstein
Occasionally wonky but overall a good case for how the dismal science can make the world less—well, dismal.
GOOD ECONOMICS FOR HARD TIMES
by Abhijit V. Banerjee & Esther Duflo ‧ RELEASE DATE: Nov. 12, 2019
"Quality of life means more than just consumption": Two MIT economists urge that a smarter, more politically aware economics be brought to bear on social issues.
It's no secret, write Banerjee and Duflo (co-authors: Poor Economics: A Radical Rethinking of the Way To Fight Global Poverty, 2011), that "we seem to have fallen on hard times." Immigration, trade, inequality, and taxation problems present themselves daily, and they seem to be intractable. Economics can be put to use in figuring out these big-issue questions. Data can be adduced, for example, to answer the question of whether immigration tends to suppress wages. The answer: "There is no evidence low-skilled migration to rich countries drives wage and employment down for the natives." In fact, it opens up opportunities for those natives by freeing them to look for better work. The problem becomes thornier when it comes to the matter of free trade; as the authors observe, "left-behind people live in left-behind places," which explains why regional poverty descended on Appalachia when so many manufacturing jobs left for China in the age of globalism, leaving behind not just left-behind people but also people ripe for exploitation by nationalist politicians. The authors add, interestingly, that the same thing occurred in parts of Germany, Spain, and Norway that fell victim to the "China shock." In what they call a "slightly technical aside," they build a case for addressing trade issues not with trade wars but with consumption taxes: "It makes no sense to ask agricultural workers to lose their jobs just so steelworkers can keep theirs, which is what tariffs accomplish." Policymakers might want to consider such counsel, especially when it is coupled with the observation that free trade benefits workers in poor countries but punishes workers in rich ones.
Publisher: PublicAffairs
Review Posted Online: Aug. 29, 2019
Categories: GENERAL CURRENT EVENTS & SOCIAL ISSUES | GENERAL BUSINESS | CURRENT EVENTS & SOCIAL ISSUES | BUSINESS | PUBLIC POLICY | ISSUES & CONTROVERSIES | ECONOMICS
Bill Gates Shares His Summer Reading List