Extremely timely given growing fears about the possibility of another financial crash.

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RECKLESS ENDANGERMENT

HOW OUTSIZED AMBITION, GREED, AND CORRUPTION LED TO ECONOMIC ARMAGEDDON

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.

Extremely timely given growing fears about the possibility of another financial crash.

Pub Date: May 24, 2011

ISBN: 978-0-8050-9120-5

Page Count: 352

Publisher: Times/Henry Holt

Review Posted Online: April 4, 2011

Kirkus Reviews Issue: March 15, 2011

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Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our...

THINKING, FAST AND SLOW

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

ISBN: 978-0-374-27563-1

Page Count: 512

Publisher: Farrar, Straus and Giroux

Review Posted Online: Sept. 4, 2011

Kirkus Reviews Issue: Sept. 15, 2011

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Essential reading for citizens of the here and now. Other economists should marvel at how that plain language can be put to...

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CAPITAL IN THE TWENTY-FIRST CENTURY

A French academic serves up a long, rigorous critique, dense with historical data, of American-style predatory capitalism—and offers remedies that Karl Marx might applaud.

Economist Piketty considers capital, in the monetary sense, from the vantage of what he considers the capital of the world, namely Paris; at times, his discussions of how capital works, and especially public capital, befit Locke-ian France and not Hobbesian America, a source of some controversy in the wide discussion surrounding his book. At heart, though, his argument turns on well-founded economic principles, notably r > g, meaning that the “rate of return on capital significantly exceeds the growth rate of the economy,” in Piketty’s gloss. It logically follows that when such conditions prevail, then wealth will accumulate in a few hands faster than it can be broadly distributed. By the author’s reckoning, the United States is one of the leading nations in the “high inequality” camp, though it was not always so. In the colonial era, Piketty likens the inequality quotient in New England to be about that of Scandinavia today, with few abject poor and few mega-rich. The difference is that the rich now—who are mostly the “supermanagers” of business rather than the “superstars” of sports and entertainment—have surrounded themselves with political shields that keep them safe from the specter of paying more in taxes and adding to the fund of public wealth. The author’s data is unassailable. His policy recommendations are considerably more controversial, including his call for a global tax on wealth. From start to finish, the discussion is written in plainspoken prose that, though punctuated by formulas, also draws on a wide range of cultural references.

Essential reading for citizens of the here and now. Other economists should marvel at how that plain language can be put to work explaining the most complex of ideas, foremost among them the fact that economic inequality is at an all-time high—and is only bound to grow worse.

Pub Date: March 10, 2014

ISBN: 978-0-674-43000-6

Page Count: 640

Publisher: Belknap/Harvard Univ.

Review Posted Online: April 30, 2014

Kirkus Reviews Issue: May 15, 2014

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