How Markets Fail: The Logic of Economic Calamities / Edition 1

How Markets Fail: The Logic of Economic Calamities / Edition 1

by John Cassidy
3.2 19
ISBN-10:
0374173206
ISBN-13:
9780374173203
Pub. Date:
11/10/2009
Publisher:
Farrar, Straus and Giroux
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How Markets Fail: The Logic of Economic Calamities 3.2 out of 5 based on 0 ratings. 19 reviews.
mrfreeze_ak More than 1 year ago
There is finally a book out that extends Keynes ideas about what to do when markets fail to how they fail in the first place. This books goes into a history of different economic writers and their ideas. Now my problem is how to get my congressmen to read this book before they gut the Federal Reserve.
nolitawatch More than 1 year ago
Very clear presentation of America's economic history from the Great Depression through the Great Recession. Cassidy uses language that general readers can appreciate to explain the economic theories, financial practices, and lack of governance that led to the near miss.
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Magneto More than 1 year ago
I don't wish to be unkind to Cassidy, but I keep waiting for a logically respectable refutation of genuine free markets to come forth and John Cassidy's How Markets Fail is yet an additional disappointment in reason. Out of the chute, I was left slack-jawed by Cassidy's opener in the book; Alan Greenspan's now-famous testimony to Congress where he describes his change of heart and admits that free markets fail. One of the most in vogue, terrifically shallow and common errors pop critics of free markets make is to paint Alan Greenspan as a "free markets guy" or an "Ayn Rand disciple". Logic easily brings this assertion down when one considers that, in honest economic circles, Greenspan is famously recognized as a traitor to free markets by his venal ascendancy into the post of Chairman of the Federal Reserve during the Reagan administration - the same Federal Reserve that exercises de facto centralized economic planning through forced interest rates (read, interventionist capital markets) and fiat money printing. Greenspan is a bane of free markets and soul-sold poster boy of government created economic disasters. Among Cassidy's disjointed examples of why rational, self-interested people cause markets to fail is the story of a pedestrian bridge built over the river Thames. I am expecting to read the account of how a bridge was built by a free-market entity (usually a "infrastructure" task that unimaginative thinkers cede to governments) and how the venture failed. Instead, he gives an example of how people begin to step in unison, setting up a dangerous rythmic sway of this bridge. It turns out to a cute metaphor with dubious applicability to markets, especially considering that people were reacting with instinct on the bridge and not the rational behavior that the author intends to lambaste. It fails to recognize good investors' first rule: venture where others are not. It is an example best left for structural engineers and not markets. Cassidy is contradictory in that the regulations he calls for are well known fences that create the 'self-interested and rational' herds he condemns. The book discusses banks in the housing bubble of 2002-2007 as exemplary of free market failures. He fails to notice the blaringly obvious fact that banks did not and do not operate in the free-market, especially in regards to the housing market (Fannie? Freddie?). Banks are the first recipients of inflated Fed funds (printed money), highly regulated and shot through with implicit governmental guarantees behind them and thusly, for failure. Cassidy uses the period between 1945-1980 as an example of how regulation works to spur economic growth, citing depression-era laws as the reason for "enormous prosperity". He called this a lab. Every scientist knows that any experiment can endure a certain amount of infiltration or deviation. Cassidy's reverence towards regulations as promoting of economic growth is likely spurious and non-causal. So, another book hits the shelves of the genre, full of poorly researched economic history and logically inept conclusions. With it, Cassidy joins the seemingly coordinated chorus of anti-freedom drones, making philosophically and historically unsound arguments in favor of the financial nanny state.