Political bubbles : financial crises and the failure of American democracy / Nolan McCarty, Keith T. Poole, Howard Rosenthal.

Format:

Book

Author/Creator:

McCarty, Nolan M.

Contributor:

Poole, Keith T.

Rosenthal, Howard, 1939-

Language:

English

Subjects (All):

Financial crises--United States--History--21st century.

Financial crises.

Global Financial Crisis, 2008-2009--Political aspects.

Global Financial Crisis, 2008-2009.

Physical Description:

1 online resource (369 p.)

Edition:

Course Book

Place of Publication:

Princeton : Princeton University Press, c2013.

Language Note:

English

Summary:

Behind every financial crisis lurks a "political bubble"--policy biases that foster market behaviors leading to financial instability. Rather than tilting against risky behavior, political bubbles--arising from a potent combination of beliefs, institutions, and interests--aid, abet, and amplify risk. Demonstrating how political bubbles helped create the real estate-generated financial bubble and the 2008 financial crisis, this book argues that similar government oversights in the aftermath of the crisis undermined Washington's response to the "popped" financial bubble, and shows how such patterns have occurred repeatedly throughout US history. The authors show that just as financial bubbles are an unfortunate mix of mistaken beliefs, market imperfections, and greed, political bubbles are the product of rigid ideologies, unresponsive and ineffective government institutions, and special interests. Financial market innovations--including adjustable-rate mortgages, mortgage-backed securities, and credit default swaps--become subject to legislated leniency and regulatory failure, increasing hazardous practices. The authors shed important light on the politics that blinds regulators to the economic weaknesses that create the conditions for economic bubbles and recommend simple, focused rules that should help avoid such crises in the future. The first full accounting of how politics produces financial ruptures, Political Bubbles offers timely lessons that all sectors would do well to heed.

Contents:

Front matter

Contents

Acknowledgments

Introduction

Part I: The Political Bubble. Why Washington Allows Financial Crises to Occur

Chapter 1. Bubble Expectations

Chapter 2. Ideology

Chapter 3. Interests

Chapter 4. Institutions

Chapter 5. The Political Bubble of the Crisis of 2008

Part II. Pops. Why Washington Delays in Solving Financial Crises

Chapter 6. Historical Lessons of the Responses to Pops

Chapter 7. The Pop of 2008

Chapter 8. "Populism

Chapter 9 . How to Waste a Crisis

Epilogue

Notes

Bibliography

Name Index

Subject Index

Notes:

Description based upon print version of record.

Includes bibliographical references and index.

ISBN:

9781400846399

1400846390

OCLC:

842919696

Publisher Number:

40022449167