The Financial Crisis and the Free Market Cure: Why Pure Capitalism is the World Economy's Only Hope

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The Financial Crisis and the Free Market Cure: Why Pure Capitalism is the World Economy's Only Hope

The Financial Crisis and the Free Market Cure: Why Pure Capitalism is the World Economy's Only Hope

Authors: John A. Allison

Published: September 2012

eISBN: 9780071806787 0071806784 | ISBN: 9780071806770

Cover

About the Author

Title Page

Copyright Page

Contents

Introduction

1 Fundamental Themes

2 What Happened?

3 Government Monetary Policy: The Fed as the Primary Cause

4 FDIC Insurance: The Background Cause

5 Government Housing Policy: The Proximate Cause

6 The Essential Role of Banks in a Complex Economy: The Liquidity Challenge

7 The Residential Real-Estate-Market Bubble and Financial-Market Stress

8 Failure of the Rating Agencies: The Subprime Mortgage Market and Its Impact on Capital Markets

9 Pick-a-Payment Mortgages: A Toxic Product of FDIC Insurance Coverage

10 How Freddie and Fannie Grew to Dominate the Home Mortgage Lending Business

11 Fair-Value Accounting and Wealth Destruction

12 Derivatives and Shadow Banking: A Misunderstanding

13 The Myth that “Deregulation” Caused the Financial Crisis

14 How the SEC Made Matters Worse

15 Market Corrections Are Necessary, but Panics Are Destructive and Avoidable

16 TARP (Troubled Asset Relief Program)

17 What We Could Have—and Should Have—Done

18 The Cure for the Banking Industry: Systematically Move Toward Pure Capitalism

19 Some Political Cures: Government Policy

20 Our Short-Term Path and How to End Unemployment

21 The Deepest Cause Is Philosophical

22 The Cure is Also Philosophical

23 How the United States Could Go Broke

24 The Need for Principled Action

25 Conclusion

Notes

Index