Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy | Date: 28 April 2011, 07:12
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Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy
By Barry Ritholtz
* Publisher: Wiley
* Number Of Pages: 332
* Publication Date: 2009-05-26
* ISBN-10 / ASIN: 0470520388
* ISBN-13 / EAN: 9780470520383
Product Description:
A riveting indictment of those responsible for our current financial mess
Bailout Nation offers one of the clearest looks at the financial lenders, regulators, and politicians responsible for the financial crisis of 2008. Written by Barry Ritholtz, one of today's most popular economic bloggers and a well-established industry pundit, this book skillfully explores how the United States evolved from a rugged independent nation to a soft Bailout Nation-where financial firms are allowed to self-regulate in good times, but are bailed out by taxpayers in bad times.
Entertaining and informative, this book clearly shows you how years of trying to control the economy with easy money has finally caught up with the federal government and how its practice of repeatedly rescuing Wall Street has come back to bite them.
* The definitive book on the financial crisis of 2008
* Names the villains responsible for this tragedy-from financial regulators to politicians
* Shows how each bailout throughout modern history has impacted what happened in the future
* Examines why the consumer/taxpayer is left suffering in an economy of bubbles, bailouts, and possible inflation
Scathing, but fair, Bailout Nation is a voice of reason in these uncertain economic times.
Summary: Maybe we are a bailout nation, but US is still a great country with opportunities
Rating: 4
I have read several books on this subject, and there are many different opinions. In this book, the author argues that the United States has turned itself from an entrepreneurial and capitalistic country to a bailout nation. He thinks that the government should not be bailing out any businesses and should let them fail and go bankrupt. He uses a quote from Allan Maultzer who says, "Capitalism without failure is like religion without sin - it just doesn't work."
It seems that there are people on both sides of the spectrum with some wanting no bailouts like the author, and others who would keep pumping money into the failing automakers. I cannot find myself on either of these two extremes. This book provides arguments for one side, and I think it is a good read, but if you think that United States is not capitalistic country, then go and try living somewhere else and you will realize how great this country really is.
- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market
Summary: Comprehensive and well written
Rating: 3
Bailout Nation is a comprehensive description of our current financial crisis and a clear explanation of what led up to it. It is wide ranging, going back to the earliest Federal government bailouts in the 1970's up to the bank bailouts of 2008.
Barry Ritholtz is a an executive of quantitative research firm, he seems to know the material well. He is also a popular blogger on financial matters. Bailout Nation is written very much in the blogging style; too much so in my opinion.
The author is not shy about expressing his opinions. He becomes more opinionated as the book progresses. He uses a number of nick names for institutions and people, especially Alan Greenspan. I noticed a few egregious errors, like calling in the 86th airborne. There is no such thing, I assume he meant the 82nd Airborne. As far as I could tell the errors were not germane to the story, but they do raise doubts about the authors thoroughness.
The book ends with a very short section of suggestions. This really reads like a bunch of quotations slapped together quickly to fill out the book. They seem very politically naive to me.
While Ritholtz is opinionated he does seem knowledgeable; and Bailout Nation see well informed and thorough. It is well written and comprehensive. Well worth the time for anyone interested in our current economic woes.
Summary: Casino Capitalism, Where Wins are Privatized and Losses are Socialized.
Rating: 4
First thing's first: I am not a "financial guy." I don't watch a lot of CNBC, and too much talk about hedge funds can make my head spin. But I am a concerned citizen (and of reasonable intelligence), and as such, I have been on a quest to read many of the remarkable books that have been written about the financial crisis of '08/'09. Out of these many fine books, Bailout Nation may be the most interesting, detailed, and even-handed I've come across.
The main thrust of this book is, as the title suggests, a discussion about how the US became a bailout nation (much to the author and this reviewer's chagrin). The first third of the book is a brief history of bailouts (which are much more common than many believe, especially under Greenspan). If there is a point to this section, it is to demonstrate to us that "each rescuse attempt is more costly than the one which preceded it," (pg. 3) and that (using the Chrysler bailout of 1980 as an example) that bailouts do more to ensure moral hazard than correct financial problems.
This brings us to the thrust of the second part of the book, where we take a slo-mo look at what led to this current wave of billion dollar bailouts: moral hazard. The term "moral hazard" is used a lot by Ritholtz (with an entire chapter on "Why Bailouts Cause Future Problems"). In short, Ritholtz argues that by the mid 2000's, the Federal Reserve had a fairly established precedent of stepping in to intervene at the slightest threat that the market might turn south and, in turn, indirectly encouraging reckless behavior ("If we win, we win. If not, we get bailed out.")
Like seemingly every single other book written about the economic crisis of '08/'09, Ritholtz puts first blame on the Federal Reserve, both for their ridiculous lowering of interest rates (at 1% for more than a year!), but also for failing to regulate banks in what Ritholtz sees as an overzealous belief in free markets (this is where Ritzholtz departs from several books written about the crisis).
But Ritholtz also blames several other groups: banks are next. Where authors like Thomas Sowell suggest that banks were forced by government to use "creative" tactics to increase the availability of loans to underpriviliged groups, Ritzholtz explains that their motivation may be better explained by the repeal of a law that prohibited dealings between depository and investment banks. Suddenly, investment banks got creative with mortgage backed securities, which offered depository banks all the incentive in the world to issue loans without a care as to whether the loan would be paid back.
All in all, a chapter toward the end of this book, called "Casting Blame" points to 23 groups or individuals that Ritholtz suggests were responsible for the crisis of '08/'09 (everyone from the Fed, to former presidents Reagan, Cllinton and Bush Jr. to regulatory agencies). In this, Rithzholtz's book has the advantage of being quite ideologically neutral; Ritzholtz does not blame one party (as does Dick Morris), only the government (as does Sowell and Woods Jr), and goes beyond blaming capitalism and greedy businesses.
Again, I am not a financial guy so I have no real basis to judge who is telling the truth and whose interpretation is correct. But I do wholeheartedly reccomend Bailout Nation to anyone who wants a very well thought-out and argued take on the crisis of '08/'09. Those looking for a similar case to this one should also check out A Failure of Capitalism: The Crisis of '08 and the Descent into Depression Those wanting to see an equally well-argued, more free-market case, should check out The Housing Boom and Bust
Summ
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