A comprehensive account of the rise and fall of the mortgage-securitization industry, which explains the complex roots of the 2008 financial crisis.

More than a decade after the 2008 financial crisis plunged the world economy into recession, we still lack an adequate explanation for why it happened. Existing accounts identify a number of culprits—financial instruments, traders, regulators, capital flows—yet fail to grasp how the various puzzle pieces came together. The key, Neil Fligstein argues, is the convergence of major US banks on an identical business model: extracting money from the securitization of mortgages. But how, and why, did this convergence come about?

The Banks Did It carefully takes the reader through the development of a banking industry dependent on mortgage securitization. Fligstein documents how banks, with help from the government, created the market for mortgage securities. The largest banks—Countrywide Financial, Bear Stearns, Citibank, and Washington Mutual—soon came to participate in every aspect of this market. Each firm originated mortgages, issued mortgage-backed securities, sold those securities, and, in many cases, acted as their own best customers by purchasing the same securities. Entirely reliant on the throughput of mortgages, these firms were unable to alter course even when it became clear that the market had turned on them in the mid-2000s.

With the structural features of the banking industry in view, the rest of the story falls into place. Fligstein explains how the crisis was produced, where it spread, why regulators missed the warning signs, and how banks’ dependence on mortgage securitization resulted in predatory lending and securities fraud. An illuminating account of the transformation of the American financial system, The Banks Did It offers important lessons for anyone with a stake in avoiding the next crisis.

This book is a major contribution exploring the policy options available for developing and emerging economies in response to the global economic crises.

Written by a highly respected development economist, the book gives a clear-eyed account of the issues particular to these countries and critically evaluates different policy approaches, including reforms in financial, monetary and trade policies. Informed by deep scholarship as well as practical experience, Yilmaz Akyüz draws on empirical data, historical context and theoretical expertise, with special attention paid to issues such as the role of the International Monetary Fund and China.

The Financial Crisis and the Global South is a landmark book that will be of interest to practitioners, scholars, theorists and students of economics and development studies.

In an age when pundits constantly decry overt political bias in the media, we have naturally become skeptical of the news. But the bluntness of such critiques masks the highly sophisticated ways in which the media frame important stories. In Front Page Economics, Gerald Suttles delves deep into the archives to examine coverage of two major economic crashes—in 1929 and 1987—in order to systematically break down the way newspapers normalize crises.

Poring over the articles generated by the crashes—as well as the people in them, the writers who wrote them, and the cartoons that ran alongside them—Suttles uncovers dramatic changes between the ways the first and second crashes were reported. In the intervening half-century, an entire new economic language had arisen and the practice of business journalism had been completely altered. Both of these transformations, Suttles demonstrates, allowed journalists to describe the 1987 crash in a vocabulary that was normal and familiar to readers, rendering it routine.

A subtle and probing look at how ideologies are packaged and transmitted to the casual newspaper reader, Front Page Economics brims with important insights that shed light on our own economically tumultuous times.

The definitive account of the housing bubble that caused the Great Recession—and earned Wall Street fantastic profits.

The American housing bubble of the 2000s caused the worst global financial crisis since the Great Depression. In this definitive account, Adam Levitin and Susan Wachter pinpoint its source: the shift in mortgage financing from securitization by Fannie Mae and Freddie Mac to “private-label securitization” by Wall Street banks. This change set off a race to the bottom in mortgage underwriting standards, as banks competed in laxity to gain market share.

The Great American Housing Bubble tells the story of the transformation of mortgage lending from a dysfunctional, local affair, featuring short-term, interest-only “bullet” loans, to a robust, national market based around the thirty-year fixed-rate mortgage, a uniquely American innovation that served as the foundation for the middle class.

Levitin and Wachter show how Fannie and Freddie’s market power kept risk in check until 2003, when mortgage financing shifted sharply to private-label securitization, as lenders looked for a way to sustain lending volume following an unprecedented refinancing wave. Private-label securitization brought a return of bullet loans, which had lower initial payments—enabling borrowers to borrow more—but much greater back-loaded risks. These loans produced a vast oversupply of underpriced mortgage finance that drove up home prices unsustainably. When the bubble burst, it set off a destructive downward spiral of home prices and foreclosures.

Levitin and Wachter propose a rebuild of the housing finance system that ensures the widespread availability of the thirty-year fixed-rate mortgage, while preventing underwriting competition and shifting risk away from the public to private investors.

This account of the financial crisis of 2008–2009 compares banking systems in the United States and the United Kingdom to those of Canada and Australia and explains why the system imploded in the former but not the latter. Central to this analysis are differences in bankers’ beliefs and incentives in different banking markets.

A boom mentality and fear of being left behind by competitors drove many U.S. and British bank executives to take extraordinary risks in creating new financial products. Intense market competition, poorly understood trading instruments, and escalating system complexity both drove and misled bankers. Formerly illiquid assets such as mortgages and other forms of debt were repackaged into complex securities, including collateralized debt obligations (CDOs). These were then traded on an industrial scale, and in 2007 and 2008, when their value collapsed, economic activity fell into a deep freeze. The financial crisis threatened not just investment banks and their insurers but also individual homeowners and workers at every level. In contrast, because banks in Canada and Australia could make good profits through traditional lending practices, they did not confront the same pressures to reinvent themselves as did banks in the United States and the United Kingdom, thus allowing them to avoid the fate of their overseas counterparts.

Stephen Bell and Andrew Hindmoor argue that trading and systemic risk in the banking system need to be reined in. However, prospects for this are not promising given the commitment of governments in the crisis-hit economies to protect the “international competitiveness” of the London and New York financial markets.

It is now widely agreed that mainstream macroeconomics is irrelevant and that there is need for a more useful and realistic economic analysis that can provide a better understanding of the ongoing global financial and economic crisis. Lance Taylor’s book exposes the unrealistic assumptions of the rational expectations and real business cycle approaches and of mainstream finance theory. It argues that in separating monetary and financial behavior from real behavior, they do not address the ways that consumption, accumulation, and the government play in the workings of the economy.

Taylor argues that the ideas of J. M. Keynes and others provide a more useful framework both for understanding the crisis and for dealing with it effectively. Keynes’s basic points were fundamental uncertainty and the absence of Say’s Law. He set up machinery to analyze the macro economy under such circumstances, including the principle of effective demand, liquidity preference, different rules for determining commodity and asset prices, distinct behavioral patterns of different collective actors, and the importance of thinking in terms of complete macro accounting schemes. Economists working in this tradition also worked out growth and cycle models.

Employing these ideas throughout Maynard’s Revenge, Taylor provides an analytical narrative about the causes of the crisis, and suggestions for dealing with it.

In The Credit Crunch, Graham Turner predicted that banks would be nationalised and interest rates would be reduced too slowly to halt the crisis. His predictions were correct. His new book, No Way to Run an Economy, is the essential guide to the turbulent times ahead.

Turner recommended radical measures, such as quantitative easing, in early 2008 but argues that action has been taken too late and been too timid to make a real difference. He dissects the policy mistakes of the last 12 months including Obama's doomed market-led response to the crisis and the obsession of central banks with the red herring of inflation.

There is no doubt the economy is still in serious trouble, but Turner shows that learning from the mistakes made so far can prevent a situation worse than that of the 1930s crisis.

Written by a top scholar on social security in Latin America and the Caribbean, this book assesses the effects of the world economic crisis on social security and welfare in the region. Drawing on the impact of and lessons from previous crises, Carmelo Mesa-Lago identifies the strengths and weakness of Latin American social security before the current global crisis. He evaluates the event's actual and potential effects on pensions, health care, and social assistance programs, based on a taxonomy of three groups of countries.

The book ends with a summary of policies adopted by some countries and the author's own recommendations on social policies to lessen the adverse outcomes of the financial crisis. Latin America's pioneering social-welfare reforms make this book important for other regions of the world, both developed and developing.