Author |
: Gary B. Gorton |
Publisher |
: Oxford University Press |
Total Pages |
: 232 |
Release |
: 2010-03-08 |
ISBN-10 |
: 9780199742110 |
ISBN-13 |
: 0199742111 |
Rating |
: 4/5 (10 Downloads) |
Book Synopsis Slapped by the Invisible Hand by : Gary B. Gorton
Download or read book Slapped by the Invisible Hand written by Gary B. Gorton and published by Oxford University Press. This book was released on 2010-03-08 with total page 232 pages. Available in PDF, EPUB and Kindle. Book excerpt: Originally written for a conference of the Federal Reserve, Gary Gorton's "The Panic of 2007" garnered enormous attention and is considered by many to be the most convincing take on the recent economic meltdown. Now, in Slapped by the Invisible Hand, Gorton builds upon this seminal work, explaining how the securitized-banking system, the nexus of financial markets and instruments unknown to most people, stands at the heart of the financial crisis. Gorton shows that the Panic of 2007 was not so different from the Panics of 1907 or of 1893, except that, in 2007, most people had never heard of the markets that were involved, didn't know how they worked, or what their purposes were. Terms like subprime mortgage, asset-backed commercial paper conduit, structured investment vehicle, credit derivative, securitization, or repo market were meaningless. In this superb volume, Gorton makes all of this crystal clear. He shows that the securitized banking system is, in fact, a real banking system, allowing institutional investors and firms to make enormous, short-term deposits. But as any banking system, it was vulnerable to a panic. Indeed the events starting in August 2007 can best be understood not as a retail panic involving individuals, but as a wholesale panic involving institutions, where large financial firms "ran" on other financial firms, making the system insolvent. An authority on banking panics, Gorton is the ideal person to explain the financial calamity of 2007. Indeed, as the crisis unfolded, he was working inside an institution that played a central role in the collapse. Thus, this book presents the unparalleled and invaluable perspective of a top scholar who was also a key insider.