Apart from the substantiation of the thesis, there is little in the narrative of the immediate causes of the crash of that cannot be found in any number of other works.?
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The set of proposals in the second half of the book indicates that the commentaries flowing from the crash have turned from simple chronologies of events and the assignment of blame to more sober second thoughts about correcting the deficiencies in the system in which the crash occurred. There are two elements in the set of proposals, a number of suggested polices growing out of the historical thesis, and a general injunction about the reformation of the capitalist system.?
The latter is a theme previously put forward by the authors in book form and on the web under the title Philanthrocapitalism Bloomsbury Press, London, ? The Road from Ruin adds nothing new to this proposed possible reformation of the capitalist market system of economic organization. The main contribution of The Road from Ruin is its historical thesis, though saying even that is saying too much; because similar theses have been put forward by Charles P. What is distinctive in this particular book is its very readable exhaustive listing and description of the historical events that support its substantial thesis.?
For example, the tulip bubble followed the first appearance of limited liability ownership of shares in business enterprises, and the first appearance of a market for shares that included contracts to be fulfilled at some future time.? The South Sea Bubble collapse of followed the introduction of government support for the value of shares in a particular enterprise.
The crash of followed the introduction of the ticker tape, stock brokers? The crash of followed the introduction of portfolio insurance and computerized formula trading.? Late twentieth century and early twenty first century crashes followed the introduction of derivatives, hedge funds, credit default swaps, subprime mortgages, and mark-to-market valuations.? Accounts of a number of nineteenth century banking crises and panics and of innovations in financial instruments and institutions associated with them provide material filling in the narrative.
The point being made is that, for the most part, the intruding new instruments and institutions that at first were written down as the causes of financial collapse survived the calamities with which they were associated.?
The Road from Ruin: How to Revive Capitalism and Put America Back on Top
When the smoke cleared they proved to be useful, efficiency generating, innovations.? Upcoming SlideShare. Like this presentation?
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The Road from Ruin: How to Revive Capitalism and Put America Back on Top | David K. Hurst
Published in: Business. Full Name Comment goes here. Are you sure you want to Yes No. Paulson Jr. View all New York Times newsletters. The authors say the ensuing loss of confidence prompted the huge — and, in their minds, otherwise avoidable — government bailouts that Mr.
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Paulson initiated in following days. For his part, Mr.
Green are a bit disappointing and not entirely original when prescribing cures for what they think ails capitalism. They warn against resurrecting regulatory measures like the Depression-era Glass-Steagall Act , which separated commercial and investment banking until its repeal in ; they fear that such restraints would hamper the competitiveness of American banks internationally.
They also advocate replacing the dollar with a new world reserve currency, which they say would increase American exports and help level the playing field of international trade.
The Case for Financial Reinvention
That, as they concede, is an idea borrowed from Mr. So, too, is their argument that the economy might have benefited from more government stimulus spending, and still might be helped by it.
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Buffett, who are giving much of their fortunes to charitable causes. Beyond that, the authors call for programs to improve financial literacy in the media and the general public, and for shareholders and institutional investors to demand that corporate managers focus on long-term success rather than on quarterly profits. But if their book has its shortcomings, Mr.
Green make a persuasive case that America needs to transform its basic economic theory and practice, or the road out of our current mess will be at least as long and winding as the road that got us in it.
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