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  1. Economic Policy and the Financial Crisis: An Empirical Analysis of What Went Wrong.John B. Taylor - 2009 - Critical Review: A Journal of Politics and Society 21 (2-3):341-364.
    ABSTRACT The financial crisis was in large part caused, prolonged, and worsened by a series of government actions and interventions. The housing boom and bust that precipitated the crisis were enabled by extraordinarily loose monetary policy. After the housing boom came to an end, the Federal Reserve misdiagnosed financial markets' uncertainty about the location and value of risky subprime mortgage‐backed securities as being, instead, a liquidity problem, and it took inappropriate compensatory actions that had side effects that included raising the (...)
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  • The Anatomy of a Murder: Who Killed America's Economy?Joseph E. Stiglitz - 2009 - Critical Review: A Journal of Politics and Society 21 (2-3):329-339.
    ABSTRACT The main cause of the crisis was the behavior of the banks—largely a result of misguided incentives unrestrained by good regulation. Conservative ideology, along with unrealistic economic models of perfect information, perfect competition, and perfect markets, fostered lax regulation, and campaign contributions helped the political process along. The banks misjudged risk, wildly overleveraged, and paid their executives handsomely for being short‐sighted; lax regulation let them get away with it—putting at risk the entire economy. The mortgage brokers neglected due diligence, (...)
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  • Monetary Policy, Credit Extension, and Housing Bubbles: 2008 and 1929.Steven Gjerstad & Vernon L. Smith - 2009 - Critical Review: A Journal of Politics and Society 21 (2-3):269-300.
    ABSTRACT Asset‐market bubbles occur dependably in laboratory experiments and almost as reliably throughout economic history—yet they do not usually bring the global economy to its knees. The Crash of 2008 was caused by the bursting of a housing bubble of unusual size that was fed by a massive expansion of mortgage credit—facilitated, in turn, by the longest sustained expansionary monetary policy of the past half century. Much of this mortgage credit was extended to people with little net wealth who made (...)
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  • An Accident Waiting to Happen.Amar Bhidé - 2009 - Critical Review: A Journal of Politics and Society 21 (2-3):211-247.
    ABSTRACT Banks provide a valuable but inherently unstable combination of deposit‐taking and lending functions that were successfully held together for several decades after the New Deal by tough banking rules. The weakening of the rules after the 1970s promoted the displacement of traditional relationship‐based banking with securitized, arms‐length alternatives that encouraged banks to undertake activities about which bankers lacked deep relationship‐based knowledge of the risks. Ironically, this risky behavior, encouraged by loosened regulation, was reinforced by progressively tightened securities regulation, which (...)
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