Engineering the Financial Crisis
By Arnold Kling
That is the title of the new book by Jeffrey Friedman and Wladimir Klaus. I have just started to read it.
Their view is very close to mine in several ways. First, they emphasize the role of capital regulations in steering banks toward holding mortgage securities blessed with high ratings from rating agencies. Second, they emphasize that the financial system is beyond the capacity for even an expert to understand well enough to control. Third, they are skeptical of narratives of the crisis that fit political agendas. This includes the narrative that emphasizes greed and deregulation as well as the narrative that emphasizes government promotion of high-risk mortgages and the buildup of moral hazard at banks due to a track record of bailouts.
I will say more about the book when I have read more of it. I wanted to post now, because some of you in the DC area may want to attend a session that will feature the book. Two options:
1. Monday afternoon, October 24, at the American Enterprise Institute.
2. Thursday afternoon, October 27, at the Cato Institute (actually, down the street from Cato, because of construction)