Part 15 (1/2)

Chapter 1: The White Swan

14 on the eve of the Great Depression: The single best account of the crash remains John Kenneth Galbraith, The Great Crash, 1929 (Boston: Houghton Mifflin, 1954)

15 ”At this juncture”: Ben S Bernanke, ”Economic Outlook,” testiress, March 28, 2007; online at federalreservegov/newsevents/testimony/bernanke20070328ahtm

15 ”I don't think it poses”: Paulson quoted in Kevin Carmichael and Peter Cook, ”Paulson Says Subpricocom/apps/news?pid=20601087&sid=aBvlvv forward”: Henry M Paulson, Jr, reton, DC, May 16, 2008, online at ustreasgov/press/releases/hp981htm

16 ”Surethere are trouble spots”: Donald Luskin, ”Quit Doling Out That Bad-Econoton Post, September 14, 2008

16 ”black swan”: Nassihly Improbable (New York: Random House, 2007)

18 households used their holey, and Robert J shi+ller, ”Co Market,” Advances in Macroeconomics 5 (2005): 1-34

18 ho Bust Meets the Equity Blues,” Blooco9aJ_E; Alan Greenspan and James Kennedy, ”Sources and Uses of Equity Extracted fro Paper no 2007-20, Finance and Economics Discussion Series, Federal Reserve Board, online at federalreservegov/pubs/feds/2007/200720/200720pappdf

18 ”This tioff, This Tiht Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2009)

20 Before the rise of capitalisoff, This Time Is Different, 86-89, 101-11, 174-81

20 The Chinese pioneered: Peter Bernholz, Monetary Regimes and Inflation: History, Economic and Political Relationshi+ps (Cheltenhaar, 2003), 53

20 ”tulip mania”: See, for example, Peter M Garber, ”Tulipmania,” Journal of Political Econoar, Tulipe (Chicago: University of Chicago Press, 2007)

20 John Law's Mississippi Company: John Law, A Full and Impartial Account of the Company of Mississippi (London, 1720); Antoin E Murphy, John Law: Economic Theorist and Policy-Maker (Oxford: Clarendon Press, 2007)

21 South Sea Company: Rik G P Frehen, William N Goetzmann, and K Geert Rouwenhorst, ”New Evidence on the First Financial Bubble,” National Bureau of Econo Paper no 15332, September 2009

21 the panic of 1825: Larry Neal, ”The Financial Crisis of 1825 and the Restructuring of the British Financial System,” Federal Reserve Bank of St Louis Review, May-June 1998, 53-76; Michael Bordo, ”Commentary,” Federal Reserve Bank of St Louis Review, May-June 1998, 77-82

21 ”a period of frantic”: Walter Bagehot, Lombard Street: A Description of the Money Market (New York: E P Dutton, 1920), 190

21 the panic of 1857: G W Van Vleck, The Panic of 1857: An analytical Study (New York: Columbia University Press, 1943); Charles W Caloins, Transmission, and Containment,” Journal of Economic History 51 (1991): 807-34

22 Countries around the world: Charles P Kindleberger, Manias, Panics, and Crashes: A History of Financial Crises (New York: Basic Books, 1978), 129-30

22 the crisis of 1873: Ibid, 132-133; Michael Bordo, ”Discussion: The Panic of 1873 and Financial Market Volatility and Panics Before 1914,” in Eugene White, ed, Crashes and Panics: The Lessons from History (Homewood, Ill: Business One Irwin, 1990), 126-32

23 The crisis of 1907: Robert F Bruner and Sean D Carr, The Panic of 1907: Lessons Learned from the Market's Perfect Storm (Hoboken, NJ: John Wiley and Sons, 2009)

23 the money supply sharply contracted: Milton Friedman and Anna J Schwartz, A Monetary History of the United States, 1867-1960 (Princeton, NJ: Princeton University Press, 1963), 299-419

23 ”leave-it-alone liquidationist”: Hoover quoted in Kindleberger, Manias, Panics, Crashes, 139-40

24 the worst depression in its history: David M Kennedy, Freedom from Fear: The American People in Depression and War, 1929-1945 (New York: Oxford University Press, 1999)

24 Many nations in Europe: Charles P Kindleberger, The World in Depression, 1929-1939 (Berkeley: University of California Press, 1986); Reinhart and Rogoff, This Time Is Different, 71-73, 111

24 Bretton Woods: Michael D Bordo and Barry J Eichengreen, eds, A Retrospective on the Bretton Woods Systeo: University of Chicago Press, 1993), 3-108

25 All good things: Peter M Garber, ”The Collapse of the Bretton Woods Fixed Exchange Rate Syste: Timothy Curry, ”The LDC Debt Crisis,” in FDIC Division of Research and Statistics, History of the Eighties: Lessons for the Future (Washi+ngton: FDIC, 1997), 1:191-210

26 the Great Moderation: Jaed and Why?” NBER Macroeconomics Annual 2002 17 (2003): 159-218

26 What accounted for the Great Moderation: The literature on the Great Moderation is extensive See, for exahil Ahmed, Andrew Levin, and Beth Anne Wilson, ”Recent US Macroeconomic Stability: Good, Policies, Good Practices, or Good Luck?” Review of Econoaret McConnell, and Gabriel Perez-Quiros, ”On the Causes of the Increased Stability of the US Economy,” Federal Reserve Bank of New York, Economic Policy Review 8 (2002): 183-202; Jordi Gali and Luca Gambetti, ”On the Sources of the Great Moderation,” American Economic Journal: Macroeconomics 1 (2009): 26-57

27 ”optimistic for the future”: Ben S Bernanke, ”The Great Moderation,” reton, DC, February 20, 2004, online at federalreservegov/boarddocs/speeches/2004/20040220/defaulthtman, The Return of Depression Economics (New York: WW Norton, 1999), 60-82; Takatoshi+ Ito, ”Retrospective on the Bubble Period and Its Relationshi+p to Developments in the 1990s,” World Economy 26 (2003): 283-300; Mitsuhiro fukao, ”japan's Lost Decade and Its Financial System,” World Econoulfed Norway: Harald A Benink and David T Llewellyn, ”Fragile Banking in Norway, Sweden and Finland: An Empirical analysis,” Journal of International Financial Markets, Institutions and Money 4 (1994): 5-19

28 savings and loan associations: Tis and Loan Crisis: Truth and Consequences,” FDIC Banking Review 13 (2000): 26-35

28 countries in Latin America and Asia: Nouriel Roubini and Brad Setser, Bailouts or Bail-Ins? Responding to Financial Crises in Eton, DC: Institute for International Econoer Lowenstein, When Genius Failed: The Rise and Fall of Long-Terement (New York: Random House, 2000)

29 Crises continued to materialize: Roubini and Setser, Bailouts or Bail-Ins, 61-70

31 ”There is no national housing bubble”: Daniela Deane, ”In Real Estate Fever, More Signs of Sickness,” Washi+ngton Post, April 17, 2005

31 ”the charm of history”: Aldous Huxley, The Devils of Loudun (London: Chatto and Windus, 1952), 259

31 greed: See, for example, Ruth Gledhill, ”Rowan Williams Says 'Human Greed' to Blame for Financial Crisis,” Times (London), October 15, 2008

33 ”we should be quite cautious”: Alan Greenspan, ”Consumer Credit and Financial Modernization,” re Institute, San Francisco, Calif, October 11, 1997, online at federalreservegov/boarddocs/speeches/1997/19971011htm

33 ”lenders are now able”: Alan Greenspan, remarks to the Federal Reserve System's Fourth Annual Coton, DC, April 8, 2005, online at federalreservegov/boarddocs/speeches/2005/20050408/defaultht the rate: Jean Claude Trichet, ”Activism and Alertness in Monetary Policy,” lecture to ”Central Banks in the 21st Century” conference, Madrid, June 8, 2006, online at ecbint/press/key/date/2006/html/sp060608_1enhtml

Chapter 2: Crisis Economists

39 ”Practical men, who believe”: Keynes, General Theory, 383

40 ”invisible hand”: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: Charles Knight, 1835), 3:112; Robert L Heilbroner and Lester C Thurow, Economics Explained (New York: Touchstone, 1987), 25-31

40 economists refined and reworked: Denis P O'Brien, ”Classical Economics,” in Warren J Samuels, Jeff E Biddle, and John B Davis, eds, A Coht (Oxford: Blackwell, 2003), 112-29; Alessandro Roncaglia, The Wealth of Ideas: A History of Econoe University Press, 2005), 179-243, 278-96, 322-83