Obscura Society is Holding a William Helmreich Event #WhereInNYC

The Obscura Society seeks out secret histories, unusual access, and opportunities to explore strange and overlooked places hidden all around us. Having a description like that, it only makes sense that they asked someone like William Helmreich, author of The New York Nobody Knows: Walking 6,000 Miles in the City, to speak at the ACME Studio in New York City on December 2nd. His salon-style lecture will go from 8:00 PM to 9:30 PM and books will also be for sale at this event. To learn more, click here.


Helmreich_NewYorkIn a quest to truly know and understand the vast city that he had spent his entire life in, William Helmreich took on an epic undertaking: to walk every single block of New York City.

Over the course of four years Helmreich walked over 6,000 miles of city streets, thoroughly exploring all five boroughs and accumulating a wealth of stories about the people he met and places he found along the way.  Helmreich will be joining the Obscura Society December 2 at Acme Studio to share a truly intimate portrait of the heart and soul of New York, from its most overlooked and hidden corners to the diversity and determination of the people who have made this city home.

William B. Helmreich is the author of the recently published book The New York Nobody Knows: Walking 6,000 Miles in the City.  He is a professor of sociology at the City University Graduate Center (CUNY) and the City College of New York as well as a life-long New Yorker.  He’s been an avid explorer of the hidden outskirts of the city since he was a young child, when his father invented a game called “Last Stop” in which the two would take a subway to the very end of the line and spend the day exploring the surrounding area on foot.


Want more Helmreich? Check out our Tumblr page where we post photos and quotes from Helmreich himself all about the Big Apple.
Or check out our Facebook page where we post about reviews and events involving The New York Nobody Knows.


The 50th Anniversary of the JFK Assassination

JFKToday marks the 50th anniversary of the assassination of President John F. Kennedy. The 35th President of the United States, he was one of four presidents who have ever been assassinated while in office (the other three being Lincoln, McKinley and Garfield). He was shot and killed in a presidential motorcade in Dallas, Texas on November 22nd, 1963 at 12:30 pm.

To honor JFK and all of our fearless leaders of the United States since George Washington was inaugurated in 1789, we’re posting a list of some of our best presidential titles to remind us all of the dedication these men put forth in their time leading our country.

Rest in Peace, Mr. President.


Quotable Jefferson
The Quotable Jefferson

Collected & Edited by John P. Kaminski

The Quotable Jefferson is the first book to put Jefferson’s words in context with a substantial introduction, a chronology of Jefferson’s life, the source of each quotation, an appendix identifying Jefferson’s correspondents, and a comprehensive index. The main section of Jefferson quotations, which are arranged alphabetically by topic, is followed by three other fascinating sections of quotations: Jefferson on his contemporaries, his contemporaries on him, and Jefferson on himself.

Nixon
Richard Nixon: Speeches, Writings, Documents

Edited and Introduced by Rick Perlstein

The first book to present America’s most controversial president in his own words across his entire career, this unique collection of Richard Nixon’s most important writings dramatically demonstrates why he has had such a profound impact on American life. This volume gathers everything from schoolboy letters to geostrategic manifestos and Oval Office transcripts to create a fascinating portrait of Nixon, one that is enriched by an extensive introduction in which Rick Perlstein puts forward a major reinterpretation of the thirty-seventh president’s rise and fall.

Reagan
Morning in America: How Ronald Reagan Invented the 1980′s

By: Gil Troy

Did America’s fortieth president lead a conservative counterrevolution that left liberalism gasping for air? The answer, for both his admirers and his detractors, is often “yes.” In Morning in America, Gil Troy argues that the Great Communicator was also the Great Conciliator. His pioneering and lively reassessment of Ronald Reagan’s legacy takes us through the 1980s in ten year-by-year chapters, integrating the story of the Reagan presidency with stories of the decade’s cultural icons and watershed moments-from personalities to popular television shows.

Bush
The Presidency of George W. Bush: A First Historical Assessment

Edited by Julian E. Zelizer

The Presidency of George W. Bush brings together some of today’s top American historians to offer the first in-depth look at one of the most controversial U.S. presidencies. Emotions surrounding the Bush presidency continue to run high–conservatives steadfastly defend its achievements, liberals call it a disgrace. This book examines the successes as well as the failures, covering every major aspect of Bush’s two terms in office. It puts issues in broad historical context to reveal the forces that shaped and constrained Bush’s presidency–and the ways his presidency reshaped the nation.

Obama
Reading Obama: Dreams, Hope, and the American Political Tradition (New in Paper)

By: James T. Kloppenberg

Reading Obama reveals the sources of Obama’s commitment to democratic deliberation: the books he has read, the visionaries who have inspired him, the social movements and personal struggles that have shaped his thinking. Kloppenberg shows that Obama’s positions on social justice, religion, race, family, and America’s role in the world do not stem from a desire to please everyone but from deeply rooted–although currently unfashionable–convictions about how a democracy must deal with difference and conflict.

Presidential Leadership
Presidential Leadership and the Creation of the American Era

By: Joseph S. Nye, Jr

Spanning multiple presidencies, this book examines the foreign policy decisions of the presidents who presided over the most critical phases of America’s rise to world primacy in the twentieth century, and assesses the effectiveness and ethics of their choices. The book shows how transformational presidents like Wilson and Reagan changed how America sees the world, but argues that transactional presidents like Eisenhower and the elder Bush were sometimes more effective and ethical. It also draws important lessons for today’s uncertain world, in which presidential decision making is more critical than ever.

Presidential Difference
The Presidential Difference: Leadership Style from FDR to Barack Obama (Third Edition)

By: Fred I. Greenstein

In The Presidential Difference, Greenstein provides a fascinating and instructive account of the presidential qualities that have served well and poorly in the Oval Office, beginning with Franklin D. Roosevelt’s first hundred days. He surveys each president’s political skill, vision, cognitive style, organizational capacity, ability to communicate, and emotional intelligence–and argues that the last is the most important in predicting presidential success. Throughout, Greenstein offers a series of bottom-line judgments on each of his 13 subjects as well as an overarching theory of why presidents succeed or fail.


Jonathan M. Ladd Named Finalist for 2012 Frank Luther Mott Award

Jonathan M. Ladd - Why Americans Hate the Media and How It Matters
Finalist for the 2012 Frank Luther Mott – Kappa Tau Alpha Journalism and Mass Communication Research Award

The award is given in honor of Frank Luther Mott, Pulitzer Prize winner, educator and long-time leader of Kappa Tau Alpha. The competition has been held annually since1944. The prize was presented Aug. 9 in Washington, D.C. during the annual convention of the Association for Education in Journalism and Mass Communication.

To read more about this award, click here.

Why Americans Hate The Media and How It MattersAs recently as the early 1970s, the news media was one of the most respected institutions in the United States. Yet by the 1990s, this trust had all but evaporated. Why has confidence in the press declined so dramatically over the past 40 years? And has this change shaped the public’s political behavior? This book examines waning public trust in the institutional news media within the context of the American political system and looks at how this lack of confidence has altered the ways people acquire political information and form electoral preferences.

Jonathan Ladd argues that in the 1950s, ’60s, and early ’70s, competition in American party politics and the media industry reached historic lows. When competition later intensified in both of these realms, the public’s distrust of the institutional media grew, leading the public to resist the mainstream press’s information about policy outcomes and turn toward alternative partisan media outlets. As a result, public beliefs and voting behavior are now increasingly shaped by partisan predispositions. Ladd contends that it is not realistic or desirable to suppress party and media competition to the levels of the mid-twentieth century; rather, in the contemporary media environment, new ways to augment the public’s knowledgeability and responsiveness must be explored.

Drawing on historical evidence, experiments, and public opinion surveys, this book shows that in a world of endless news sources, citizens’ trust in institutional media is more important than ever before.

Jonathan M. Ladd is associate professor of government and public policy at Georgetown University. He received his PhD in politics from Princeton University.

In Honor Of Those Who Have Served

It’s Veteran’s Day! In honor of those who have bravely fought to protect our country, the Press is taking a moment to thank those men and women who have risked their lives for this amazing country and its people. On such an occasion, it only makes sense to share some of our titles with you all that highlight the wars we’ve fought and the democracy we’ve worked so hard to build, neither of which would be possible without people to protect and defend us.

Thank you to all those who have served!


The Confidence Trap
The Confidence Trap: A History of Democracy in Crisis from World War I to the Present

By: David Runciman
In this wide-ranging, original, and compelling book, David Runciman tells the story of modern democracy through the history of moments of crisis, from the First World War to the economic crash of 2008. A global history with a special focus on the United States, The Confidence Trap examines how democracy survived threats ranging from the Great Depression to the Cuban missile crisis, and from Watergate to the collapse of Lehman Brothers. It also looks at the confusion and uncertainty created by unexpected victories, from the defeat of German autocracy in 1918 to the defeat of communism in 1989.

Five Days in August
Five Days in August: How World War II Became a Nuclear War

By: Michael D. Gordin
Most Americans believe that the Second World War ended because the two atomic bombs dropped on Japan forced it to surrender. Five Days in August boldly presents a different interpretation: that the military did not clearly understand the atomic bomb’s revolutionary strategic potential, that the Allies were almost as stunned by the surrender as the Japanese were by the attack, and that not only had experts planned and fully anticipated the need for a third bomb, they were skeptical about whether the atomic bomb would work at all. With these ideas, Michael Gordin reorients the historical and contemporary conversation about the A-bomb and World War II.

Nothing Less Than Victory
Nothing Less than Victory: Decisive Wars and the Lessons of History

By: John David Lewis
The goal of war is to defeat the enemy’s will to fight. But how this can be accomplished is a thorny issue. Nothing Less than Victory provocatively shows that aggressive, strategic military offenses can win wars and establish lasting peace, while defensive maneuvers have often led to prolonged carnage, indecision, and stalemate. Taking an ambitious and sweeping look at six major wars, from antiquity to World War II, John David Lewis shows how victorious military commanders have achieved long-term peace by identifying the core of the enemy’s ideological, political, and social support for a war, fiercely striking at this objective, and demanding that the enemy acknowledges its defeat.

How Wars End
How Wars End

By: Dan Reiter
Why do some countries choose to end wars short of total victory while others fight on, sometimes in the face of appalling odds? How Wars End argues that two central factors shape war-termination decision making: information about the balance of power and the resolve of one’s enemy, and fears that the other side’s commitment to abide by a war-ending peace settlement may not be credible. How Wars End concludes with a timely discussion of twentieth-century American foreign policy, framing the Bush Doctrine’s emphasis on preventive war in the context of the theory.

Paying The Human Costs of War
Paying the Human Costs of War: American Public Opinion and Casualties in Military Conflicts

By: Christopher Gelpi, Peter D. Feaver & Jason Reifler
From the Korean War to the current conflict in Iraq, Paying the Human Costs of War examines the ways in which the American public decides whether to support the use of military force. Contrary to the conventional view, the authors demonstrate that the public does not respond reflexively and solely to the number of casualties in a conflict. Instead, the book argues that the public makes reasoned and reasonable cost-benefit calculations for their continued support of a war based on the justifications for it and the likelihood it will succeed, along with the costs that have been suffered in casualties. Of these factors, the book finds that the most important consideration for the public is the expectation of success.

Our Army
Our Army: Soldiers, Politics, and American Civil-Military Relations

By: Jason K. Dempsey
Conventional wisdom holds that the American military is overwhelmingly conservative and Republican, and extremely political. Our Army paints a more complex picture, demonstrating that while army officers are likely to be more conservative, rank-and-file soldiers hold political views that mirror those of the American public as a whole, and army personnel are less partisan and politically engaged than most civilians. Our Army adds needed nuance to our understanding of a profession that seems increasingly distant from the average American.


Alan Greenspan Calls The Battle of Bretton Woods “Excellent”

Alan Greenspan, former Chairman of the Federal Reserve, recently recommended The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order in an interview for the Associated Press, calling it “excellent”. The author of the book, Benn Steil, was delighted to see this tweet from Liberty News a few days ago, spreading the news of this exciting endorsement. You can read the full article from the Associated Press here.

Liberty News

Benn Steil Wins the 2013 Spear’s Book Award

Steil_Bretton Woods_author photoBenn Steil – The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order
Winner of the 2013 Spear’s Book Award in Financial History

The Spear’s Book Awards, which cover everything from finance to fiction, were presented on Tuesday at a luncheon in London. Caroline Priday accepted the prize for Benn Steil—a leather-bound edition of his book with gold-embossed inscription naming the award.
To read more about the award luncheon and the other winners, click here.

The Battle of Bretton WoodsWhen turmoil strikes world monetary and financial markets, leaders invariably call for ‘a new Bretton Woods’ to prevent catastrophic economic disorder and defuse political conflict. The name of the remote New Hampshire town where representatives of forty-four nations gathered in July 1944, in the midst of the century’s second great war, has become shorthand for enlightened globalization. The actual story surrounding the historic Bretton Woods accords, however, is full of startling drama, intrigue, and rivalry, which are vividly brought to life in Benn Steil’s epic account.

A remarkably deft work of storytelling that reveals how the blueprint for the postwar economic order was actually drawn, The Battle of Bretton Woods is destined to become a classic of economic and political history.

Benn Steil is senior fellow and director of international economics at the Council on Foreign Relations. His previous book, Money, Markets, and Sovereignty, was awarded the 2010 Hayek Book Prize.

“Fighting for the Speakership” Named One of CHOICE’s Editors’ Picks for 2013

Jeffery A. Jenkins & Charles Stewart III – Fighting for the Speakership: The House and the Rise of Party Government
One of Choice’s Editors’ Picks for 2013

The editors of CHOICE Review Online rave over , saying: “An excellent look at the history of majority party leadership in the House. Summing Up: Highly recommended.”

Fighting for the SpeakershipThe Speaker of the House of Representatives is the most powerful partisan figure in the contemporary U.S. Congress. How this came to be, and how the majority party in the House has made control of the speakership a routine matter, is far from straightforward. Fighting for the Speakership provides a comprehensive history of how Speakers have been elected in the U.S. House since 1789, arguing that the organizational politics of these elections were critical to the construction of mass political parties in America and laid the groundwork for the role they play in setting the agenda of Congress today.

Jeffery Jenkins and Charles Stewart show how the speakership began as a relatively weak office, and how votes for Speaker prior to the Civil War often favored regional interests over party loyalty. While struggle, contention, and deadlock over House organization were common in the antebellum era, such instability vanished with the outbreak of war, as the majority party became an “organizational cartel” capable of controlling with certainty the selection of the Speaker and other key House officers. This organizational cartel has survived Gilded Age partisan strife, Progressive Era challenge, and conservative coalition politics to guide speakership elections through the present day. Fighting for the Speakership reveals how struggles over House organization prior to the Civil War were among the most consequential turning points in American political history.

Jeffery A. Jenkins is associate professor of politics at the University of Virginia. Charles Stewart III is the Kenan Sahin Distinguished Professor of Political Science at the Massachusetts Institute of Technology.

Andrew Delbanco Wins the 2013 O.L. David, Jr. Book Award

Andrew Delbanco – College: What It Was, Is, and Should Be
Winner of the 2013 O.L. Davis, Jr. Book Award, American Association for Teaching and Curriculum

Each year, the American Association for Teaching and Curriculum (AATC) acknowledges an Outstanding Book in Education.  AATC, as a recognized major society in the common fields of curriculum and teaching, selects a book that merits high praise and recognition. The award is given in recognition of scholarship that adds substantively to the body of knowledge about the practices and theories of curriculum and teaching.

“At a time when vast changes in higher education are happening, author Andrew Delbanco of Columbia University calls attention to the purpose of college education (historic origins to the present). It is a very good read.”- Chara Bohan, Committee Chair

 
College: What It Was, Is, and Should BeAs the commercialization of American higher education accelerates, more and more students are coming to college with the narrow aim of obtaining a preprofessional credential. The traditional four-year college experience–an exploratory time for students to discover their passions and test ideas and values with the help of teachers and peers–is in danger of becoming a thing of the past.

In College, prominent cultural critic Andrew Delbanco offers a trenchant defense of such an education, and warns that it is becoming a privilege reserved for the relatively rich. In arguing for what a true college education should be, he demonstrates why making it available to as many young people as possible remains central to America’s democratic promise.

In a brisk and vivid historical narrative, Delbanco explains how the idea of college arose in the colonial period from the Puritan idea of the gathered church, how it struggled to survive in the nineteenth century in the shadow of the new research universities, and how, in the twentieth century, it slowly opened its doors to women, minorities, and students from low-income families. He describes the unique strengths of America’s colleges in our era of globalization and, while recognizing the growing centrality of science, technology, and vocational subjects in the curriculum, he mounts a vigorous defense of a broadly humanistic education for all. Acknowledging the serious financial, intellectual, and ethical challenges that all colleges face today, Delbanco considers what is at stake in the urgent effort to protect these venerable institutions for future generations.

In a new preface, Delbanco addresses recent events that threaten the future of the institution.

Andrew Delbanco is the Mendelson Family Chair of American Studies and the Julian Clarence Levi Professor in the Humanities at Columbia University. His many books include Melville: His World and Work (Vintage), which won the Lionel Trilling Award and was a finalist for the Los Angeles Times book prize in biography. He is a recipient of the 2011 National Humanities Medal for his writing that spans the literature of Melville and Emerson to contemporary issues in higher education.

What The Pros Have To Say About Higher Education

It seems as though having a college education is becoming more and more necessary in today’s job search, and with the high price of getting that degree and the constant changes in our modern higher education system, something’s got to give. With some wisdom on exactly what is giving and who is being affected, here is a list of some of our top books on higher education:

Higher Education in America1) Higher Education in America
By: Derek Bok

This book is an analysis of the current condition of our colleges and universities and the strengths and weaknesses of modern American higher education.  At a time when colleges and universities have never been more important to its students or to our nation as a whole, Bok provides a thorough examination of the entire system and determines which criticisms of higher education are unfounded or exaggerated, which are issues of genuine concern, and what can be done to improve matters.
College2) College: What it Was, Is and Should Be
By: Andrew Delbanco

As the commercialization of American higher education accelerates, more and more students are coming to college with the narrow aim of obtaining a preprofessional credential. The traditional four-year college experience–an exploratory time for students to discover their passions and test ideas and values with the help of teachers and peers–is in danger of becoming a thing of the past. College demonstrates why making education available to as many young people as possible remains central to America’s democratic promise.
3) HighHigher Education in the Digital Ageer Education in the Digital Age
By: William G. Bowen

Two of the most visible and important trends in higher education today are its exploding costs and the rapid expansion of online learning. Could the growth in online courses slow the rising cost of college and help solve the crisis of affordability? In this short and incisive book, Bowen explains why he believes technology has the potential to help rein in costs without negatively affecting student learning.
4) The Great BThe Great Brain Racerain Race: How Global Universities Are Reshaping the World
By: Ben Wildavsky

This book presents the first popular account of how international competition for the brightest minds is transforming the world of higher education–and why this revolution should be welcomed, not feared. Every year, nearly three million international students study outside of their home countries, a 40 percent increase since 1999. Wildavsky shows that as international universities strive to become world-class, the new global education marketplace is providing more opportunities to more people than ever before.

Strategy & Business Gives “Mass Flourishing” A Thumbs Up

Mass FlourishingTheodore Kinni of Strategy & Business reviewed Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change this week, saying:

“I…find his values-driven view of national prosperity fascinating—and applicable to corporate and personal prosperity. If innovation and the prosperity it yields stem from the values to which we subscribe as individuals, organizations, and nations, it stands to reason that we should be paying a great deal of attention to the particular values we adopt and espouse.”
― Theodore Kinni, Strategy-Business.com

To check out the full article, click here.
In this book, Nobel Prize-winning economist Edmund Phelps draws on a lifetime of thinking to make a sweeping new argument about what makes nations prosper–and why the sources of that prosperity are under threat today. Why did prosperity explode in some nations between the 1820s and 1960s, creating not just unprecedented material wealth but “flourishing”–meaningful work, self-expression, and personal growth for more people than ever before? Phelps makes the case that the wellspring of this flourishing was modern values such as the desire to create, explore, and meet challenges. These values fueled the grassroots dynamism that was necessary for widespread, indigenous innovation. Most innovation wasn’t driven by a few isolated visionaries like Henry Ford; rather, it was driven by millions of people empowered to think of, develop, and market innumerable new products and processes, and improvements to existing ones. Mass flourishing–a combination of material well-being and the “good life” in a broader sense–was created by this mass innovation.

Yet indigenous innovation and flourishing weakened decades ago. In America, evidence indicates that innovation and job satisfaction have decreased since the late 1960s, while postwar Europe has never recaptured its former dynamism. The reason, Phelps argues, is that the modern values underlying the modern economy are under threat by a resurgence of traditional, corporatist values that put the community and state over the individual. The ultimate fate of modern values is now the most pressing question for the West: will Western nations recommit themselves to modernity, grassroots dynamism, indigenous innovation, and widespread personal fulfillment, or will we go on with a narrowed innovation that limits flourishing to a few?

A book of immense practical and intellectual importance, Mass Flourishing is essential reading for anyone who cares about the sources of prosperity and the future of the West.

Edmund Phelps was the 2006 Nobel Laureate in economics. He is director of the Center on Capitalism and Society at Columbia University. His many books include Designing Inclusion, Rewarding Work, and Seven Schools of Macroeconomic Thought.

Joseph Nye Speaks at “How The Light Gets In” Festival

Presidential Leadership“How The Light Gets In” advertises itself as a philosophy and music festival at Hay on Wye. The event just had its fifth year, with over 30,000 people in attendance, many of whom saw and heard Joseph Nye’s talk about his book, Presidential Leadership and the Creation of the American Era, which examines the foreign policy decisions of the presidents who presided over the most critical phases of America’s rise to world primacy in the twentieth century, and assesses the effectiveness and ethics of their choices.

Joseph S. Nye, Jr. is University Distinguished Service Professor and former dean of the Kennedy School of Government at Harvard University. His books include Soft Power, The Powers to Lead, and The Future of Power. He is a fellow of the American Academy of Arts and Sciences and a member of the American Academy of Diplomacy.

Now, check out his speech in the video below:

Special Excerpt from “The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It”

The Bankers' New ClothesYesterday marked the fifth anniversary of the Lehman Brothers filing for bankruptcy in 2008, sending our economy into a tailspin. To note this occasion, we posted a list of some of our Top Banking Books to help people try to figure out what in the world is going on with our economy.
Along that same thread, today we have a special excerpt of The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It by Anat Admati & Martin Hellwig posted below. In this excerpt (pages 11-12 to be exact), Admati and Hellwig address the Lehman Brothers fall and the ripple affect it had on America and even other countries abroad.
As a whole, the book addresses how risks in banking can impose significant costs on the economy. Many think that a safer banking system would require sacrificing lending and economic growth, but Admati and Hellwig  argue that we can have a safer and healthier banking system without sacrificing any of the benefits of the system, and at essentially no cost to society.
Check out the excerpt below!

In the run-up to the financial crisis, the debts of many large banks financed 97 percent or more of their assets. Lehman Brothers in the United States, Hypo Real Estate in Germany, Dexia in Belgium and France, and UBS in Switzerland had many hundreds of billions of dollars, euros, or Swiss francs in debt. Lehman Brothers filed for bankruptcy in September 2008. The other three avoided bankruptcy only because they were bailed out by their governments.


The Lehman Brothers bankruptcy caused severe disruption and damage to the global financial system. Stock prices imploded, investors withdrew from money market funds, money market funds refused to renew their loans to banks, and banks stopped lending to each other. Banks furiously tried to sell assets, which further depressed prices. Within two weeks, many banks faced the prospect of default.


To prevent a complete meltdown of the system, governments and central banks all over the world provided financial institutions with funding and with guarantees for the institutions’ debts. These interventions stopped the decline, but the downturn in economic activity was still the sharpest since the Great Depression. Anton Valukas, the lawyer appointed by the bankruptcy court to investigate Lehman Brothers, put it succinctly: “Everybody got hurt. The entire economy has suffered from the fall of Lehman Brothers . . . the whole world.”


In the fall of 2008, many financial institutions besides Lehman Brothers were also vulnerable. Ben Bernanke, chairman of the Federal Reserve, told the Financial Crisis Inquiry Commission (FCIC) that “out of maybe . . . 13 of the most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two.” Some or all of the major banks in Belgium, France, Germany, Iceland, Ireland, the Netherlands, Switzerland, and the United Kingdom failed or were at significant risk of failing had their governments not bailed them out.


Accounts of the crisis often focus on the various breakdowns of bank funding between August 2007 and October 2008. Much bank funding consisted of very short-term debt. Banks were therefore vulnerable to the risk that this debt would not be renewed. The deeper reason for the breakdowns, however, was that banks were highly indebted. When banks suffered losses, investors, including other financial institutions, lost confidence and cut off funding, fearing that the banks might become unable to repay their debts.


The Lehman Brothers bankruptcy itself heightened investors’ concerns by showing that even a large financial institution might not be bailed out, and therefore that default of such an institution was a real possibility.


The problem posed by some banks being regarded as too big to fail is greater today than it was in 2008. Since then, the largest U.S. banks have become much larger. On March 31, 2012, the debt of JPMorgan Chase was valued at $2.13 trillion and that of Bank of America at $1.95 trillion, more than three times the debt of Lehman Brothers. The debts of the five largest banks in the United States totaled around $8 trillion. These figures would have been even larger under the accounting rules used in Europe.


In Europe, the largest banks are of similar size. Because European economies are smaller than that of the United States, the problem is even more serious there. Relative to the overall economy, banks are significantly larger in Europe than in the United States, especially in some of the smaller countries. In Ireland and Iceland before the crisis, the banking systems had become so large that, when the banks failed, these countries’ economies collapsed.


The traumatic Lehman experience has scared most governments into believing that large global banks must not be allowed to fail. Should any of these large banks get into serious difficulties, however, we may discover that they are not only too big to fail but also too big to save. There will be no good options.


The consequences of letting a large bank fail are probably more severe today than in the case of Lehman Brothers in 2008, but saving them might cripple their countries. The experiences of Ireland and Spain provide a taste of what can happen if large banking systems have to be saved by their governments. In both countries, the governments were unable to deal with their banking problems on their own, so they had to ask for support from the International Monetary Fund and from the European Union.