Looking dapper in their tuxedos, 2013 Nobel in Economics co-winner Robert Shiller (r) and Princeton University Press Director Peter Dougherty (l) prepare for the awards ceremony today at the Stockholm Concer Hall in Sweden. Shiller, along with fellow economists Eugene Fama and Lars Peter Hansen (also a PUP author), were awarded the prize in October. Read all about winners of the The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2013, as it is officially called, on the official website.
Yesterday 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!
The Fifth Anniversary of the Lehman Brothers Bankruptcy and Our Top 10 Books on Banking
Since the economic downturn in America, people have been paying much more attention to what is going on with their government, their spending, and most certainly their banks. As today is the fifth anniversary of the Lehman Brothers filing for bankruptcy (the largest bankruptcy filing in the history of the United States), we here at the Press thought we would help you all out a little by suggesting some of our best publications on bank failures, economic regulations, and financial crises. Fun topic for a lazy Sunday, right?
Click on the titles below to learn more about them, and don’t forget to check back tomorrow for an exclusive excerpt from our newest banking book this year: The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It by Anat Admati and Martin Hellwig.
1) The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It
By: Anat Admati & Martin Hellwig
What is wrong with today’s banking system? The past few years have shown that risks in banking can impose significant costs on the economy. Many claim, however, that a safer banking system would require sacrificing lending and economic growth. The Bankers’ New Clothes examines this claim and the narratives used by bankers, politicians, and regulators to rationalize the lack of reform, exposing them as invalid.
2) Debt’s Dominion: A History of Bankruptcy Law in America
By: David A. Skeel Jr.
David Skeel provides the first complete account of the remarkable journey American bankruptcy law has taken from its beginnings in 1800, when Congress lifted the country’s first bankruptcy code right out of English law, to the present day.
3) How Big Banks Fail and What to Do about It
By: Darrell Duffie
How Big Banks Fail and What to Do about It examines how large dealer banks (like J.P. Morgan and Goldman Sachs) collapse and how we can prevent the need to bail them out.
4) Unsettled Account: The Evolution of Banking in the Industrialized World since 1800
By: Richard S. Grossman
In Unsettled Account, Richard Grossman takes the first truly comparative look at the development of commercial banking systems over the past two centuries in Western Europe, the United States, Canada, Japan, and Australia. Grossman focuses on four major elements that have contributed to banking evolution: crises, bailouts, mergers, and regulations.
5) Why Are There So Many Banking Crises? The Politics and Policy of Bank Regulation
By: Jean-Charles Rochet
Almost every country in the world has sophisticated systems to prevent banking crises. Yet such crises–and the massive financial and social damage they can cause–remain common throughout the world. Jean-Charles Rochet, one of the world’s leading authorities on banking regulation, makes the case that, although many banking crises are precipitated by financial deregulation and globalization, political interference often causes–and almost always exacerbates–banking crises.
6) Appeasing Bankers: Financial Caution on the Road to War
By: Jonathan Kirshner
The financial world values economic stability above all else, and crises and war threaten that stability. Appeasing Bankers shows that, when faced with the prospect of war or international political crisis, national financial communities favor caution and demonstrate a marked aversion to war.
7) Codes of Finance: Engineering Derivatives in a Global Bank
By: Vincent Antonin Lépinay
Codes of Finance takes readers behind the scenes of the equity derivatives business at one of the world’s leading investment banks before the crisis, providing a detailed firsthand account of the creation, marketing, selling, accounting, and management of these financial instruments–and of how they ultimately created havoc inside and outside the bank.
8) Balancing the Banks: Global Lessons from the Financial Crisis
By: Mathias Dewatripont, Jean-Charles Rochet & Jean Tirole
Translated by: Keith Tribe
Bringing together three leading financial economists to provide an international perspective, Balancing the Banks draws critical lessons from the causes of the crisis and proposes important regulatory reforms, including sound guidelines for the ways in which distressed banks might be dealt with in the future.
9) Banking on the Future: The Fall and Rise of Central Banking
By: Howard Davies & David Green
Banking on the Future provides a fascinating insider’s look into how central banks have evolved and why they are critical to the functioning of market economies. The book asks whether, in light of the recent economic fallout, the central banking model needs radical reform.
10) Banks and Politics in America from the Revolution to the Civil War
By: Bray Hammond
Bray Hammond investigates into the role of banking in the formation of American society. Hammond, who was assistant secretary of the Board of Governors of the Federal Reserve System from 1944 to 1950, presents this 771-page book with a definitive account of how banking evolved in the United States in the context of the nation’s political and social development.
“The Federal Reserve was founded 1914, and concerns about both macroeconomic stability and financial stability motivated the decision of Congress and President Woodrow Wilson to create it. After the Civil War and into the early 1900s, there was no central bank, so any kind of financial stability functions that could not be performed by the Treasury had to be done privately.” -Ben S. Bernanke, from chapter one of The Federal Reserve and the Financial Crisis
In 2012, Ben Bernanke, chairman of the U.S. Federal Reserve, gave a series of lectures about the Federal Reserve and the 2008 financial crisis, as part of a course at George Washington University on the role of the Federal Reserve in the economy. In this unusual event, Bernanke revealed important background and insights into the central bank’s crucial actions during the worst financial crisis since the Great Depression. Taken directly from these historic talks, The Federal Reserve and the Financial Crisis offers insight into the guiding principles behind the Fed’s activities and the lessons to be learned from its handling of recent economic challenges.
Ben S. Bernanke is chairman of the U.S. Federal Reserve. He has served as chairman of the President’s Council of Economic Advisors and as a member of the Board of Governors of the Federal Reserve. Before his time in public service he was a professor of economics at Princeton University. His many books include Essays on the Great Depression and Inflation Targeting (both Princeton).
We invite you to read chapter one online at: http://press.princeton.edu/chapters/s9928.pdf
Anat Admati of Stanford University talks with EconTalk host Russ Roberts about her new book (co-authored with Martin Hellwig), The Bankers’ New Clothes. Admati argues that the best way to reduce the fragility of the banking system is to increase capital requirements–that is, require banks to finance their activities with a greater proportion of equity rather than debt. She explains how debt magnifies returns and losses while making each bank more fragile. Despite claims to the contrary, she argues that the costs of reducing debt are relatively small for society as a whole while the benefits are substantial.
What is wrong with today’s banking system? The past few years have shown that risks in banking can impose significant costs on the economy. Many claim, however, that a safer banking system would require sacrificing lending and economic growth. The Bankers’ New Clothes examines this claim and the narratives used by bankers, politicians, and regulators to rationalize the lack of reform, exposing them as invalid. Anat Admati and Martin Hellwig argue 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.
Learn more about it from Anat Admati’s interview from NPR’s Morning Edition:
Anat Admati argues that banks carry too much debt and have too little equity.
We invite you to read a book excerpt at npr.org at:
“Crucial . . .”–Jim Surowiecki, NewYorker.com
“Ms. Admati and Mr. Hellwig, top-notch academic financial economists, do understand the complexities of banking, and they helpfully slice through the bankers’ self-serving nonsense. Demolishing these fallacies is the central point of The Bankers’ New Clothes.”–John Cochrane, Wall Street Journal
We also invite you to try your luck and enter for a chance to win a copy of The Bankers’ New Clothes: What’s Wrong with Banking & What to Do about It at Goodreads:
Stanford finance prof Anat Admati discusses her new book, with Martin Hellwig, THE BANKERS’ NEW CLOTHES
Stanford finance and economics professor Anat Admati discusses her new book, with Martin Hellwig, THE BANKERS’ NEW CLOTHES: What’s Wrong with Banking and What to Do about It, out in March, with the Stanford Graduate School of Business.
Follow Professor Admati on her popular Twitter feed @anatadmati
We invite you to browse and download our new economics and finance catalog!
Of particular interest are some of our forthcoming titles including Benn Steil’s remarkable The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order, Ben S. Bernanke’s insightful The Federal Reserve and the Financial Crisis, and Anat Admati and Martin Hellwig’s engaging and accessible The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It. Also note Justin Yifu Lin’s The Quest for Prosperity: How Developing Economies Can Take Off. Interwoven with insights, observations, and stories from Lin’s travels as chief economist of the World Bank and his reflections on China’s rise, this book provides a road map and hope for those countries engaged in their own quest for prosperity.
Our catalog also exhibits critical textbooks including David M. Kreps’ rigorous Microeconomic Foundations I: Choice and Competitive Markets, Steven Tadelis’ comprehensive Game Theory: An Introduction, Ariel Rubinstein’s essential second edition Lecture Notes in Microeconomic Theory: The Economic Agent, and Michael Wickens’ superior second edition Macroeconomic Theory: A Dynamic General Equilibrium Approach.
If you’re interested in hearing more about our economics and finance titles, sign up with ease here: http://press.princeton.edu/subscribe/ Your email address will remain confidential!
We’ll see everyone at the meeting of the Allied Social Science Associations January 4-6 in San Diego, CA. Come visit us at booth 308! Be sure to stop by Saturday, January 5 at 1:00 p.m. for a book signing with Justin Yifu Lin, author of The Quest for Prosperity: How Developing Economies Can Take Off.
Paul Seabright “On Lying, Risk-Taking and the Implosion of the Euro” – The Princeton in Europe annual lecture
The launch of the Euro was a promise of prosperity made by Europe’s political élites to the citizens of the Euro area. But it has gone badly and dangerously wrong. Why? Much has been written about the causes of the Euro crisis and much ink spilt on trying to assign blame among the active participants in the drama: financiers, politicians, regulators, central bankers.
In this lecture Paul Seabright asks a different question: why did the rest of us play along? The active participants needed our money, our bank deposits, our votes – our trust, in short – in order to construct the Euro project. Trust in the project, like trust in the financial system and in many of the projects of modern democracy, required us to deploy psychological capacities that proved quite inadequate to the task.
Behavioural economics and neuroscience are starting to illuminate just why we have such difficulty evaluating complex financial promises like those made by the founders of the Euro project. In particular we have an evolved tendency to deal in dichotomies – such as risk/safety and truth/lies – that are quite unsuited to the continuous gradations of the modern economic landscape. Drawing on a wide range of sources, from neuroscientific experiments to air accident reports, Seabright brings home to us how much our collective illusions contributed to a major financial disaster with potentially serious consequences for democracy in Europe.
Paul Seabright is professor of economics at the Toulouse School of Economics. He has been a fellow of All Souls College, University of Oxford, and Churchill College, University of Cambridge. ‘The Company of Strangers: A Natural History of Economic Life (Revised Edition) was published by Princeton in 2010 and his new book ‘The War of the Sexes: How Conflict and Cooperation Have Shaped Men and Women from Prehistory to the Present’ will be published on 14 May 2012.
The lecture takes place on 18 April 2012 in the Great Hall at Goodenough College from 6.30pm.
For further information, or to register for the event, please contact firstname.lastname@example.org.
A series of excerpts from FINANCE AND THE GOOD SOCIETY, the new book from economist and New York Times Economic Scene columnist Robert J. Shiller, is running this week on Bloomberg View. Yesterday’s piece, “Walt Whitman, First Artist of Finance,” is already generating quite a discussion and today’s “Finance Isn’t as Amoral as It Seems,” already is sure to continue . Stay tuned thoughout the week for more slices from the book.
Walt Whitman, First Artist of Finance
One of the myths surrounding economic inequality in our society is that high incomes are often the result of selfishness and narrow-mindedness, rather than idealism and humanity. We tend to think that those in careers other than our own are fundamentally different kinds of people.
Personality and character differences are, indeed, somewhat associated with occupation. But we tend to attribute the behavior of others to personality differences far more often than is warranted.
We tend to think of philosophers, artists or poets as the polar opposite of chief executive officers, bankers or businesspeople. But the idea that those involved in business have personalities fundamentally different from those in other walks of life is belied by the fact that many often combine or switch careers. Consider a few examples.
Walt Whitman is one of our most revered poets, and his poetry is among the most transcendent. But he could not ignore more material concerns; he had to make a living. To do so, he turned to fiction — more marketable than poetry — and made his name with a commercial novel called “Franklin Evans, or The Inebriate: A Tale of the Times”….