Financial Crisis Reading

The financial crisis has been going on long enough now that we are starting to see a lot of serious research and policy papers addressing the various issues that the crisis has raised.

This material may be a bit more complicated than most of the reports this blog usually links to but I think some of our readers may appreciate getting a sense of the stuff that we’re reading in trying to understand what’s going on and where we should be heading.

So, here’s some stuff I’ve been reading in between my nationalisation blogging …

  1. Via Paul Krugman, here’s the six-month congressional oversight report for TARP (oh that NAMA would ever receive such oversight!)  Beyond the detailed discussion of the various US government initiatives, the report contains a valuable discussion of historical approaches to banking crises (including the often mis-interpreted Swedish bad bank scheme)  and current European approaches.  The report even devotes two pages to Ireland.
  2. Via Greg Mankiw, two papers from this weekend’s NBER Macro Annual conference struck me as particularly interesting.  This one on “The Credit Ratings Crisis” (Personally, I’m in favour of setting up an international ratings agency, run out of the BIS, such that risk-weighted capital calculations would be done by a fully independent agency — but more on that some other time).  Then there’s this paper on foreclosures from the Boston Fed. See also this excellent summary of the paper from the unrivalled source of free ice-cream that is Calculated Risk.
  3. Amid the damp squib that was the G20 meeting, I didn’t see any discussion of these three reports released simultaneously by the Financial Stability Forum (an intergovernmental body of central bankers and treasury officials — now apparently re-named the far more catchy Financial Stability Board) on addressing procyclicality in the financial system, on compensation practices, and on international co-operation on financial crises.  The reports contain lots of interesting material.

3 replies on “Financial Crisis Reading”

Less academic but still worth reading is a very recent book “Ireland’s House Party- what the estate agents don’t want you to know” by Derek Brawn , the former head of research at Savills HOK. While the basic story will be very familiar to readers of the blog its insider perspective is very useful & its a fun read. There is a nice chapter reviewing the pronouncements of the various cheerleaders for the house price bubble.

Here’s a paper about the Japanese property and banking crisis that bears thinking about. It is written in terms of the US, but there might be something to learn. Although it’s much bigger, Japan is, like Ireland, a basically rural country that is in thrall to developers.

It is worth searching a bit more and reading about Long Term Credit Bank of Japan. This disaster zone was one of the biggest companies in the world at one stage. Didn’t stop it crashing and burning. In the end, the Japanese government had to nationalize it, then sell it again for a low price.

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