Description
Book SynopsisBehind every financial crisis lurks a "political bubble"--policy biases that foster market behaviors leading to financial instability. Rather than tilting against risky behavior, political bubbles--arising from a potent combination of beliefs, institutions, and interests--aid, abet, and amplify risk. Demonstrating how political bubbles helped creat
Trade Review"As pundits debate the causes of the 2008 economic crisis, the authors contend that financial crises have inherently political dimensions. McCarty, Poole, and Rosenthal argue persuasively that political bubbles and market bubbles are highly similar, with policy biases contributing to and amplifying market behavior... The authors provide an exhaustive review of structural problems that they believe impede effective government response to new catastrophic economic developments. Their arguments transcend the academic to include historical precedents and specifics on Wall Street machinations."--Publishers Weekly "McCarty, Poole, and Rosenthal have crafted a masterful analysis of the 2008 financial crisis. Their central thesis is that the underlying cause of the Great Recession was the 'political bubble'... The warnings for the U.S. political system are dire, and the authors make the case for political courage in dealing with wealth inequalities. This book would be an excellent addition to the library of any student of political economy and an excellent start in generating policy proposals on how to deal with future crises."--Choice "Greatly expanding upon and enriching prior work on political polarization, Political Bubbles persuasively shows that the 2008 financial crisis was the product of potent political forces."--Philip Rocco, Public Administration
Table of ContentsAcknowledgments vii Introduction 1 Part I: The Political Bubble - Why Washington Allows Financial Crises to Occur Chapter 1 Bubble Expectations 31 Chapter 2 Ideology 38 Chapter 3 Interests 71 Chapter 4 Institutions 90 Chapter 5 The Political Bubble of the Crisis of 2008 117 Part II: Pops - Why Washington Delays in Solving Financial Crises Chapter 6 Historical Lessons of the Responses to Pops 153 Chapter 7 The Pop of 2008 184 Chapter 8 "Pop"ulism 228 Chapter 9 How to Waste a Crisis 251 Epilogue 275 Notes 283 Bibliography 305 Name Index 327 Subject Index 333
