How Did the Global Financial Crisis and Bubble Happen?

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Former FED Chairman Alan Greenspan made a very interesting comment when he testified before congress after the Global Financial bubble burst of late 2008. When asked how did this happen, he made a number of astute observations and comments, of course the most telling and one that has been repeated the most was; "I couldn't believe that bankers would act this way against their own interests" or something to that point.

Was it more irrational exuberance, only this time aimed at the banking sector? Well, if you'd like to read an extremely good book on the reality of "rational investment" on Wall Street than boy to I have a good book recommendation for you. The book is a really good read, but very detail oriented and philosophically based, which 100s of names, theories, examples, observations and a good bit of history on economic thought, and financial theory. The book is:

"The Myth of Rational Markets; A History of Risk, Reward, and Delusion on Wall Street" by Justin Fox; Harper Business Book Publishers; New York, NY; 2009.

As the author takes you through some 350 pages, he never actually answers the question, which is the suggested in the title of the book; are markets rational? But, that is okay, as the reader, if intellectually endowed will have a very good understanding by the time they finish. All the pros and cons, and theories of this question are addressed.

I very much enjoyed the history, and his lectures on the evolution of economic and financial thinking. There were many folks listed in the book, as well as all their arguments. I enjoyed the comments about Warren Buffet, and the top academic scholars on investment theory, portfolio allocation schemes, capital asset pricing, and option pricing. Action packed with references galore, it's all here. Think on this.

Lance Winslow - Lance Winslow's Bio. Lance Winslow is also Founder of the Car Wash Guys, a cool little Franchise Company; http://www.carwashguys.com/history/founder.html.

Fault Lines - How Hidden Fractures Still Threaten The World Economy

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Theses culprits are none other than greedy bankers, sleepy regulators and irresponsible borrowers whose individual choices that collectively brought about the economic meltdown.

Raghuram Rajan was one of the few economists who warned the world of the global financial crisis before it even hit. In the book Rajan warns us of the serious flaws in the economy that need to be fixed to prevent potentially more devastating crisis that awaits us. According to Rajan there were two main causes that led to initial breakdown-One was stagnant wages and the other was growing inequality in the U.S.

All this led to the reduced purchasing power of many middle class households which gave birth to an urgent demand for credit. The financial industry that had already gained encouragement from the government responded back by supplying home equity loans, subprime mortgages and auto loans. Most economists had failed to consider that the side effects of this unrestrained credit growth would turn out to be more devastating.

Raghuram writings are always well reasoned and based on sound set of facts. While the book is worth it even for the explanation of why we had a crisis and is even the most thought provoking contribution in the aftermath of the financial crisis. Readers will find that the book is full of great examples and cases and will certainly question some long held biases about current economic conditions in western countries.

Raghuram in his book also lays out some common patterns of global economic behavior in households, markets and governments and shows that when economic conditions become so demanding the difference of behavior between developed and developing countries becomes negligible.

Jenny is an online marketing professional, who keeps on researching on how various businesses are using online marketing for their advantages. He often shares his research and understanding through his articles and blogs.
He is currently researching on the global book industry and finding out the best resource to procure and buy books. To buy books online, he tests the usability factors associated with the online bookstores. Based on his real life experiences he would be contributing some of the articles for various resources to procure and buy books.