How Markets Fail
By John Cassidy
Farrar, Straus & Giroux, 400 pp., $25
How Markets Fail: The Logic of Economic Calamities also addresses the recent crisis, but John Cassidy's learned yet readable volume is basically an intellectual history of competing ideas about how much oversight financial institutions require -- and what happens when ideology trumps common sense.
The reader gets the impression that Cassidy doesn't much like capitalism. And while he's relentlessly fair-minded in making the case for more financial regulation, his faith in the powers of government is probably excessive.
Cassidy's judicious account of recent events shows that under Alan Greenspan the Fed kept interest rates too low for too long while failing to adequately supervise an overheated financial system. This is to say nothing of government's disastrous role in the creation and inadequate regulation of Fannie Mae and Freddie Mac.
That said, Cassidy has given us a very good book, one that belongs alongside such classics as Robert Heilbroner's The Worldly Philosophers and Jerry Muller's The Mind and the Market.
Maybe if enough people read such books, next time really will be different. But don't bet on it.
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