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Jeffrey Friedman and Wladimir Kraus


Subtitle: Systemic Risk and the Failure of Regulation, Univ. Of Pennsylvania, Philadelphia, 2011, 272 pgs., index, references, notes


Reviewer comment The authors carefully examine many of the theoretical claims as to what caused the financial crisis of 2008 and discount either completly or in part most of the more proment ideas. They examine the interaction of a number of separate decisions and actions by different agencies to show how these worked unpredicted to create the crisis. Chief among these were the vary policies instituted by the official regulators - especially those titled Basil I and II.


Chapter 1 - Bonuses, Irrationality, and Two-Bigness: The Conventional Wisdom About the Financial Crisis and Its Theoretical Implications


Chapter 2 - Capital Adequacy Regulations and the Financial Crisis: Bankers' and Regulators' Errors


Chapter 3 - The Interaction of Regulations and the Great Recession: Fetishing Market Prices


Chapter 4 - Capitalism and Regulation: Ignorance, Hetrogeneity, and Systemic Risk


Conclusion -


Appendix I: Sclolarship About the Corporate-Compensation Hypothesis


Appendix II - The Basel Rules off the Balance Sheet


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