2008 Financial Crisis Primer  Tags: financial crisis  

• Nocera, Joe. "RISK Mismanagment." New York Times Magazine (4 Jan. 2009) p. 24. America’s Newspapers, NewsBank. IIT Downtown Campus Library, Chicago IL.  22 Jan 2009. <link to article>.

Abstract: Joe Nocera tells the story of Value at Risk or VaR and its role in the financial crisis.  This statistic became one of the most commonly used measures of financial risk employed by portfolio managers and corporate executives alike. The article uncovers how and why this statistic was used and misused, and discusses why it ultimately failed to predict the scope of the losses inflicted on the institutions that used it.

• John Cassidy, “ANATOMY OF A MELTDOWN.” New Yorker, 84.39 (Dec. 2008): 48-63. Academic Search Premier. EBSCO. IIT Downtown Campus Library, Chicago IL.  22 Jan. 2009 <link to article>.

Abstract: "The article profiles the U.S. financial crisis following the collapse of the subprime loan housing market. Chairman of the Federal Reserve bank Ben Bernanke and secretary Henry Paulson organized a bailout plan for the U.S. banking industry. Other topics include the housing bubble, home-equity loans, president George W. Bush, and economic risk in the credit market." -- Academic Search Premier

• Lewis, Michael. “The End.” Portfolio 2.12 (Dec. 2008). www.Portfolio.com 3 Dec. 2008 <link to article> .

Abstract: "The era that defined Wall Street is finally, officially over. Michael Lewis, who chronicled its excess in Liar’s Poker, returns to his old haunt to figure out what went wrong." -- Portfolio.com

• Dash, Eric and Julie Creswell, “Citigroup Saw No Red Flags Even as It Made Bolder Bets.” New York Times. 22 Nov. 2008. www.nytimes.com. 23 Nov. 2008 <link to article>.

Abstract: This article details the evolution and impact of the financial crisis at Citigroup, one of the nation’s largest financial institutions.  The article highlights the roles played by Citigroup’s chief executive, Charles O. Prince III and former U.S.Treasury Secretary Robert Rubin, an influential director and advisor at Citigroup.

• "When Fortune Frowned." Economist 387.8601 (11 Oct. 2008): special section 3-6. Business Source Premier. EBSCO. IIT Downtown Campus Library, Chicago, IL. 26 Oct. 2008 <link to article>.

Abstract: "The article examines the 2008 financial crisis caused by the collapse of the U.S. housing bubble. The U.S. legislation to purchase $700 billion in assets from the financial services industry is an unprecedented government intervention in finance, but it is unclear if it will be enough to restore confidence in credit markets. Past banking crises in rich countries have resulted in deep recessions. The emerging economies of developing countries may mitigate that effect." -- Business Source Premier

• Nocera, Joe, et al. “36 Hours of Alarm and Action as Crisis Spiraled.” New York Times 2 Oct. 2008, sec. A1. NewsBank.  IIT Downtown Campus Library, Chicago IL.  27 Oct. 2008. <link to article>.

Abstract: "Special report The Reckoning describes panic that quickly spread to biggest investors in financial markets during 36 hours on Sept 17-18, opening fissures in worldwide financial system; credit crisis, unlike stock market plunge, has been playing out in places most people cannot see; banks refused to lend to lend to other banks, signaling loss of confidence in seemingly healthy institutions like Morgan Stanley and Goldman Sachs; hedge funds pulled out cash and investors bought credit-default swaps at huge premiums to ensure against potential bankrupcty; situation set stage for meeting in which outlines of $700 billion rescue plan were devised by Federal Reserve chmn Ben Bernanke and Treasury Sec Henry Paulson." -- NewsBank

• "Confessions of a Risk Manager.” Economist. 387.8592 (9 Aug. 2008): p.72-73. Business Source Premier.  EBSCO.  IIT Downtown Campus Library, Chicago IL.  2 Nov. 2008. <link to article>.

Abstract: "A personal narrative is presented which explores the author's experience of being a risk manager for a large banking company before and throughout the 2007 and 2008 credit crisis." -- Business Source Premier. 

• Reinhart, Carmen M. and Kenneth S. Rogoff, This Time is Different: A Panoramic View of Eight Centuries of Financial Crises. 16 April 2008.  University of Maryland - School of Public Policy. 26 Oct. 2006. <link to pdf>.

Abstract: "This paper offers a “panoramic” analysis of the history of financial crises dating from England’s fourteenth-century default to the current United States sub-prime financial crisis. Our study is based on a new dataset that spans all regions. It incorporates a number of important credit episodes seldom covered in the literature, including for example, defaults and restructurings in India and China. As the first paper employing this data, our aim is to illustrate some of the broad insights that can be gleaned from such a sweeping historical database. We find that serial default is a nearly universal phenomenon as countries struggle to transform themselves from emerging markets to advanced economies. Major default episodes are typically spaced some years (or decades) apart, creating an illusion that “this time is different” among policymakers and investors. A recent example of the “this time is different” syndrome is the false belief that domestic debt is a novel feature of the modern financial landscape. We also confirm that crises frequently emanate from the financial centers with transmission through interest rate shocks and commodity price collapses. Thus, the recent US sub-prime financial crisis is hardly unique. Our data also documents other crises that often accompany default: including inflation, exchange rate crashes, banking crises, and currency debasements." -- Author's Abstract