The Crisis of Capitalist Democracy

* Introduction * Part I: An Analytic Narrative of the Crisis * The Calm before the Storm: 2001--2006 * To the Abyss: December 2007--September 2008 * The Spectre of the Great Depression: October 2008--March 2009 * Bottoming Out: Spring 2009--Autumn 2009 * The Movement for Financial Regulatory Reform: June--December 2009 * Depression and Aftershock: 2007--? * Part II: What Lessons Have We Learned from the Crisis? * The Fragility of Finance * Keynes Redux * The Economics of Uncertainty * The Crisis of Macroeconomics * Part III: The Way Forward * Reform You Can Believe In * America in a World Economy * Index

Richard A. Posner is Circuit Judge, the United States Court of Appeals for the Seventh Circuit, and a senior lecturer at the University of Chicago Law School.

The prolific federal judge and University of Chicago economist argues that competitive forces inspire financiers to take irrational gambles--especially when they're betting other people's money. We cannot trust them to put the common good ahead of profits, says Posner. As a result, government must step in to limit the risks bankers take and, occasionally, repair the damage they inflict. Posner, who less than a year ago began his dissection of the crisis of 2008 with A Failure of Capitalism, has enormous credibility when he casts a skeptical eye on Wall Street. As an influential free-market thinker, he helped shape the antiregulatory ideology that inspired so much public policy since 1980...Posner offers solid suggestions for change. He echoes those, including former Fed Chairman Paul Volcker, who would reestablish the Glass-Steagall Act's separation of commercial banking from proprietary trading and other forms of high-risk finance. That would insulate the financing of small and midsized businesses from the gales of Wall Street. He also urges eliminating the semi-official status of the big three bond-rating agencies, paring back their conflicts of interest, and beefing up the beleaguered corps of civil servants who staff federal regulatory agencies. Good ideas, all. In his final pages, though, the author can't muster much confidence that America will overcome its splintered politics, the "quasi-bribery" of campaign money, or the bipartisan myth that we can thrive indefinitely on low taxes and profligate public spending. Posner may have shaken off old shibboleths--and hurray for that--but at present he sees no reason to expect that courage or fresh thinking will prevail. -- Paul Barrett BusinessWeek 20100315 Posner presents well-argued suggestions for change and offers fresh thinking about the business cycle, building on Keynes's theories. -- Don Tapscott Globe and Mail 20100423 My advice is: Read it. While his book is not exactly beach reading, Posner is a fine