Casino Capitalism: How the Financial Crisis Came About and What Needs to be Done Now
AbstractIn Casino Capitalism Hans-Werner Sinn examines the causes of the banking crisis, points out the flaws in the economic rescue packages, and presents a master plan for the reform of financial markets. Sinn argues that the crisis came about because limited liability induced both Wall Street and Main Street to gamble with real estate properties. He meticulously describes the process of lending to American homeowners and criticizes both the process of securitizing and selling mortgage claims to the world, as well as the poor job rating agencies did in providing transparency. He argues that the American Dream has ended because the world now realizes that this dream was built on loans that are never likely to be repaid. Sinn also asserts that the banking crisis has not yet been resolved, because the necessary write-offs of toxic assets have largely been swept under the carpet. Comparing actual worldwide write-offs with those estimated by the IMF estimates, he concludes that substantial parts, if not most, of the true losses have yet to be revealed and that the banking systems of many countries are on the brink of insolvency. In view of this, he directs sharp criticism at the various economic rescue packages, arguing that the plans assume that banks have a liquidity problem while, in fact, they suffer from a solvency crisis. Sinn points out that the conflict between the goals of rescuing banks in the short term and inducing more prudent behaviour in the long term requires the government to help the banks, but not their shareholders, by becoming a temporary co-owner. In addition, he calls for higher equity requirements, a worldwide return to more cautious accounting methods, a ban on extremely speculative short selling, and strict regulations on conduits, hedge funds and credit default swaps. This authoritative account provides an invaluable overview for academics, students, policymakers, politicians, and all those with an interest in the unprecedented 2008 banking crisis.
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Bibliographic InfoThis book is provided by Oxford University Press in its series OUP Catalogue with number 9780199588275 and published in 2010.
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- Sinn, Hans-Werner, 2012. "Casino Capitalism: How the Financial Crisis Came About and What Needs to be Done Now," OUP Catalogue, Oxford University Press, number 9780199659883.
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- Hristov, Nikolay & Hülsewig, Oliver & Wollmershäuser, Timo, 2012.
"Loan supply shocks during the financial crisis: Evidence for the Euro area,"
Journal of International Money and Finance,
Elsevier, vol. 31(3), pages 569-592.
- Nikolay Hristov & Oliver Hülsewig & Timo Wollmershäuser, 2011. "Loan Supply Shocks during the Financial Crisis: Evidence for the Euro Area," CESifo Working Paper Series 3395, CESifo Group Munich.
- Hans-Werner Sinn & Timo Wollmershaeuser, 2011.
"Target Loans, Current Account Balances and Capital Flows: The ECB’s Rescue Facility,"
NBER Working Papers
17626, National Bureau of Economic Research, Inc.
- Hans-Werner Sinn & Timo Wollmershäuser, 2012. "Target loans, current account balances and capital flows: the ECB’s rescue facility," International Tax and Public Finance, Springer, vol. 19(4), pages 468-508, August.
- Hans-Werner Sinn & Timo Wollmershäuser, 2011. "Target Loans, Current Account Balances and Capital Flows: The ECB’s Rescue Facility," CESifo Working Paper Series 3500, CESifo Group Munich.
- Giancarlo Corsetti & Michael P. Devereux & John Hassler & Gilles Saint-Paul & Hans-Werner Sinn & Jan-Egbert Sturm & Xavier Vives, 2011. "Chapter 5: Taxation and Regulation of the Financial Sector," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 147-169, 02.
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- Angelos Kotios & George Galanos, 2012. "The International Economic Crisis and the Crisis of Economics," The World Economy, Wiley Blackwell, vol. 35(7), pages 869-885, 07.
- Giancarlo Corsetti & Michael P. Devereux & John Hassler & Gilles Saint-Paul & Hans-Werner Sinn & Jan-Egbert Sturm & Xavier Vives, 2011. "Chapter 2: A New Crisis Mechanism for the Euro Area," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 71-96, 02.
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