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463 of 490 people found the following review helpful
5.0 out of 5 stars Excellent and Credible Insights!
Stiglitz believes that markets lie at the heart of every successful economy, but do not work well without government regulation. In "Freefall" he explains how flawed perspectives and incentives lead to the 'Great Recession' of 2008, and brought mistakes that will prolong the downturn.

Between 1996-2006, Americans used over $2 trillion in home equity (HELOC) to...
Published on January 5, 2010 by Loyd E. Eskildson

176 of 226 people found the following review helpful
3.0 out of 5 stars Why only three stars?
Professor Stiglitz's account of the causes of the financial crisis is lucid, and his advice regarding the need for regulation of banks and other financial institutions is sound. Stiglitz is an unapologetic man of the left, but his book is more balanced than many which have addressed this issue from the right. (E.g., Thomas Sowell's "The Housing Boom and Bust".)...
Published on February 11, 2010 by Dan Heath

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463 of 490 people found the following review helpful
5.0 out of 5 stars Excellent and Credible Insights!, January 5, 2010
Stiglitz believes that markets lie at the heart of every successful economy, but do not work well without government regulation. In "Freefall" he explains how flawed perspectives and incentives lead to the 'Great Recession' of 2008, and brought mistakes that will prolong the downturn.

Between 1996-2006, Americans used over $2 trillion in home equity (HELOC) to pay for home improvements, cars, medical bills, etc., largely because real income had been stagnant since the early 1990s. Economic recovery requires that we repay the remainder of these amounts, overcome stock market losses (10% between 2000-2009), the loss of some 10 million jobs, and reductions in credit card balances, and find an equivalent amount to the former home-equity sourced financing ($975 billion in 2006 alone - about 7% of GDP) to finance another consumer-driven GDP upturn - without the prior boom in housing and commercial building. Stiglitz also points out that the Great Depression coincided with the decline of U.S. agriculture (crop prices were falling before the 1929 crash), and economic growth resumed only after the New Deal and WWII. Similarly, today's recovery from the Great Recession is also hampered by the concomitant shift from manufacturing to services, continued automation and globalization, taxes that have become less progressive (shifting money from those who would spend to those who haven't), and new accounting regulations that discourage mortgage renegotiation.

Stiglitz is particularly critical of the U.S. finance industry - its size (41% of corporate profits in 2007), avarice (maximizing revenues through repeated high fees generated by over-eager and over-sold homeowners needing to refinance adjustable-rate mortgages that repeatedly reset), and 'sophisticated ignorance' (using complex computer models to evaluate risk that failed to account for high correlation within and between housing markets; 'eliminating risk' through buying credit default swaps from AIG - blind to the likelihood AIG could not make good in a housing downturn), and excessive risk (banks leveraged up to 40:1 with increasingly risky mortgage assets - 'liar's loans,' 2nd mortgages, ARMs, no-down-payments; taking advantage of the 'too-big-to-fail' and 'Greenspan/Bernanke put' phenomena). Much of this behavior was driven by lopsided personal financial incentives (bonuses) - if bankers win, they walk off with the proceeds, and if they lose, taxpayers pick up the tab. However, to be fair, any firm that failed to take advantage of every opportunity to boost its earnings and stock price faced the threat of a hostile takeover.

The impact of mortgage defaults is greater than one would otherwise expect because financial wizards found that the highest tranches of securitized mortgages would still earn a AAA rating if some income was provided to the lowest tranches in the 'highly unlikely' event of eg. a 50% overall default, thus boosting the ratings and saleability of lower tranches. (Fortunately for the U.S., many of these mortgages ended up overseas, spreading the disaster.) Another problem is that mortgage speculators make more profit from foreclosure than partial settlements. Meanwhile, investors worried that mortgage servicers might be too soft on borrowers required restrictions that make renegotiation more difficult and lead to more foreclosures. Similarly, those with 2nd-mortgages often found that those holding the second were unwilling to accept a principal write-down as their share of assets would be wiped out. Finally, new government regulations aimed at making banks seem healthier than otherwise allowed changing from 'mark-to-market' valuation of mortgages to long-term 'mark-to-hope' valuation - thus, writing down assets in a renegotiation would generate the very mortgage write-downs the new regulations avoided, and thus increased bank reluctance to do so.

"Freefall" also does an excellent job refuting many of the simple explanations, alibis, and remedies for the 2008 Great Recession. For example, Greenspan's 'nothing he could do' alibi is countered by Stiglitz's 'require higher down payments or margin requirements' (or increase interest rates). To those blaming Community Reinvestment Act requirements for increased mortgages to those with low incomes, Stiglitz says the default rates on those loans was less than in other areas; as for Fannie and Freddie being responsible, they came late into the sub-prime game. Responding to claims that increased regulation would stifle innovation and its role in economic growth, Stiglitz asserts that it is impossible to trace any sustained economic growth to those 'innovative' mortgages. (A 'real' contribution could have been made by less profitable innovative mortgages that helped homeowners stay in their homes.) On the other hand, he also admits that just giving more regulatory power to the Federal Reserve is not a solution - the Federal Reserve didn't use what it did have prior to late 2008; similarly, the SEC boosted leverage limits from 12:1 to 30:1 and higher in 2004 - exactly the wrong move. Banks suggest banning short sales in the future as a preventive measure - Stiglitz, however, points out that the incentive provided short-sellers to discover fraud and reckless lending may actually play a more important role in curbing bad bank behavior than government regulators have.

Other factors, especially government actions, also receive attention from the author. Overall, global supply exceeds demand - thus, the recovery focus needs to be on boosting demand. Stiglitz points out that growing inequality shifts money from those who would have spent it to those who didn't - weakening overall consumer demand. High oil prices have also impacted most those with low incomes, and probably encouraged Greenspan to hold down interest rates to counteract the negative impact. On a broader level, Stiglitz contends that IMF encouragement of national self-discipline and 'rainy-day' funds also weaken consumer demand. As for recommendations for more tax cuts and rebates, Stiglitz says these won't have much impact on consumers saddled with debt and anxiety, and as long as there's excess capacity, businesses will be reluctant to invest (Laffer's supply-curve tax-curve is an irrelevant theory, at best). Stiglitz even suggests elsewhere that the failure of Bush's 2001 tax cuts to stimulate the economy may have also influenced Greenspan to hold down interest rates for too long.

AIG, once bailed out, paid off billions to Goldman Sachs at 100% (Secretary Paulson's former firm), while defunct credit-default-swaps elsewhere were settled at only 13 cents on the dollar, says Stiglitz. Overall, he is very negative on the financial-sector bailout (TARP), believing that the money would much better have been used to capitalize new banks at 12:1 leverage, or not spent at all. The resulting bank subsidies were unfair to taxpayers (Treasury put up most of the money and got short-changed on potential benefits), and implementation was inconsistent - some institutions and stockholders were bailed out, others were not. (The reason lending 'froze up' is that banks didn't know whether they or their peers ere underwater.) The stimulus package, on the other hand, was too small (aimed at 3.6 million jobs, vs. 10 million lost plus 1.5 million new workers/year needing jobs), and was delegated to Congress without clear guidance. The result was a failure to provide mortgage insurance for those losing jobs, while instead creating the 'cash-for-clunkers' (mostly just moved sales from one period to another - [...] estimated only 18% were added sales, costing taxpayers $24,000 apiece; eight of the top ten purchases came from Asian manufacturers), ineffectual tax cuts, putting money into a failing auto industry, and increased road construction (greater global warming) instead of giving even more money to high-speed rail. The stimulus emphasis should have been on fast implementation, high-multiplier impact, and addressing long-term problems (eg. global warming). The employment situation now is worse than just the unemployment rate suggests - there are a record 6 applicants for every opening, the average work week is at 34 hours - the lowest since data was first collected in 1964, many have turned to disability instead of unemployment and are not counted.

Overall, Stiglitz believes there is far too much short-term thinking driving decision-makers, that business lobbies are too strong, and that markets are not naturally efficient. (Other inefficient market areas besides finance include health care, energy, manufacturing.) Meanwhile, we have done nothing to correct the underlying problems (big banks are even bigger) and Stiglitz also fears (reported elsewhere) the U.S. economy faces a "significant chance" of contracting again.

Interesting side-notes: 1)Stiglitz suggests that banks 'too-big-to-fail' should pay higher rates of deposit insurance, and incur restraints on executive incentives. In 1995 our five largest banks' market share was 11%, 40% now. Regardless, the world's largest three banks are now Chinese - #5 is American. (Not to worry - scale economics are no longer a factor for any of those banks, says Stiglitz.) 2)President Reagan made a major mistake in removing Paul Volcker as Chairman of the Federal Reserve Board and appointing Alan Greenspan in his place. Volcker had brought down inflation from more than 11 percent to under 4 percent, which should have assured his reappointment. But Volcker believed financial markets need to be regulated, and Reagan wanted someone who did not. Thus, Stiglitz believes regulations must be mandated, and enforced by a neutral, not political, source. 3)Repealing the Glass-Steagall Act in 1999 changed the culture of banking from conservative to high-risk, and also encouraged even larger institutions. 4)It is ironic that the Bush/Greenspan efforts to minimize government involvement in the economy resulted in our becoming de facto owners of the world's largest auto and insurance companies, and some of the largest banks. 5)Stock options are doubly damaging - they undermine stockholder wealth while remaining largely hidden from stockholders, and they encourage maximum short-term accounting manipulation to move stock prices up. 6)The U.S. national debt will reach 70% of GDP by 2019, and when it hits 90%, paying 5% interest on that debt will consume one-fifth of federal taxes.

Bottom-Line: Most books on current economic issues written for the public are superficial, or even worse, mere demagoguery. Stiglitz's qualifications - Nobel prize-winner in economics (2001), former Chairman of the President's Council of Economic Advisors (1995-97), and former World Bank Chief Economist help provide an important, interesting and credible alternative. "Freefall" was a pleasure to read.
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61 of 67 people found the following review helpful
5.0 out of 5 stars Economics 101, February 2, 2010
W. P. Strange "Bill's shelf" (Williamstown, MA United States) - See all my reviews
I admit that economics confuses me, so when I read a book written in lucid easy to understand language I can begin to understand a compound-complex idea a little more clearly. Nothing in economics is as it seems because politics can often obfuscate with ideological explanations that are neither simple or even partially true when based on politics. Stiglitz doesn't say that the free market can't work, but that it isn't the entire answer. Regulations, as the banking meltdown of 2009 demonstrates, are necessary to prevent greed from becoming the dominating motivation for Wall Street and big banks, especially investment banks that measure success only in terms of how big their next bonus will be.

"Freefall" doesn't give us all the answers, and again I admit that I still have questions, but for a basic understanding of the markets as they played out in the past couple of years and how deregulation merely increased the problems for most of Main sreet this is a very good place to start. Some critics have already panned this book as a call to socialism, but those critics obviously lack even a basic understanding of what socialism really is and are only looking for a buzz word to sustain the belief that a totally "Free Market" system is the only good thing, when in fact it increases the chances of boom and bust cycles coming even closer together in the future. To begin, modest regulations are all that might be needed, and if bankers once again act trustworthy and preform ethically it could be enough. If greed continues unabated, then the middle class will disappear and only the wealthiest will profit.
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19 of 21 people found the following review helpful
4.0 out of 5 stars Pulls no punches, April 15, 2010
With Freefall, Joseph Stiglitz presents a thoroughly argued - although at times convoluted - exposé on the downfall of the global economy and (he clearly hopes) the discrediting of the "markets can do no wrong" school of economic thought. I'm not an economist, and am not qualified to comment on the academics presented here, but the fact that no one emerges unscathed from this book gives me a degree of confidence that Mr Stiglitz has produced a well-balanced work focussed on outcomes rather than party platforms.

Many of the 1-star reviews harp on about Mr Stiglitz's wanting to give the government more power when the Fed and others were culpable in the Great Recession. At best that interpretation does a disservice to what Mr Stiglitz advocates. Yes, he calls for a balanced role for government involvement to keep markets in line (as, he argues, they have clearly demonstrated they cannot do it themselves), but he also takes regulators and the Fed to the mat for their poor oversight, and the Obama administration for poor choices of remedy (basically just continuing the failed policies of GW Bush). Mr Stiglitz goes further, though, in calling for a restructuring of the financial sector - from the ashes, a phoenix - saying that today's incentives produce bad behavior, and need to be rethought with "right" outcomes in mind. It's an admirable goal, but where the political will for this comes from is anybody's guess. If Obama couldn't part ways with GW Bush on this matter, how will he restructure finance? One reviewer laments the lack of moral outrage expressed by the author - did he read the book? It's full of moral outrage and condemnation of a system which has failed everyone except the heads of the financial sector.

I agree with a few thoughts from the 1-star reviews: Freefall tends to wander from topic to topic, and gets very repetitious. The final chapter is like reading a sermon - demanding we be, perhaps, unrealistically moral. Also, 1-star reviewers unfairly complain there are no remedies shared in the book - there are plenty (e.g., implementing a Global Reserve Currency at one end of "the possible" and Reinventing Economics at the other), but they are a) thinly distributed throughout the book (so easy to forget they're there), and b) sometimes so grand in scope and vision as to be almost meaningless in today's political reality.

At the end of the day, I found Freefall to be harshly (yet fairly) illuminating in the origins of the Great Recession, the shortcomings of the system and its actors in the market and in the government, and the fact that something good can emerge from this mess. It is clear that major changes are needed, and equally clear that there is good reason to be skeptical that necessary change is achievable. We live in a different, more interconnected global economy than when the current rules were created; Mr Stiglitz convincingly argues that a new way of managing this economy - even a new way for how we think about the economy - is mandatory. How we get from here to there, however, is anything but clear.
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39 of 47 people found the following review helpful
5.0 out of 5 stars Speaking Truth to Power -- Again, January 31, 2010
JB Kemble (Sacramento CA) - See all my reviews
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Professor Stiglitz has repeatedly spoken truth to power. He wrote about the perils of unchecked globalization, the disaster of the Federal Reserves policies in the 90s and 00s, the wrong-footed solutions to the Asia crisis, and the cost of the Iraq War. Here he lays out in simple, straightforward jargon-free language, what happened to cause the worst economic crisis since the Depression and what steps we need to take to prevent it from happening again. Highly recommended.
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26 of 31 people found the following review helpful
4.0 out of 5 stars very important perspective, a bit uneven on blame, January 29, 2010
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Freefall is a fantastic overview of the crisis from both the multitude of causes to the social fabric that created the backdrop. Stiglitz in a fairly concise book, manages to discuss a lot of issues with a lot of clarity. It describes incentive misalignment, the abuse of barganing power by those who had it during the crisis under asymmetric informaiton, the failure of prices to reflect true costs, the abundance of negative externalities and market failures that inherintly exist and even the degredation of our social contract in promoting general well being. The book is not written in two parts but the contents of the book are sort of split into two categories.

The first part of the book is really a description of the causes of the crisis. It describes some of the specific actions taken by bankers, the incentives to take fees irrespective of the value add of the underlying contracts, and how that evolved into model "arbitrage" abuse in mortgage repackaging. It discusses the change in the distribution of wealth in the country and the stagnation of wages for most of the country despite general GDP growth that hides that fact, in particular the transfer of wealth from "main street to wall street". It discusses the failure of central bankers to address the bubbles of the economy and how their economic principles were too often based on faulty neo-classical principles. It then goes into how the crisis was used as an opportunity to hold the taxpayer "hostage" in the same way that one can price gouge a pedestrian for a ride in a hurricane. This part of the book prepares the unfamiliar reader with the much needed backdrop to understand most of the crisis.

The second part of the book starts off where the current events end and tries to set the scene for the steps we need to take for the future. This was the best part of the book for me. Stiglitz outlines many of the important principles that are violated in the neo-classical world that makes it apparant, desire for incremental benefit does not imply an aggregate improvement for the economy. Stiglitz makes a strong effort to show market failures are rife, the cost of a crisis as an example far exceeded the profit generated by fees, and as a result leaning on - "the market is better than regulators in forming solutions", clearly needs to be re-thought. It is hard to disagree... Stiglitz also discusses less in depthly but importantly nonetheless, the ecological economic principles that we are missing today- in particular the true "cost" of consumption as a tax on the future with resource scarcity as well as environmental damage. I dont think these are particularly contentious but they are often forgotten. Aspects of behavioural finance are brought up and the cognitive dissonance of financiers responses are described. Stiglitz ends with a call to action society at large to take the recent failure as an opportunity to ammend our social contracts and revitalize our trust and institutional arrangements. The need for better regulation he believes is truly clear and the recent crisis needs to be taken as a reason to fundamentally change the way our economy is structured, from capital/labour distribution to consumption investment balance (investment in both fixed assets as well as human capital).

This book is so far one of the most insightful I have read. I agree with a lot of the commentary but let me quickly go into why I dont think its quite five stars. The author is often a bit unbalanced in the criticism, of both central bankers as well as those in finance. Most of the book goes on about the almost inherent total disregard for any other people's interests by the bankers involved, but then later it contextualises their actions and describes their actions as a function of their environment and incentive set- making them more a time and place phenomenon than the bad people they are painted as elsewhere. Central bankers too are berated, but they arent incentivised by the pay. Hindsight is 20/20 and although some were very impressive with their foresight of the problems, it is hard to uniformly make out as though central bankers are all fools. The end goal of this book is to try to argue for a change in social architecture and institutional arrangement. Currently incentives are misaligned, the markets fail and we deal with things after rather than pre-emptively. If this is the goal then this book should have been written inclusively for all readers. I find it quite exclusionary for most in finance and many in politics. That is not that sensible given the goal is to convince. That being said, some scolding is in order, but the magnitude and the one-sidedness is a bit frustrating, predatory lending was a real phenomenon, but assuming away the responsibility by the many individuals speculating on property is not a fair evaluation. All in all the economics of the crisis are evaluated excellently, the conclusions can be debated, but in my opinion they are extremely valuable and provide an important framework to consider for the future. Alot is accomplished in this book and most of it is convincingly argued, this book is a very valuable addition to our recent crises's literature.
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176 of 226 people found the following review helpful
3.0 out of 5 stars Why only three stars?, February 11, 2010
Dan Heath (Los Altos, CA United States) - See all my reviews
Professor Stiglitz's account of the causes of the financial crisis is lucid, and his advice regarding the need for regulation of banks and other financial institutions is sound. Stiglitz is an unapologetic man of the left, but his book is more balanced than many which have addressed this issue from the right. (E.g., Thomas Sowell's "The Housing Boom and Bust".)

Moreover, he grounds his book in a clear exposition of why advocacy for unfettered free markets does not duly consider imperfect competition (monopolies), externalities, irrationality, and asymmetric information, the subject for which he earned the 2001 Nobel Prize for economics.

So why do I give this book only three stars?

When I was an economics student in the 1960's, we learned our Keynes, and then we learned our Keynes, and then we learned our Keynes again. Over the next forty-odd years, as my knowledge of economics became antiquated, new problems arose and new theories were advanced to grapple with them, but I didn't have the time to study them. In the months after September, 2008, I devoted myself to relearning macroeconomics, which for me meant revisiting Keynes. With that basis, I couldn't fathom the ideas of the Chicago school...Lucas, Cochrane, Barro (although he is at Harvard), and others. Still, I came to some understanding of, if not agreement with, their ideas.

Stiglitz is harshly critical of their work, pointing out that their elegant mathematical models are highly constrained by assumptions that most of us would find unrealistic, and that they reach conclusions (such as that unemployment can't exist) that are absurd.

He further asserts that his own equally elegant mathematical models show the fallacies in the Chicago school's arguments. For example, he states that while they would grant that asymmetric information exists, they claim their models are "close enough", while his work shows that even small doses of imperfect information are sufficient to distort the operation of free markets to such a degree that efficient outcomes can hardly be assured. Thus, government intervention is required to produce better results.

The problem is that Siglitz does not offer the reader proof. It is true that this is because most readers (including myself) could not follow the mathematics involved, but based on the scanty evidence he provides, one cannot help being a bit skeptical. To wit:

1. He belittles the ideas of his opponents, but what arguments would they offer in rebuttal?

2. All economic models are approximations of reality. Are his opponents' actual policy recommendations as far out as he claims, or is he merely using their models as straw men?

3. Are we to believe that government policy makers are any more capable of producing economically efficient outcomes? As human beings, are they not also subject to the perils of externalities, irrationality, asymmetric information, and even (in the case of government enterprises) monopoly exploitation?

4. When Stiglitz broadens his recommendations beyond the nuts and bolts of banking reforms, he seems to launch into yet another vain sermon advocating the perfectibility of humankind. Is that sound economic analysis or merely an expression of his hopes and dreams?

After reading the book, I don't know the answers to such questions. It may well be that Professor Stiglitz has an irrefutable case for both his diagnosis and his cures, but he asks the reader to accept too much based solely on his claims to wisdom.
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44 of 55 people found the following review helpful
5.0 out of 5 stars Accurate and timely, January 20, 2010
Stiglitz accurately reflects on the mistakes made by the US government to prevent and address the financial crisis. The book is a must reader for those who want to understand the the economics and politics behind the crisis. This is an enlightening piece of work from one of the world's best economist.
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7 of 7 people found the following review helpful
4.0 out of 5 stars The Humpty Dumpty Perspective on the U.S. Economic Crisis, July 25, 2010
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We all know Humpty Dumpty sat on a wall and subsequently "had a great fall." What we don't truly understand is:

a. How ol' Humpty got in that precarious position in the first place (What was he thinking? What were his assumptions? Why did he go up there anyway?).

b. Why "all the king's horses and all the king's men - couldn't put Humpty together again."

Columbia University's Nobel Prize winning economist, Joseph E. Stiglitz, provides the perspective that other authors who have authored volumes on the U.S. economic crisis have overlooked. It's a terribly important work that proposes explanations for the questions posed above. It's truly about 'freefall' - "When the world economy went into freefall in 2008, so too did our beliefs. Long-standing views about economics, about America, and about our heroes have also been in freefall.(p.xvi). Well, what might this all mean? Stiglitz is hopeful: "The crisis will, I hope, lead to changes in the realm of policies and in the realm of ideas." (p.xiii).

From Stiglitz' perspective, "This book is about a battle of ideas, about the ideas that led to the failed policies that precipitated the crisis and about the lessons that we take away from it. In time, every crisis ends. But no crisis, especially one of this severity, passes without leaving a legacy. "(p.xii).

It is distinctly a crisis of our own creation, as Stiglitz says: The system that failed so miserably didn't just happen. It was created. Indeed, many worked hard-and Spent good money-to ensure that it took the shape that it did. (P. xxiv.).

According to Stiglitz, the crisis is evidence that the marketplace of ideas failed us (particularly as this term relates to 'herd instinct'): "The marketplace for ideas is no more perfect than the marketplace for products, capital, and labor. The best ideas do not always prevail, at least in the short run. But the good news is that while the nonsense 0£ perfect markets may have predominated in, certain parts of the economics profession, some scholars were trying to understand how markets actually worked. Their ideas are there, now, to be used by those who wish to construct a more stable, prosperous, and equitable economy." (P. 274).

The crisis pointed out the central role of the "human element" that remains so dramatically misunderstood in economic behavior: "But the central bankers were, in a sense, right: no one with credibility in their circle challenged the prevailing view, but there was a tautology: no one challenging the prevailing view would be treated as credible. Sharing similar views was part of being socially and intellectually acceptable." (p. 253) --- a terrible cost to pay for ignoring the voices of dissent, in favor of a perceived "socially acceptable" policy position.

Now what? Stiglitz is clear: "The old rules, whether they worked well in the past, are not the right rules for the twenty-first century." (P. 207)...the final parts of this volume provide specific examples of what the authors suggests.

Finally, one sentence from Stiglitz really caught my attention. He writes, "Trust is the grease that makes society function." (P. 289). "Freefall" is really all about the process of how the marketplace of ideas 'greased trust' throughout the entirety of our economic system, facilitating our fall, and how we might approach putting the pieces back together again.

Needless to say, the latter is hardly a completed process and/or one where the marketplace of ideas is moving toward consensus. Will we be more successful than "all the King's horses and all the King's men?"

Imagine not having your head attached to your shoulders correctly...
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6 of 6 people found the following review helpful
5.0 out of 5 stars Much more thoughtful perspective on the financial crisis, December 15, 2010
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Since there are already a number of good reviews of this book, I just wanted to emphasize a few points that really set it apart from much of the literature written on the financial crisis in the last few years:

a)This is not a typical market and capitalism bashing book. Instead, Joe Stiglitz very much emphasizes that any viable system needs to have both market and government supplementing each other to provide a method of checks and balances

b)This is not a an investigative journalism piece written by some random reporter who picked up an interest in finance and economics because it's a "hot topic" to rehash the popular "Main street vs. Wall street" talking points. Instead, Stiglitz is a world renowned economist, who called the real estate bubble and the financial crisis long in advance and who won a Nobel Prize for his work in a relevant topic of market failures, particularly information asymmetries

c)Although Stiglitz's analysis of what went wrong is by far the most interesting and thoughtful that I have read, the book doesn't just point out the obvious shortcomings and failures of our private and public sectors. It also offers a very sensible approach to re-structuring our society and our institutions in a way that provides the right incentives and improves our well being, while avoiding unethical and short-sighted behavior that gets us into trouble

d)The book does an excellent job of explaining principles of finance and macroeconomics to a laymen audience without dumbing things down. If someone is interested in a more in-depth reading on a specific subject matter described in the book, there are plenty of good sources provided

e)The general level of rational thought, analysis and critique in this book is really way beyond anything that you would hear in the media and other pop culture outlets. I think that regardless of your political leaning, if you are really interested in the subject, you owe it to yourself to get at least this expert's take on what happened with our country and how to fix it
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6 of 6 people found the following review helpful
5.0 out of 5 stars What's wrong and what might be done better, August 24, 2011
This is a terrific, hard-hitting book. Prof. Stiglitz not only describes the errors and abuses the led to the still-current "Great Recession", he also describes the errors and abuse that occurred as the Bush and Obama administrations responded to the evolving crisis. Not stopping with criticism, Stiglitz goes on to describe various better remedies that might have been used, and/or might yet be used, to help the USA going forward.

First and foremost Stiglitzs condemns big finance for recent past and present problems. Not only did the Big Banks and related institutions, (notably the mortgage creator business), act in a narrow, purely self-interested way, but they also acted against common sense and their own, longer term interest.

Stiglitz is also harshly critical of actions, (regulation and lack there of), before that crisis and also during the crisis. As reading would predict, the author is utterly contemptuous of the Bush administration whose actions were exclusively pro-Big Finance and against the wider public interest. But knee-jerk Republicans can take some small comfort in his hard-hitting criticism of the Obama team's responses to the crisis too.

Stiglitz roundly condemns Obama's bail out of the Big Banks which he sees as too much and definitely miss-targeted. Further, he insists that Obama missed the obvious opportunity to reform and regulate the Big Banks and other areas of the financial system.

This is must-read book for anybody with the slightest interest in the current economic situation. It contains quite a bit of detail but is always clear & accessible to the economic layman.
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Freefall: America, Free Markets, and the Sinking of the World Economy
Freefall: America, Free Markets, and the Sinking of the World Economy by Joseph E. Stiglitz (Hardcover - January 18, 2010)
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