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Unintended Consequences: Why Everything You've Been Told About the Economy Is Wrong [Kindle Edition]

Edward Conard
3.1 out of 5 stars  See all reviews (81 customer reviews)

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Sold by: Penguin Group (USA) LLC

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Book Description

In the aftermath of the Financial Crisis, many com­monly held beliefs have emerged to explain its cause. Conventional wisdom blames Wall Street and the mortgage industry for using low down pay­ments, teaser rates, and other predatory tactics to seduce unsuspecting home owners into assuming mortgages they couldn’t afford. It blames average Americans for borrowing recklessly and spend­ing too much. And it blames the tax policies and deregulatory environment of the Reagan and Bush administrations for encouraging reckless risk taking by wealthy individuals and financial institutions.
But according to Unintended Consequences, the conventional wisdom masks the real causes of our economic disruption and puts us at risk of facing a slew of unintended—and potentially dangerous—consequences. This book addresses many essential but overlooked questions, such as:
  • If the United States had become a nation of reckless consumers rather than investors, why did productivity soar in the years leading up to the meltdown?
  • If predatory bankers took advantage of home owners, why did down payments decline, thereby shifting risk from home owners to lenders?
  • If the risks were easy to spot, why did top politi­cal and financial advisers encourage lenders to make unsound investments?
  • If new regulations encourage banks to hold enough capital to fund withdrawals and not just loan losses, how will the economy underwrite the risks necessary to reach full employment?
In an attempt to set the record straight and fill the void left by other analysts, Conard presents a fas­cinating and contrarian case for how the economy really works, what went wrong over the past decade, and what steps we can take to start growing again.

Editorial Reviews


''Ed Conard has written a provocative and important book about the economy that challenges conventional wisdom about the financial crisis, the trade deficit, government policy, and the path to prosperity.'' --William A. Sahlman, senior associate dean, Harvard Business School

''Ed Conard provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.'' --Nouriel Roubini, chairman of Roubini Global Economics

''Ed Conard's book presents the most cogent and persuasive analysis of the financial crisis to date.'' --Andrei Shleifer, Bates Clark Medal winner, Harvard University

''There are an amazing number of good ideas and interesting points made in this book.'' --Steven Levitt, coauthor of the New York Times bestseller Freakonomics

''Unintended Consequences will be the most talked-about economics book in 2012.'' --Kevin Hassett, senior fellow and director of economic policy, American Enterprise Institute

About the Author

EDWARD CONARD was a partner at Bain Capital from 1993 to 2007. He served as the head of Bain's New York office and led the firm's acquisitions of large industrial companies. He sits on several boards of directors, including the boards of Waters Corporation and Sensata Technologies. Prior to Bain, Conard worked for Wasserstein Perella, an investment bank, and Bain & Company, a management consulting firm, where he headed its industrial practice. He is a graduate of Harvard Business School and the University of Michigan.

Product Details

  • File Size: 1850 KB
  • Print Length: 321 pages
  • Page Numbers Source ISBN: 1591846307
  • Publisher: Portfolio; Reprint edition (May 7, 2012)
  • Sold by: Penguin Group (USA) LLC
  • Language: English
  • ISBN-10: 1101602589
  • ISBN-13: 978-1101602584
  • ASIN: B007ZQ3AKO
  • Text-to-Speech: Enabled
  • X-Ray:
  • Word Wise: Not Enabled
  • Lending: Not Enabled
  • Amazon Best Sellers Rank: #305,092 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Customer Reviews

Most Helpful Customer Reviews
38 of 43 people found the following review helpful
Edward Conard has good ideas and themes. But, his thought process is scattered and he makes many unsubstantiated statements that do not come together to create a complete model of markets and applied economics. I liked the list facts/myths on the Financial Crisis (2007-9) that Mr. Conrad listed toward the end of his book.

THEME: Capital markets play an important role in underwriting of risk (equities) and distributing risk to risk takers (equity investors and sellers of insurance) that increases productivity and economic growth. Underwriting risk is easier in economies with large, liquid capital markets. Efficiently priced insurance reduces the risk of moral hazard and reduces the risk of panic-driven withdrawals of short-term deposits. Successful risk-taking creates equity which can be consumed or reinvested. Prudent risk-taking is a good for society. Risk properly priced in the market leads to higher employment and greater wealth creation than when risk is mispriced (asset bubbles) which wastes investment dollars and leads to inappropriate decision making on investment/consumption. Society as a whole captures 100% of the benefit of investments: 1) Investors capture about 30% of the total value. 2) Consumers capture 70% of the total value. 3) Government redistributes some of the benefits. As an economy becomes richer, it is willing to take more risks.
Commerce is the salvation of the poor. Prosperity of a society has the greatest impact on the plight of the poor.

THEME: Financial panics and capital withdrawals cannot be accurately predicted. Government guarantees provide effective counter-measures to these unforeseen events. Government guarantees (properly priced) is the cheapest way to insure against panic and financial crises.
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156 of 202 people found the following review helpful
4.0 out of 5 stars Valuable even if you disagree with the author June 7, 2012
By Jackal
This is a book written by a management consulting kind of guy. One key argument is that the wealthy class adds a lot of value to society because they invest money (as opposed to spend money). I think the author is half-right in this statement because risky equity capital is neither provided by the Fed, the banks nor small investors. However, it is only half-right, because the US economy is to some 70% driven by end-customer demand. If Americans lack purchasing power, new products will not be in much demand. Any thinking person would realise that total income inequality (one guy earning everything) or total income equality (everyone earning the same) would be pretty bad societies. The optimal level of inequality is not much discussed in this book. More seems better for the author. (Just as less seems better for economists Krugman and Stiglitz. It is a bit sad that we get just another book saying that more/less is better.)

The author wants to make an impact as a thought leader, but that will not happen for a couple of reasons:
- He is far too dogmatic in accepting market prices as unbiased. He seems to defend market prices in all situations, even when those markets are not very efficient. So while he rightly praises the highly paid IT or biotech entrepreneur, he also seems to praise all bankers. Somebody bought the subprime debt so some value must have been added, the author thinks. He does not take seriously the fact that some markets are seriously inefficient (e.g. banking salaries, CEO salaries, CDOs). Had he analysed the lack of efficiency in some markets, the book would have been much stronger.
- Sometimes it is more intelligent, both intellectually and impact-wise, to concede a few points.
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17 of 22 people found the following review helpful
5.0 out of 5 stars Impressive research and reasoning September 16, 2012
Format:Hardcover|Verified Purchase
Mr. Conard put an impressive amount of research and intellectual effort into this book. In short, he argues that innovation underwritten by risk capital increases society's wealth available to the upper, middle and lower economic classes. Actions that inhibit risk and innovation inevitably reduce overall U.S. wealth. The Great Recession has caused the U. S. to dial back the use of risk capital, which slows innovation, inhibits employment and reduces prosperity. He examines the arguments on taxation and income redistribution from all sides of the political and economic spectrum. Those of a socialist or liberal political persuasion will probably find the author's arguments unpersuasive and perhaps troubling; political conservatives will probably be more persuaded. He argues, for instance, that much of the wealth that innovation and risk create flow to the middle and lower economic classes. He further argues that excess consumption feeds the egos that drive the risk-taking that leads to innovation that increases the wealth available to society. While I am certain that some political viewpoints will react adversely to these arguments, I think any reader will have to concede that the intellectual breadth of the author's effort deserves respect.

The sections of the book addressing the effects of technical regulatory changes and accounting interpretations on the Great Recession were enlightening. The author explains that these arcane regulatory and accounting matters had an unexpected influence on the market forces in the subprime loan debacle. He also discusses the political and market impulses that led to the Great Recession arising out of the misuse of subprime loans. His discussion of the political impulses behind these loans is fairly well known.
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Most Recent Customer Reviews
1.0 out of 5 stars that policy must be better than a competing one
This book is a clear example of starting with an erroneous premise to reach an erroneous conclusion. Read more
Published 1 month ago by EP
4.0 out of 5 stars This book is a practical look at economics and what ...
This book is a practical look at economics and what happened in the financial crisis in 2008. It's a bit of a tough go in spots, but well worth the effort.
Published 2 months ago by Gerald R. Stein
5.0 out of 5 stars Five Stars
Published 3 months ago by Norman Heinly
4.0 out of 5 stars Four Stars
I found it thought provoking and enjoyable to read.
Published 4 months ago by Charles Adams
4.0 out of 5 stars What you don't know, can hurt you!
This book elucidates the best part of the truth about what our government does and why it does not always work out.
Published 6 months ago by Grey Fox
5.0 out of 5 stars Fabulous book mixing applied economics, markets and politics
Most interesting are the range of comments here. I never realized the how much open animosity there to to free markets, capitalism and risk taking by successful entrepreneurs. Read more
Published 6 months ago by T. Noyes
4.0 out of 5 stars Interesting Read
Gives bird's eye, economist view of the crisis and the current economy. Well written and certainly has some interesting points no matter what your political views are
Published 9 months ago by Brian
2.0 out of 5 stars Is Edward Conrad's "Unintended Consequences" complete lunacy?
I'm on page 54 of Edward Conrad's "Unintended Consequences" and if I had one word to describe the text so far it would be lunacy. Read more
Published 10 months ago by Timoleon
5.0 out of 5 stars Excellent economic insight
Conrad provides answers to many of my unresolved economic questions. The author creates a thoughtful and complete framework of economic concepts. Read more
Published 10 months ago by Thomas P gause
4.0 out of 5 stars good read
I've been uneasy about our country's path but without any concrete understanding of "why". This book gave me an understanding of specifically what has been happening.
Published 11 months ago by M. Caldwell
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