The science behind and economic consequences of fear are explained by
demonstrating how fear can drive markets to disastrous lows and how the financial industry
profits most when fear and volatility are highest. The reader is offered recommendations
that can resolve market fears and bolster world economies.
COLIN READ is Professor of Economics and Finance at SUNY College at
Plattsburgh, and a columnist for the Plattsburgh New York Press Republican newspaper. He
has taught economics and finance for 25 years. His recent books include Global
Financial Meltdown: How We Can Avoid the Next Economic Crisis and International Taxation
Handbook (edited with G. Gregoriou).
Table of Contents
Introduction
• PART I: THE NATURE OF RISK
• The Biology and Psychology of Fear
• An Economic Definition of Fear and Risk
• PART II: THE SUPPLY AND DEMAND OF LOANABLE FUNDS
• The Demand Side
• The Supply Side
• Balance of Capital
• PART III: MEASUREMENT OF RISK
• The Risk Premium - How Risk Affects Expected Returns
• The Fear Premium
• The Demographics of Risk and Fear
• The Microeconomics of Risk Aversion
PART IV: THE PROBLEMS WITH RISK
• Moral Hazard
• Privatized Gains and Socialized Losses
• Adverse Selection and Imperfect Information
• Risk, Uncertainty, Fear, and Gambling
* PART V: RISK AND THE MARKET
• Market Volatility and Returns
• Fear, Panic, and Market Returns
• The Fear Factor
• PART VI: A HISTORY OF PANICS
• A Brief History of the Fear Gripped Market
• The Roaring Twenties and the Great Crash
• The Depression-Gripped Economy
* Along Comes Keynes
• PART VII: COORDINATION FAILURES
• The Market for Lemmings, or Tale of Two Cultures
• The Role of Machines and Programmed trading
• The Ratings Agencies - More Perfect Information?
• PART VIII: SOCIAL RESPONSIBILITY AS AN ANTIDOTE TO FEAR
* Where Were the Regulators
• Ethics and Social Responsibility
• Wall Street, Main Street, and the Social Contract
• PART IX: INSTITUTIONS THE AMELIORATE OR AMPLIFY FEAR
* The Media as an Antidote to Fear
• Politics That Fan the Flames of Fear
•Is There More to Fear than Fear Itself?
• PART X: SOLUTIONS AND CONCLUSIONS
• Economic Leadership as an Antidote to Fear
• A Dozen Prescriptions to Take Back the Markets
• Conclusions
288 pages, Hardcover
