Crash and Beyond
In 2007-2008 the world was plunged into a financial and economic crash. This book
explores the multiple entwined roots of the crash, including the build-up of global
economic imbalances, the explosion in the use of novel financial instruments, the
mismanagement of risk, and the specific roles played by housing and debt. It reviews the
evidence that on the eve of the crash all was not well and that many political and finance
industry leaders ignored the dangers.
The book details the key events of the crash, and explains the main amplification
mechanisms. Instead of a blow-by-blow account of the numerous bank rescue programs, it
uses an economics lens to dissect the logic of each category of rescue measure to make
them more digestible for the lay reader. It pays particular attention to the hidden ways
in which rescue measures worked and their longer-term consequences, and investigates why
some approaches were favoured over others, who will ultimately bear the costs, what
political constraints shaped outcomes, and to what degree new risks were created and
problems only delayed.
Half the book is devoted to the numerous policy struggles after the crash. It evaluates
fiscal and monetary policy measures used to rescue economies, efforts to tackle
unemployment, proposals for dealing with collapsing housing markets, the widespread
application of austerity and the battles over long-term sovereign debt. A chapter is
devoted to the handling of the Eurozone crash and policymakers struggles to fix it, and
another to the continuing risks of global economic instabilities, some old and some
newly-created. It reviews reforms of mortgage markets, monetary policy and banking
designed to make such disasters less likely in the future. Written before, during, and in
the years immediately after the crash, the book is a lively chronicle and engaging
analysis of the events and thinking of these years and of the economic and political
constraints that shaped responses.
The book's arguments take on added authority given that the author had identified, and
called attention to, key features of the crash before it happened. It is a very timely
analysis of how policymakers arrived where they are now and of the many hurdles that still
lie ahead. It provides a scholarly yet highly accessible account that will appeal to a
wide audience and contribute to the public debate about the lessons to be learnt and
future policy options.
Farlow's focus on the importance of income inequality and deficiency of demand is
refreshingly Keynesian in flavour ... Crash and Beyond does much more
than simply consider the causes of the crisis; it also looks to the policy response.
Victoria Bateman, Times Higher Education On the whole, this is a scholarly book which
enriches our understanding of the crisis. Farlow does not suggest any ultimate solution.
He says he would be happy if the book serves as a collective memory of the crash and its
bitter aftertaste and acts as guidance or warning to handle future crises. Indeed, he has
succeeded. The Hindu A lively narrative, scholarly but with lay appeal, too. Oxford Today
In 2004-05, [Farlow] wrote about how, after the equity bubble in the late 1990s, money was
flowing into debt, especially mortgage finance, and how this could lead to another crisis.
The theoretical possibility he thought of materialised soon ...
The crisis gave Farlow a reputation as an economic astrologer, and brought him many
invitations to speak and attest. While this book deals with the crisis, it has a broader
subject ... This is not a dry and dusty book in economics; much drama has gone into it.
Farlow covers the theoretical debates; but he also goes deep into the events and
sequences, the errors and consequences. Ashok V Desai, Businessworld Farlow's discussion
of the US and European bank rescues also makes compelling reading...a fine addition to the
crisis/recession discourse Joel Campbell, International Affairs
PREFACE ;
PART ONE: BEFORE ;
1: GLOBAL IMBALANCES AND THE RISE OF DEBT ;
2: HOUSING AND MORTGAGE MARKET EXCESS ;
3: INNOVATION AND EXCESS IN BANKING ; PART TWO: CRASH AND RESCUE ;
4: CRASH ;
5: SAVING THE GODS ;
6: HEALING THE SICK AND RAISING THE DEAD ; PART THREE: BEYOND ;
7: RETURN FROM SLUMP, AND THE JOBLESS AND JOYLESS RECOVERY ;
8: HOUSING MARKET MELTDOWN, RESCUE AND REFORM ;
9: AUSTERITY AND THE BATTLES OVER SOVEREIGN DEBT ;
10: THE EUROZONE CRASH ;
11: GLOBAL REBALANCING AND INSTABILITY ;
12: BANKING REFORM ; CLOSING THOUGHTS ;
BIBLIOGRAPHY
448 pages, Hardcover