Overview

Before 2007, economists thought that financial crises would never happen again in the United States, that such upheavals were a thing of the past. Gary B. Gorton, a prominent expert on financial crises, argues that economists fundamentally misunderstand what they are, why they occur, and why there were none in the U.S. from 1934 to 2007. Misunderstanding Financial Crises offers a back-to-basics overview of financial crises, and shows that they are not rare, idiosyncratic events caused by a perfect storm of unconnected factors. Instead, Gorton shows how financial crises are, indeed, inherent to our financial system. Economists, Gorton writes, looked from a certain point of view and missed everything that was important: the evolution of capital markets and the banking system, the existence of new financial instruments, and the size of certain money markets like the sale and repurchase market. Comparing the so-called Quiet Period of 1934 to 2007, when there were no systemic crises, to the Panic of 2007-2008, Gorton ties together key issues like bank debt and liquidity, credit booms and manias, moral hazard, and too-big-too-fail--all to illustrate the true causes of financial collapse. He argues that the successful regulation that prevented crises since 1934 did not adequately keep pace with innovation in the financial sector, due in part to the misunderstandings of economists, who assured regulators that all was well. Gorton also looks forward to offer both a better way for economists to think about markets and a description of the regulation necessary to address the future threat of financial disaster.

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Michael Butler Murray is a professional actor, narrator, and musician who has voiced over fifty-five audiobooks. His recorded titles run the spectrum from dramatic to comedic fiction and nonfiction titles varying in topics from the Middle East to understanding your dog's olfactory senses. Born on Long Island, New York, he has been performing his entire life. Over the past few decades, he has performed in slews of musicals, dramas, and improv shows across the country, has appeared in several films, and performs regularly with his guitar comedy duo, Schoolcraft & Murray. He loves stretching his legs in the great outdoors, sailing, surfing and, naturally, sitting in a quiet box reading aloud. Gary B. Gorton is the Frederick Frank Class of 1954 Professor of Finance at the Yale School of Management. He is the author of Slapped by the Invisible Hand: The Panic of 2007.

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