A Failure of Capitalism by Richard A. Posner

He was the chief judge of the court from 1993 to 2000. Court of Appeals for the Seventh Circuit, where he presided until his retirement on September 2, 2017. He first came to the Law School in 1969, and was Lee and Brena Freeman Professor of Law prior to his appointment in 1981 as a judge of the U.S. Prior to going to Stanford Law School in 1968 as Associate Professor, Judge Posner served as general counsel of the President's Task Force on Communications Policy. For the next two years he was assistant to the solicitor general of the United States. From 1963 to 1965, he was assistant to Commissioner Philip Elman of the Federal Trade Commission. Richard Posner is Senior Lecturer in Law at the University of Chicago Law School.įollowing his graduation from Harvard Law School, Judge Posner clerked for Justice William J. Read Richard Posner's blog, and his latest article in The Atlantic. Posner concludes that the pendulum swung too far and that our financial markets need to be more heavily regulated. Posner analyzes the two basic remedial approaches to the crisis, which correspond to the two theories of the cause of the Great Depression: the monetarist-that the Federal Reserve Board allowed the money supply to shrink, thus failing to prevent a disastrous deflation-and the Keynesian-that the depression was the product of a credit binge in the 1920’s, a stock-market crash, and the ensuing downward spiral in economic activity.

Among the facts and causes Posner identifies are: excess savings flowing in from Asia and the reckless lowering of interest rates by the Federal Reserve Board the relation between executive compensation, short-term profit goals, and risky lending the housing bubble fuelled by low interest rates, aggressive mortgage marketing, and loose regulations the low savings rate of American people and the highly leveraged balance sheets of large financial institutions. This is a book for intelligent generalists that will interest specialists as well. No previous acquaintance on the part of the reader with macroeconomics or the theory of finance is presupposed. How could it have happened, especially after all that we’ve learned from the Great Depression? Why wasn’t it anticipated so that remedial steps could be taken to avoid or mitigate it? What can be done to reverse a slide into a full-blown depression? Why have the responses to date of the government and the economics profession been so lackluster? Richard Posner presents a concise and non-technical examination of this mother of all financial disasters and of the, as yet, stumbling efforts to cope with it.

The financial and economic crisis that began in 2008 is the most alarming of our lifetime because of the warp-speed at which it is occurring.

A Failure of Capitalism by Richard A. Posner