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Stress Test: Reflections on Financial Crises (Anglais) Relié – Séquence inédite, 12 mai 2014


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Descriptions du produit

Revue de presse

A Financial Times Best Book of 2014

“He’s written a really good book — we might as well get that out of the way, as so much else about Timothy F. Geithner remains unsettled… There’s hardly a moment in Geithner’s story when the reader feels he is being anything but straightforward — a near-superhuman feat for someone who spent so much time in public life defending himself from careless and dishonest personal attacks. The decisions he made are easier to criticize than they are to improve upon. I doubt many readers will put his book down and think the man did anything but his best. On his feet he might have stammered and wavered. That in itself was always a sign he was unusually brave.” –Michael Lewis, New York Times Book Review

“An intimate take on the financial crisis… gripping… conveys in visceral terms just how precarious things were during the crisis, just how frightened many first responders were, and just what an achievement it was to avert a major depression… [Geithner] demonstrates that he can discuss economics in an accessible fashion, making the situation the country faced in 2008 and 2009 tactile, comprehensible—and harrowing—to the lay reader. Along the way, he also gives us a telling portrait of himself.” New York Times
 
“A how-to manual for anyone faced with a financial crisis… Mr Geithner was known for his brutal candor, and as an author, he does not disappoint.” —The Economist

 “A fascinating memoir about life in the maelstrom of the financial crisis… Earlier books have described much of what happened that September, but Geithner was present for all the frantic meetings, the thousands of phone calls — and in the case of Lehman, the failure to find a buyer that could keep it alive. New problems cropped up almost weekly, if not daily. He explains each in easy-to-understand language and what the issues were that shaped the responses… There could be another crisis someday, of course, but what Geithner and his colleagues did has made one far less likely.” –USA Today

“Sharply worded and candid memoir.” —Financial Times

“Geithner does an admirable job of explaining the origins and complexities of the crisis for the average person. But there’s enough detail and retrospective lessons-learned to make it valuable for students of financial history….fast-paced and colorful….Stress Test goes beyond other crisis books.” –Los Angeles Times
 
“Throughout Stress Test, one gains a deep appreciation for the heart-pumping decisions made by Geithner and his colleagues from 2007 through 2012. And he makes a compelling case that overhwelming force is necessary in crisis, and that the measures taken by the Fed and two successive administrations prevented even more pain for ordinary Americans.” –WashingtonPost.com

“An unsparing insider’s account of the financial crisis from the former Secretary of the Treasury, unpacking the hard decisions and terrible trade-offs that devastated the economy but staved off a deep, lasting depression.” —TIME.com

“The central irony of Stress Test, the new memoir by former U.S. Treasury Secretary Tim Geithner, is that a guy who was accused of being a lousy communicator while in office has penned a book that is such a good read…I’ve now read four or five of these first drafts of the history of the Great Recession, and I believe Stress Test represents the biggest contribution of the bunch.” —Bill Gates

“Sensational . . . Tim’s book will forever be the definitive work on what causes financial panics and what must be done to stem them when they occur.” —Warren Buffett
 
“Very few important subjects in American history have been the subject of as much disinformation and deliberate distortion as the events surrounding the financial crisis that broke in 2008. Tim Geithner’s candid, clear-headed, and refreshingly self-effacing account of his role in formulating the federal government’s response is a very welcome antidote. Geithner’s book is a triple threat: it is first-rate economic history, insightful political science, and, most important, a cogent exposition of the importance of adhering to the policies adopted in the aftermath of the crisis if we are to succeed in diminishing the likelihood of any recurrence.” —Barney Frank
 
Stress Test is an absolutely compelling account of the financial crisis, written in a clear, graceful style with striking honesty at every step along the way. Timothy Geithner brings a complex story to life with telling anecdotes and personal reflections.” —Doris Kearns Goodwin
 
“This is a lucid, fascinating, and extremely important book. Every American should read it. Geithner does something unusual: he engages in substance. With both insight and humility, plus a good dose of wry humor, he explains what really happened during the financial crisis. No matter your political persuasion, you will find this book educational, enlightening, and interesting.” —Walter Isaacson
 
“The country owes Tim Geithner great appreciation for his role in overcoming the financial crisis of 2008.  He has now indebted it further with writing a thoughtful, very readable and informative account of the conduct of policy at the edge of disaster.” —Henry A. Kissinger
 
 
 

Présentation de l'éditeur

New York Times Bestseller

Washington Post Bestseller

Los Angeles Times Bestseller

Stress Test is the story of Tim Geithner’s education in financial crises.

 
As president of the Federal Reserve Bank of New York and then as President Barack Obama’s secretary of the Treasury, Timothy F. Geithner helped the United States navigate the worst financial crisis since the Great Depression, from boom to bust to rescue to recovery. In a candid, riveting, and historically illuminating memoir, he takes readers behind the scenes of the crisis, explaining the hard choices and politically unpalatable decisions he made to repair a broken financial system and prevent the collapse of the Main Street economy. This is the inside story of how a small group of policy makers—in a thick fog of uncertainty, with unimaginably high stakes—helped avoid a second depression but lost the American people doing it. Stress Test is also a valuable guide to how governments can better manage financial crises, because this one won’t be the last.

Stress Test reveals a side of Secretary Geithner the public has never seen, starting with his childhood as an American abroad. He recounts his early days as a young Treasury official helping to fight the international financial crises of the 1990s, then describes what he saw, what he did, and what he missed at the New York Fed before the Wall Street boom went bust. He takes readers inside the room as the crisis began, intensified, and burned out of control, discussing the most controversial episodes of his tenures at the New York Fed and the Treasury, including the rescue of Bear Stearns; the harrowing weekend when Lehman Brothers failed; the searing crucible of the AIG rescue as well as the furor over the firm’s lavish bonuses; the battles inside the Obama administration over his widely criticized but ultimately successful plan to end the crisis; and the bracing fight for the most sweeping financial reforms in more than seventy years. Secretary Geithner also describes the aftershocks of the crisis, including the administration’s efforts to address high unemployment, a series of brutal political battles over deficits and debt, and the drama over Europe’s repeated flirtations with the economic abyss.

Secretary Geithner is not a politician, but he has things to say about politics—the silliness, the nastiness, the toll it took on his family. But in the end, Stress Test is a hopeful story about public service. In this revealing memoir, Tim Geithner explains how America withstood the ultimate stress test of its political and financial systems.



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Détails sur le produit

  • Relié: 592 pages
  • Editeur : Crown (12 mai 2014)
  • Langue : Anglais
  • ISBN-10: 0804138591
  • ISBN-13: 978-0804138598
  • Dimensions du produit: 16,8 x 4,5 x 24,2 cm
  • Moyenne des commentaires client : 4.5 étoiles sur 5  Voir tous les commentaires (2 commentaires client)
  • Classement des meilleures ventes d'Amazon: 55.558 en Livres anglais et étrangers (Voir les 100 premiers en Livres anglais et étrangers)
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Par McKnife le 31 août 2014
Format: Format Kindle Achat vérifié
A pithy and fast-moving exposé of this most complex topic. Geithner is especially good on the psychology of market panics and makes a very convincing case of the need for massive intervention by central banks in order to stem systemic unravelling of the financial system. He dismisses the fears of "moral hazard" proponents such as those in EU monetary circles, who consider that bail-outs of major institutions during crises incentivise risky behaviour.

I was interested by his earlier experiences with earlier crises in Mexico & Thailand. I appreciated his modesty and willingness to explain his mistakes, and to share credit with others
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Par AndreF le 11 septembre 2014
Format: Format Kindle Achat vérifié
excellente lecture, facile et très bien faite par un acteur clé de la crise financière en cours. A lire absolument.
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218 internautes sur 265 ont trouvé ce commentaire utile 
An honest account 14 mai 2014
Par Brian L Peters - Publié sur Amazon.com
Format: Relié Achat vérifié
I worked with Geithner at the NY Fed. I was a bit player present at many of the meetings and calls described.

I imagine most ratings will reflect their predisposition to the actions taken by the Fed and Treasury during the crisis. I did not come here to debate those.

I merely came to state that the book is an honest account of how Tim and the rest of us thought during the events described. This is what he believed, and what we believed. I cannot comment on the accounts from Treasury, though they correspond with what I annecdotally heard at the time.
55 internautes sur 73 ont trouvé ce commentaire utile 
Beaten like a red haired stepchild 19 mai 2014
Par Generic Guy - Publié sur Amazon.com
Format: Relié Achat vérifié
The Debt-Deflation Theory of Great Depressions (What would have happened - and did - Depression 1.0 )

And, Geithner still seems shell shocked. He does a much better job framing the crisis in the book than in real time. But he still doesn't do an a sufficient job of conveying the crushing impact of market panic. It was the kind of fear that you can smell.

His major error is not emphasizing just how small the differences are between market based traditional bankruptcy, bailouts, and nationalization. With nationalization, the owners/shareholders are wiped out as well as some of the bondholders. In traditional bankruptcy, the owners/shareholders are wiped out and bondholders are usually wiped out or take a serious haircut. With partial nationalization (bailouts) including TARP and other guarantee programs, shareholders were either totally wiped out or lost 90% of their investment in the weakest banks. The shareholders of the stronger banks suffered dilution of their ownership through TARP fees, mandatory warrants, and Treasury imposed capital raises.

1/4 to 1/3 of the largest financial firms were effectively nationalized. The owners/shareholders were wiped out. The ONLY difference was the treatment of bond holders, who did better under the TARP and other backstop programs. And these bondholders weren't hedge funds or investment bankers. Hedge funds wouldn't touch low yield bank debt. It was owned by Pension Funds, bond mutual funds, ordinary people and institutions that look more like the president of your local branch bank then anyone on Wall Street.

Partial nationalization. If you don't believe it, ask Ralph Nader. "Nader has been arguing the government needs to recognize the rights of shareholders, instead of sending all the profits of the GSEs to the Treasury, aside from minimal capital buffers." Yes Fannie Mae and Freddy Mac were bailed out. But the owners/shareholders weren't bailed out. Nader complains that all the profits were sent to the taxpayer. Per Nader, "... they sensed that this would help keep the deficit down -- that this huge Niagara of profits would --and they were right on that." That 'huge Niagara went to the TAXPAYERS.

Geithner was beaten like a red haired stepchild. And he plays defense in this book.

The story he didn't spell out in 18 point type is:

1. TARP had a positive return of $billions. Which went to the taxpayer.
2. A huge portion of the financial system WAS effectively nationalized Bear Sterns, WaMu, Wachovia, Fannie Mae, Freddie Mac, 80% of Citi, 92% of AIG and small chunks of the institutions that were required to increase capital by Geithner's stress test.
3. When the Fed and Treasury acted, markets that had been worshiped since the breakup of the USSR -- failed. For a market system to work, markets need to be relatively efficient, liquid and deep. These characteristics, which were plausible prior to panic, were proven to be illusory.
4. The greed of the prior decade was reversed and replaced by the ice cold sweat of fear. Financial markets were frozen and our economy went into free fall.
5. Geithner won. The Fed, Treasury, and both Bush and Obama saved the country from Great Depression 2.0.

The misnamed bailout didn't bail out the owners of weak financial firms. It bailed out the rest of the country, including iconic American brands like Harley Davidson. Harley (ticker symbol HOG) is the only brand in history whose most loyal customers get tattooed with the brand name permanently and prominently. In early 2009, it was simply unable to finance sales to customers with good credit. It was choking on loans that couldn't be sold into frozen markets. Geithner's TALF broke that logjam and prevented businesses from disintegrating. Anyone that doesn't believe this should simply look it up.

Yes Geithner said it.

But he should have said it more like this. With conviction.
71 internautes sur 100 ont trouvé ce commentaire utile 
Review: A crisis-like evaluation of "Stress Test" 12 mai 2014
Par Reuters Breakingviews - Publié sur Amazon.com
Format: Relié
By Breakingviews columnists

To judge the merits of Tim Geithner’s crises reflections in “Stress Test,” six Breakingviews columnists digested different pieces of the book in a short amount of time. Like the regulators who often lacked broader context, the assessments vary. Yet there’s also consensus it’s a useful tome for the financial library.

CHAPTERS 1-2

Whatever critics say, Tim Geithner can’t be accused of having a narrow outlook or partisan blinkers. He grew up in Africa, India and Thailand as well as back home in the United States. He enrolled at preppy Dartmouth and signed up to learn Chinese. His mother is a “bleeding-heart liberal,” his father a lifelong Republican, and Geithner himself now a registered independent. He describes his background as privileged, but not rich.

He accepts in self-deprecating fashion that he gained a reputation as a fan of financial bailouts, despite the “moral hazard” precedent they created. But Geithner’s interest in finance and economics came late, after a more geopolitical focus at graduate school and Henry Kissinger’s consulting firm. It was fired up partly by Larry Summers, whom Geithner met in 1992, four years into his first stint at the Treasury Department, working on trade. Summers, later treasury secretary, “had earned a reputation for brilliance, if not for concealing it.”

Exposure to the faltering Japanese economy, a crisis in Mexico and another in Asian financial markets also helped shape Geithner’s worldview. Even as the U.S. economy went from strength to strength in the later 1990s his main recollection, he says, is “how scary it was, how little we knew.” And that was before he went to work at crisis central, the International Monetary Fund.

CHAPTERS 3-4

There is a certain modesty within the pages of Geithner’s easy-to-read book that is at once endearing and sometimes infuriating. He acknowledges, seemingly unperturbed, that he wasn’t the first choice to run the Federal Reserve Bank of New York (Stanley Fischer, John Taylor and others were ahead of him on the list) and is self-effacing about his own boyish looks, explaining how he was carded trying to buy beer the night before he started working for the regional central bank.

Geithner concedes that he fell back on a “lazy” argument about regulating derivatives, didn’t like public speaking and “wasn’t good at it,” and used “typically impenetrable prose” to warn of looming systemic troubles. At the same time, Geithner suggests he was prescient about such risks but that the Fed was limited by what it could do. “There was a widespread perception we had awesome powers to fight financial fires, but when I studied our actual firefighting equipment … I was not particularly impressed.”

He sees regulators at odds with each other, captured by the bankers they are meant to oversee, and a lack of accountability over the wider financial system. “We certainly could have been more prescient, more forceful, more imaginative,” Geithner says of the mortgage crisis. “But we were human.” The looming collapse of Countrywide seems mainly to provide yet another reminder of the limitations of watchdogs. The imminent collapse of Bear Stearns does the same, when Treasury Secretary Hank Paulson discovers “how little authority” he has “to try to avert a major financial crisis in the United States.”

CHAPTERS 5-6

Geithner thankfully avoids turning his coverage of the 2008 crisis into a magnum opus. Enough exist already. His account of Lehman Brothers’ failure, however, leaves questions unanswered. Geithner is at pains to point out that he wanted the New York Fed to “climb inside the investment banks” to understand their risks right after Bear was subsumed in March. And he informs us his analysts calculated as early as spring that Lehman could need, at worst, $84 billion of new capital to survive.

The regulator did very little with that information and started drawing up a Lehman liquidation plan only a week before the investment bank went under. A report from the firm’s bankruptcy trustee, meanwhile, provided a much less flattering account: the New York Fed and Securities and Exchange officials embedded there were as distracted by interagency rivalry as anything else.

Geithner comes clean about his peers, though. He effectively accuses Sheila Bair, who ran the Federal Deposit Insurance Corp at the time, of “moral hazard fundamentalism” for insisting on imposing losses on Washington Mutual bondholders and creating an incident in which “the U.S. government made things worse.” Her decision later to ditch Citigroup’s offer for Wachovia in favor of Wells Fargo’s prompts him to lambast her with: “We can’t act like a Banana Republic.”

Shareholders and bondholders of the various banks may debate the matter for years. But they probably share Geithner’s scorn for SEC Commissioner Christopher Cox.

CHAPTERS 7-8

The near-failure to launch the crowning achievement of Geithner’s tenure becomes newly apparent. The stress tests in spring of 2009 ultimately drew a line in the sand for the financial crisis in the United States and fostered a dramatic flow of private capital into the banking sector. Indeed, the reluctance, and institutional complications, around testing banks in Europe arguably extended the continent’s economic woes unnecessarily.

Geithner first expressed the idea while on a family vacation before Barack Obama would inhabit the White House. As a member of the transition team and as former head of the New York Fed, Geithner was already heavily involved in the new administration’s rescue plans. During a call, Geithner told Summers, his former mentor who would become Obama’s chief economic adviser, that he was thinking of a “valuation exercise” to create “transparency on opaque financial institutions and their opaque assets.” This, he reckoned, would reduce the uncertainty fueling the panic.

In hindsight, this proved absolutely correct. By the government’s forcing major financial institutions to submit to uniform and stringent scenario testing and to disclose the results, some $200 billion of private capital made its way to U.S. bank balance sheets. Getting there, however, was fraught, as Geithner makes clear.

Summers, who Geithner calls a “world-class hole-puncher,” proved a surprising obstacle. He believed the banking system was too distressed and feared that a more aggressive approach, even nationalization and forced breakups, would be necessary. That perspective, which Geithner calls the “hedge fund view,” reflected a discrepancy in the way the two valued bank assets, with Summers hewing more closely to a mark-to-market line.

There are other obstacles, too. Geithner liberally takes himself to task. He acknowledges mistakes in communicating and persuading others – within the administration, politicians and the public – of the Treasury’s plans and positions. Of his debut in early February, Geithner nails his performance: “My speech … sucked.”

History will judge kindly the Treasury’s decision to move with relative swiftness and open the books on the banking system five years ago. Geithner’s account shows how easily that outcome could have shifted in ways that would have been potentially disastrous for global financial markets.

CHAPTERS 9-10

The laudable stress tests eventually were emulated by other countries and became standard practice for regulators once the big American banks largely passed and U.S. financial markets calmed. The former treasury secretary comes off a little too earnest on the subject, though. Geithner could be forgiven for believing those first test results eased investors’ fears after regulators deemed big banks safe again. Yet it also leaves implicit the suggestion that the comfort is owed to the idea that the government would feel compelled to ride to the rescue again.

Geithner also manages to take credit for the financial reform bill that Congress eventually approved while lamenting its shortcomings. On one hand, he’s right: his Treasury led the charge with a proposal in mid-2009. On the other hand, his biggest criticism of the final version of the law, bizarrely enough, is that it didn’t leave regulators enough bailout authority. Rescues are precisely what good reform should aim to avoid.

His assessment that adding much-needed housing finance reform to the legislation would have doomed it politically sounds on the mark, too. In the years that followed, though, his Treasury failed to aggressively advance the cause. Now that Fannie Mae and Freddie Mac have begun to generate a profit again, and hedge funds gobbled up their cheap shares in the hopes of political weakness, the opportunity may have passed.

CHAPTER 11, EPILOGUE

Geithner’s post-crisis analysis reflects a deep Keynesianism, as he blames fiscal austerity for the sluggishness of economic recovery, rather than the continued diversion of massive resources into huge budget deficits. The lack of a significant bounce in U.S. GDP from the 2009 stimulus or the 2011 payroll tax cuts, or fiscal drag from the 2013 tax hikes and “sequester” spending cuts, are suggestive of his blind spot.

It’s also easy to sympathize with Geithner’s frustrations with the Republican Congress and Europe’s profligacy leading up to the Greek default. And his criticism is well targeted at the continent’s stress-free stress tests. Yet his criticism of the European Union’s “harsh” rhetoric is off point. The problem in Europe was that central authorities left too many loopholes and hadn’t enforced fiscal discipline harshly enough. Geithner’s overall assessment of the crisis aftershocks at the end of his book lacks the necessary distance to fully assess the faults of principle in the approach.

Geithner’s central takeaway is that his actions prevented a full-scale depression of a 1929-1933 order, while the weak subsequent recovery was inevitable. That’s of course unknowable, even if he deserves some credit for avoiding the policy disasters that emanated from the Hoover administration. The strength of the stock market recovery and the weakness of output and productivity growth do, however, suggest something flawed in the Geithner view. He at least has left behind a useful blueprint to study for when the next stress test comes along.

Read more [...]
79 internautes sur 114 ont trouvé ce commentaire utile 
Geithner's persuasive case for TARP (Federal Bailouts); an equitable narrative (admissions & good deal of memorable stories) 13 mai 2014
Par JPM - Publié sur Amazon.com
Geithner's persuasive case for Federal Bailouts, 2 big admissions and a good deal of memorable stories of his interactions with who's who to save our Blue planet from sinking in a depression

Timothy F. Geithner, the US Treasury Secretary (2009-2013), former President of the Federal Reserve Bank of New York and currently the President of Warburg Pincus, a global Private Equity investment institution), emphasises on the importance of Troubled Asset Relief Program (TARP or Federal Bailouts) of 2008 and his role in saving the world from the depths of Economic Depression.

In his first book titled "Stress Test," Geithner constructs a persuasive case of his role as the man most responsible for the TARP (Federal Bailouts) of 2008. Financial bailouts historically were only made available to the commercial banks and not extended to the Wall Street Investment houses, Geithner was the first Treasury Secretary to have made this possible.

He makes the case for TARP in saving the Financial Institutions. He extends the argument on the value of Financial Institutions gaining enormity when the country in question is the United States of America (USA), the largest economy on the planet. The importance of the Financial Institutions grows and reaches epic global proportions, when the same nation is facing a crisis, which finds its origins in the core of the same Financial Institutions. The TARP, which then amounted to approximately 700 Billion dollars (and have now reached ~ 8 trillion dollars: all funded by taxpayer money) was released to act as a safety net for the Financial Institutions who in turn are to protect the Tax Payer of the vicious cycle of recession, which if left uncontrolled would have led to Global Economic Depression).

Geithner makes two big admissions

1) He admits that he did not foresee the coming of the "Financial crisis" (especially showcased during a meeting held in March 2008 (the Bears Stearns rescue days), when he objected against the then Federal Governor Kevin Warsh's statement on the fact that financial institutions remained undercapitalized (i.e. the Institutions had too much leverage and hence had too much exposure to potential losses, which could lead to financial apocalypse).

2) His second biggest admission is that he did not grasp the grimness of the troubles, while they were occurring and even after they had occurred (from him being influenced by Citibank's Robert Rubin (who along with Larry Summers had recommended him for the position of President of the Federal Reserve Bank of New York, despite of him (in his own words) lacking the desired experience).

Geithner also takes jibes at and thrashes the "moral hazard fundamentalists" fellows who raise concerns that bailing out the financial institutions has encouraged even riskier behaviour. He says that the TARP and other rescue programs enacted in the crisis years were a success because the alternative(s), which no one can ever know would have been far worse.

There are some very good stories of his interactions with the heads of Wall Street banks, most notably with Citibank's Robert Rubin, Goldman Sachs Lloyd Blankfein and with important personalities of the likes of the Oracle of Omaha Mr. Warren Buffet, Ben Bernanke, the then Chairperson of the Federal Reserve, his predecessor Hank Paulson, then and current President Mr. Barack Obama and ex-President Mr. Bill Clinton.

Overall a very good read (I heard it on Audible at 1.5x :)
8 internautes sur 11 ont trouvé ce commentaire utile 
Stressed out... 23 juin 2014
Par Michael Harrington - Publié sur Amazon.com
Format: Format Kindle
Geithner's explanation of the financial crisis and its subsequent management seems more of a desire to preempt the writing of history with a rationalization of his policy choices than provide any insight into the reality of crisis or how it has reconfigured the financial landscape for the worse. Not surprisingly, Paul Krugman's review is not cited by the publishers.

Geithner's view of the economy and role of finance is colored according to the myopic banker's view of the credit system, but I guess we should have expected this from a Treasury Secretary whose only preparation for the job was as the head of the NY Federal Reserve Bank.

Geithner believes the financial crisis was a liquidity crisis akin to a bank run. Geithner's solution was calibrated with the Federal Reserve stepping in as the lender of last resort, which it performed admirably. But the payments breakdown was merely the symptom of the problem, not the cause. The cause was insolvent balance sheets across the financial sector. And this insolvency can be traced back to bad policies: easy credit by Greenspan, Bernanke and Co. and the lack of banking oversight, by, well, guess who? Timothy Geithner at the head of the NY Fed.

A housing bubble fueled by easy credit and securitized mortgages led to balance sheets with mispriced assets for financial intermediaries the world over. In other words, the AAA-rated MBS they were holding as capital reserves were only as good as the value of the underlying collateral: all those ridiculously priced houses. When people began to realize this, the run was on and the repo market froze, cascading across all the credit markets. This was an insolvency crisis reflected in a payments freeze. The Fed needed to stand in as lender of last resort and did so, with Geithner's full support.

But then Geithner's solution to the post-liquidity financial de-leveraging has been to make bankers whole and push the costs onto taxpayers, savers, homeowners, and lenders. AIG went into receivership, but all the counterparties from Goldman Sachs to European banks were paid back at par on their credit default swaps. This not only enriched but sheltered bad actors like Goldman from accountability. This served Geithner's Wall St. constituency (which is not exactly the constituency of the Treasury Secretary of the USA). This was "heads we win, tails you lose," on a grand scale. Now the banking system is more concentrated than ever with systemic risk of another shock even more threatening. Instead, the Fed and Treasury should have managed the deleveraging of the historical credit bubble until asset prices again reflected fundamental values rather than false confidence in monetary engineering.

Despite the self-congratulatory tone of the author, we are nowhere near writing the end of this story. The Fed has expanded its balance sheet by several trillion dollars and is holding much of that in overvalued MBS that it has purchased through Quantitative Easing. The policies have tried to inflate housing values in order to return these mortgages back to nominal face value, but the prices of houses are artificially being pumped up by Fed credits while housing fundamentals (median incomes) remain in the doldrums. The bubbles in financial markets are also a direct manifestation of Fed policy. The Fed knows that it can cover its bad assets by merely creating more liabilities in credit. The final reckoning will likely be the depreciation of the US$ and the loss of real value to savers, lenders, and working people.

Krugman is right, Geithner and the Fed saved the world from a Great Depression (of their own making - thank you very much), but have invited even greater economic disaster for middle class families across the country in terms of economic security.
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