The Crash of 2008 and What it Means

"In the previous edition of this book, I put forward a conceptual framework for understanding the financial crisis then beginning to unfold. I recognized that the crisis was more severe than many were willing to accept, but even I never expected the financial system to actually break down and the global economy to collapse. In the past, whenever we came to the brink of a breakdown the financial authorities came to the rescue. That is what I expected for 2008, but that is not what happened. On September 15, 2008, Lehman Brothers was allowed to go into bankruptcy without proper preparation. Within days the entire financial system suffered what amounted to cardiac arrest and had to be put on artificial life support. The effect on the global economy was the equivalent of the collapse of the banking system during the Great Depression. The current breakdown is a relatively recent event whose full impact has not yet been felt...

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