Slapped by the Invisible Hand: The Panic of 2007

Hardcover | March 22, 2010

byGary B. Gorton

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Originally written for a conference of the Federal Reserve, Gary Gorton's "The Panic of 2007" garnered enormous attention and is considered by many to be the most convincing take on the recent economic meltdown. Now, in Slapped by the Invisible Hand, Gorton builds upon this seminal work,explaining how the securitized-banking system, the nexus of financial markets and instruments unknown to most people, stands at the heart of the financial crisis. Gorton shows that the Panic of 2007 was not so different from the Panics of 1907 or of 1893, except that, in 2007, most people had never heard of the markets that were involved, didn't know how they worked, or what their purposes were. Terms like subprime mortgage, asset-backed commercial paperconduit, structured investment vehicle, credit derivative, securitization, or repo market were meaningless. In this superb volume, Gorton makes all of this crystal clear. He shows that the securitized banking system is, in fact, a real banking system, allowing institutional investors and firms tomake enormous, short-term deposits. But as any banking system, it was vulnerable to a panic. Indeed the events starting in August 2007 can best be understood not as a retail panic involving individuals, but as a wholesale panic involving institutions, where large financial firms "ran" on otherfinancial firms, making the system insolvent. An authority on banking panics, Gorton is the ideal person to explain the financial calamity of 2007. Indeed, as the crisis unfolded, he was working inside an institution that played a central role in the collapse. Thus, this book presents the unparalleled and invaluable perspective of a top scholarwho was also a key insider.

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Originally written for a conference of the Federal Reserve, Gary Gorton's "The Panic of 2007" garnered enormous attention and is considered by many to be the most convincing take on the recent economic meltdown. Now, in Slapped by the Invisible Hand, Gorton builds upon this seminal work,explaining how the securitized-banking system, th...

Gary B. Gorton is the Frederick Frank Class of 1954 Professor of Management and Finance at the Yale School of Management, and Research Associate at the National Bureau of Economic Research. He formerly taught at the Wharton School for twenty-four years and worked in the Federal Reserve System. He is also a former consultant to AIG Fin...

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Kobo ebook|Feb 8 2010

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Format:HardcoverDimensions:240 pages, 6.42 × 9.29 × 0.98 inPublished:March 22, 2010Publisher:Oxford University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0199734151

ISBN - 13:9780199734153

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Table of Contents

1. Introduction2. Slapped in the Face by the Invisible Hand: Banking and the Panic of 2007 (the Jekyll Island paper)3. The Panic of 2007: Part 1 (Part 1 of the Jackson Hole paper)4. The Panic of 2007: Part 2 (Part 2 of the Jackson Hole paper)Appendix A: A Brief Chronology of the Events of the Panic of 2007Appendix B: Main Structured Investment Vehicle Outcomes5. Bank Regulation When nullBanksnull and nullBankingnull are Not the Same6. A Note to Those Reading this in 21077. Bibliography8. Notes9. Index