In Casino Capitalism , Hans-Werner Sinn examines the causes of the banking crisis, points out the flaws in the economic rescue packages, and presents a master plan for the reform of financial markets. Sinn argues that the crisis came about because limited liability induced both Wall Street and Main Street to gamble with real estate properties. He meticulously describes the process of lending to American homeowners and criticizes both the process of securitizing and selling mortgage claims to the world, as well as the poor job rating agencies did in providing transparency. He argues that the American Dream has ended because the world now realizes that this dream was built on loans that are never likely to be repaid.
Sinn also asserts that the banking crisis has not yet been resolved, because the necessary write-offs of toxic assets have largely been swept under the carpet. Comparing actual worldwide write-offs with those estimated by the IMF estimates, he concludes that substantial parts, if not most, of the true losses have yet to be revealed and that the banking systems of many countries are on the brink of insolvency.
In view of this, he directs sharp criticism at the various economic rescue packages, arguing that the plans assume that banks have a liquidity problem while, in fact, they suffer from a solvency crisis. Sinn points out that the conflict between the goals of rescuing banks in the short term and inducing more prudent behaviour in the long term requires the government to help the banks, but not their shareholders, by becoming a temporary co-owner. In addition, he calls for higher equity requirements, a worldwide return to more cautious accounting methods, a ban on extremely speculative short selling, and strict regulations on conduits, hedge funds and credit default swaps.
This authoritative account provides an invaluable overview for academics, students, policymakers, politicians, and all those with an interest in the unprecedented 2008 banking crisis.
Review "Sinn's analysis is the most readable and best (popular science) account of the financial crisis that has yet appeared."--Sebastian Dullien, Financial Times
About the Author Hans-Werner Sinn is Chair of Economics and Public Finance at the University of Munich and President of the combined Institute for Economic Research and Center for Economic Studies (CES-ifo). He has published numerous scholarly journals and books but is also a leading commentator on contemporary economic affairs in Germany and has published a number of best selling books.

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zlib/Business & Economics/Mathematical Economics/Hans-Werner Sinn/Casino Capitalism: How the Financial Crisis Came About and What Needs to be Done Now_1161696.pdf

Kasino-Kapitalismus: Wie es zur Finanzkrise kam, und was jetzt zu tun ist

Sinn, Hans-Werner

Oxford Institute for Energy Studies

German Historical Institute London

OUP Oxford

United Kingdom and Ireland, United Kingdom

Oxford, New York, England, 2010

Illustrated, 1, US, 2010

Oxford, 2012

2011 12 30

lg723620

{"isbns":["0199588279","9780199588275"],"last_page":400,"publisher":"Oxford University Press"}

Memory of the World Librarian: Quintus

Includes bibliographical references and indexes.

Contents......Page 20
List of Figures......Page 24
List of Tables......Page 27
A near meltdown......Page 28
Recession or depression?......Page 32
Lags......Page 40
Shock producers and shock absorbers......Page 43
America has been living beyond its means......Page 47
The financiers of the world capital markets......Page 50
Depreciation of the dollar......Page 55
Stock price collapse......Page 59
Savings glut or glut of toxic assets?......Page 62
The housing crisis......Page 63
Was monetary policy to blame?......Page 69
Record number of failures......Page 73
The German Landesbanken......Page 78
The next victims......Page 81
Lehman Brothers and the collapse of interbank operations......Page 82
And still more victims......Page 86
Nationalization as a last resort......Page 93
Blind gambling instinct?......Page 97
Limited liability as capitalism's secret of success......Page 98
Undercapitalized investment banks......Page 103
Mark to market......Page 105
Investment bankers as soldiers of fortune: the role of the Bloos Rule......Page 106
Why sustainability was lost sight of......Page 111
Puppets on a string......Page 114
Lemon trade......Page 117
Non-recourse loans......Page 121
How Mr Jones became a gambler .........Page 123
... and lived beyond his means......Page 125
The banks as gambling partners......Page 129
The right to play the lottery: Clinton's law......Page 130
The securitization trick......Page 139
Fannie and Freddie......Page 143
The securitization cascade......Page 144
The trick with honorariums and cash-back credits......Page 150
The failure of the rating agencies......Page 153
People's Republic of America......Page 157
Henry Paulson and the SEC......Page 160
Madoff, Spitzeder, Ponzi, et al.......Page 162
Basel also failed......Page 164
The trick in calculating the capital ratio......Page 168
The pro-cyclical effects of the mark-to-market method......Page 173
Dynamic company valuation is also pro-cyclical......Page 177
Special purpose vehicles and hedge funds......Page 178
The competition in laxity......Page 184
The selection principle and neoliberalism......Page 188
Bank losses to date: US banks at the centre......Page 192
UK, Germany, and France......Page 196
Switzerland, the Netherlands, Belgium, and Austria......Page 198
How stable are the banks?......Page 200
Hidden write-offs......Page 206
The credit-card problem......Page 211
Graveyard insurance......Page 214
Bank rescue......Page 218
The US package......Page 221
The Geithner Plan......Page 223
Germany......Page 227
The British way......Page 231
Monetary policy......Page 233
The credit crunch......Page 236
Gaining weight......Page 240
The Keynesian recovery packages......Page 242
Why governments should not bail out GM and Opel......Page 247
Scrapping the scrap premium......Page 251
The new top debtors......Page 255
Europe at risk......Page 258
Will Greece and Italy have to be bailed out?......Page 268
Eurobonds......Page 274
Americans may travel to Italy, Europeans to Japan......Page 278
Fire protection in the jungle......Page 287
Liquidity, solvency, and equity gifts......Page 289
Bad banks and bad ideas......Page 291
The bank hospital......Page 293
Too big to fail, too small for prudence to prevail......Page 295
Building a common supervisory system......Page 297
Basel III and the accounting rules......Page 299
Credible regulation......Page 303
Executive pay......Page 306
Eliminating the pro-cyclicality of the supervisory system......Page 309
Taming the special purpose vehicles and hedge funds......Page 310
Reinstating the Glass–Steagall Act?......Page 311
Banning short sales......Page 314
A new business model for the rating agencies......Page 316
Stop signs for non-recourse claims......Page 317
Burying graveyard insurance......Page 318
Appendix: Chronology of the Financial Crisis......Page 321
B......Page 387
D......Page 388
G......Page 389
J......Page 390
N......Page 391
R......Page 392
V......Page 393
W......Page 394
C......Page 395
G......Page 396
N......Page 397
T......Page 398
Z......Page 399
J......Page 400
Z......Page 401

Contents 20
List of Figures 24
List of Tables 27
1. The World in Crisis 28
A near meltdown 28
Recession or depression? 32
Lags 40
Shock producers and shock absorbers 43
2. Life on Credit 47
America has been living beyond its means 47
The financiers of the world capital markets 50
Depreciation of the dollar 55
Stock price collapse 59
Savings glut or glut of toxic assets? 62
The housing crisis 63
Was monetary policy to blame? 69
3. Bank Failures 73
Record number of failures 73
The German Landesbanken 78
The next victims 81
Lehman Brothers and the collapse of interbank operations 82
And still more victims 86
Nationalization as a last resort 93
4. Why Wall Street Became a Gambling Casino 97
Blind gambling instinct? 97
Limited liability as capitalism's secret of success 98
Undercapitalized investment banks 103
Mark to market 105
Investment bankers as soldiers of fortune: the role of the Bloos Rule 106
Why sustainability was lost sight of 111
Puppets on a string 114
Lemon trade 117
5. Main Street also Gambled 121
Non-recourse loans 121
How Mr Jones became a gambler ... 123
... and lived beyond his means 125
The banks as gambling partners 129
The right to play the lottery: Clinton's law 130
6. Hot Potatoes 139
The securitization trick 139
Fannie and Freddie 143
The securitization cascade 144
The trick with honorariums and cash-back credits 150
The failure of the rating agencies 153
People's Republic of America 157
7. Policy Failure 160
Henry Paulson and the SEC 160
Madoff, Spitzeder, Ponzi, et al. 162
Basel also failed 164
The trick in calculating the capital ratio 168
The pro-cyclical effects of the mark-to-market method 173
Dynamic company valuation is also pro-cyclical 177
Special purpose vehicles and hedge funds 178
The competition in laxity 184
The selection principle and neoliberalism 188
8. The Extent of the Damage 192
Bank losses to date: US banks at the centre 192
UK, Germany, and France 196
Switzerland, the Netherlands, Belgium, and Austria 198
How stable are the banks? 200
Hidden write-offs 206
The credit-card problem 211
Graveyard insurance 214
9. Rescue Attempts 218
Bank rescue 218
The US package 221
The Geithner Plan 223
Germany 227
The British way 231
Monetary policy 233
The credit crunch 236
Gaining weight 240
The Keynesian recovery packages 242
Why governments should not bail out GM and Opel 247
Scrapping the scrap premium 251
10. Will the West Retain its Stability? 255
The new top debtors 255
Europe at risk 258
Will Greece and Italy have to be bailed out? 268
Eurobonds 274
Americans may travel to Italy, Europeans to Japan 278
11. Ways to a Better Banking System 287
Fire protection in the jungle 287
Liquidity, solvency, and equity gifts 289
Bad banks and bad ideas 291
The bank hospital 293
Too big to fail, too small for prudence to prevail 295
Building a common supervisory system 297
Basel III and the accounting rules 299
Credible regulation 303
Executive pay 306
Eliminating the pro-cyclicality of the supervisory system 309
Taming the special purpose vehicles and hedge funds 310
Reinstating the Glass–Steagall Act? 311
Banning short sales 314
A new business model for the rating agencies 316
Stop signs for non-recourse claims 317
Burying graveyard insurance 318
Appendix: Chronology of the Financial Crisis 321
Subject Index 387
A 387
B 387
C 388
D 388
E 389
F 389
G 389
H 390
I 390
J 390
K 391
L 391
M 391
N 391
O 392
P 392
R 392
S 393
T 393
U 393
V 393
W 394
Person and Company Index 395
A 395
B 395
C 395
D 396
E 396
F 396
G 396
H 397
I 397
J 397
K 397
L 397
M 397
N 397
O 398
P 398
R 398
S 398
T 398
U 399
V 399
W 399
Y 399
Z 399
Author Index 400
A 400
B 400
C 400
D 400
E 400
F 400
G 400
H 400
I 400
J 400
K 401
L 401
M 401
N 401
O 401
P 401
Q 401
R 401
S 401
T 401
V 401
W 401
Z 401
0199588279,9780199588275
Oxford University Press

In Casino Capitalism Hans-werner Sinn Examines The Causes Of The Banking Crisis, Points Out The Flaws In The Economic Rescue Packages, And Presents A Master Plan For The Reform Of Financial Markets. Sinn Argues That The Crisis Came About Because Limited Liability Induced Both Wall Street And Main Street To Gamble With Real Estate Properties. He Meticulously Describes The Process Of Lending To American Homeowners And Criticizes Both The Process Of Securitizing And Selling Mortgage Claims To The World, As Well As The Poor Job Rating Agencies Did In Providing Transparency. He Argues That The American Dream Has Ended Because The World Now Realizes That This Dream Was Built On Loans That Are Never Likely To Be Repaid. -- Book Jacket. 1. The World In Crisis --- 2. Life On Credit --- 3. Bank Failures --- 4. Why Wall Street Became A Gambling Casino --- 5. Main Street Also Gambled --- 6. Hot Potatoes --- 7. Policy Failure --- 8. The Extent Of The Damage --- 9. Rescue Attempts --- 10. Will The West Retain Its Stability? --- 11. Ways To A Better Banking System. Hans-werner Sinn. Includes Bibliographical References And Indexes.

An English translation of Professor Sinn's bestselling Kasino-Kapitalismus, that provides an account of the origins of the recent financial crisis. The volume examines the causes of the crisis, points out the flaws in the economic rescue packages, and presents a master plan for the reform of financial markets.

2012-02-04