Books, essays, etc. on the Financial Crisis of 2008

December 16, 2015 9:30 AM

I'm looking for good sources of basic-ish information on the global financial crisis of 2008, i.e., what caused it and what the short- and long-term aftereffects were. I'm also looking for one specific video I saw around that time.

I can speak in very general terms about what led to the global financial crisis -- subprime lending and securitization of subprime mortgages -- but I'd like to be able to think about it a bit more intelligently and discuss it in greater detail. I'm not illiterate about this stuff, but I don't have a sophisticated knowledge, so I'm looking for books written for laypeople rather than for people in the financial business. I'm looking specifically for books, but good essays from places like The Atlantic or the Econmist are also fine, and material from both sides of the political spectrum is fine.

Sub-question: I remember back around that time, there was a really excellent short video, perhaps five minutes or less, that someone made on what led to the crisis. I don't remember too much about it except that it was animated with voice-over narration and gave a really succinct explanation of subprime lending and its role in the crisis. I don't think the video had any people in it; it was just money being printed and that sort of thing, or similar. Can you help me find it?

Thanks, everyone!

posted by holborne to Work & Money (16 answers total)

Somebody is going to have to name the obvious title, The Big Short by Michael Lewis, so I will be that person.
posted by thetortoise at 9:35 AM on December 16, 2015 [5 favorites]

Also, there was a fantastic two-episode series coproduced by This American Life and Planet Money called "The Giant Pool of Money" that did a great job explaining the causes and effects of the crash. Might cost you a couple of dollars to get the TAL episode out of the archive.
posted by suelac at 9:39 AM on December 16, 2015 [7 favorites]

i seem to remember enjoying "when genius failed". on the other hand, i hardly started "never let a serious crisis go to waste" and didn't finish "antifragile" (which is more general).
posted by andrewcooke at 9:45 AM on December 16, 2015 [1 favorite]

Seconding suelac's suggestion - if you count some of the later follow-up there are actually five big episodes produced by TAL in collaboration with the Planet Money folks.
posted by Wretch729 at 9:45 AM on December 16, 2015 [3 favorites]

Here's a transcript of The Giant Pool of Money and here's the audio. It's really the go-to explanation.

If you are up for movies, then Too Big to Fail and Inside Job are worth a look.
posted by The Deej at 9:47 AM on December 16, 2015 [3 favorites]

The Causes and Effects of the 2008 Financial Crisis (YT)?
posted by MonkeyToes at 9:47 AM on December 16, 2015 [1 favorite]

I've been meaning to dig into this for a long time, but I know Frontline covered it really well, and the coverage (and issue) is ongoing, I think these are the interviews from their documentary. Dig their site a little for more.

Financial Crisis Interviews
posted by littlewater at 9:52 AM on December 16, 2015 [1 favorite]

An unordered list from my bookshelves:

But first, I read this the other day:
-Debunking “The Big Short”: How Michael Lewis Turned the Real Villains of the Crisis into Heros

-The Bubble and Beyond by Michael Hudson (broader than just the crisis)
-Bull By The Horns, Sheila Bair
-On the Brink, Henry Paulson
-The Monster, Michael W. Hudson (a different Mike Hudson than cited above)
-The Sellout, Charles Gasparino

There are a number of others out there, just not on the tip of my tongue at the moment...
posted by CincyBlues at 10:16 AM on December 16, 2015 [2 favorites]

The report of the Financial Crisis Inquiry Commission is comprehensive, accessible, and free. The opening 13-page "Conclusions" section is certainly worth reading.

Alan Blinder's After the Music Stopped is very well-regarded (see the review quotes here); here's an interview/summary.
posted by Mr.Know-it-some at 10:40 AM on December 16, 2015 [1 favorite]

Nthing the Giant Pool of Money.
posted by kevinbelt at 10:48 AM on December 16, 2015

Response by poster: Monkeytoes, thank you, that's exactly the video I was thinking of! (I see I was totally wrong about the length though, so thanks for finding it.) And the rest of these answers are great, thanks everyone.
posted by holborne at 11:22 AM on December 16, 2015

I'd recc the John Lanchester stuff in the LRB
posted by JPD at 11:51 AM on December 16, 2015 [1 favorite]

Seconding the recommendation for the Financial Crisis Inquiry Commission.
posted by coleboptera at 12:48 PM on December 16, 2015 [1 favorite]

And there's always Griftopia from Matt Taibbi.
posted by lilboo at 1:55 PM on December 16, 2015 [2 favorites]

The best explanation I've seen is the book House of Debt, by economists Atif Mian and Amir Sufi. They argue that the Great Recession was not caused by the banking crisis. It was caused by a severe and prolonged drop in household demand, due to high levels of household debt. They show that spending on housing and durable goods started declining in 2006 and 2007, well before the banking crisis, and they use county-level data to show that the most-indebted households cut back spending most sharply.

Review by Lawrence Summers. Other reviews.

Excerpt explaining the underlying mechanism. Suppose A and B both own $100,000 houses. B has a $80,000 mortgage, borrowed from A (ultimately the bank is just an intermediary). B has a net worth of $20,000, A has a net worth of $180,000. If house prices decline 10%, B's net worth drops by half (A's declines by about 5%) -- B still has to pay back the entire mortgage. As they put it, A has the senior claim on the house, B has the junior claim. A is far better protected from a fall in house prices than B. Thus high household debt concentrates losses on precisely those households which are least able to bear them.
posted by russilwvong at 10:30 PM on December 16, 2015 [1 favorite]

Gillian Tett's 'Fool's Gold'. She's the Financial Times' US Managing Editor and has a very readable writing style. It focuses a lot on J.P. Morgan and goes into serious depth about credit derivatives, shadow banking, general meltdown buffoonery, and is absolutely fine for laypeople to understand it. Highly recommended.
posted by considerthelilies at 1:46 AM on December 17, 2015 [2 favorites]