web site hit counter The Courage to Act: A Memoir of a Crisis and Its Aftermath - Ebooks PDF Online
Hot Best Seller

The Courage to Act: A Memoir of a Crisis and Its Aftermath

Availability: Ready to download

In 2006, Ben S. Bernanke was appointed chair of the Federal Reserve, the unexpected apex of a personal journey from small-town South Carolina to prestigious academic appointments and finally public service in Washington’s halls of power. There would be no time to celebrate. The bursting of a housing bubble in 2007 exposed the hidden vulnerabilities of the global financial sy In 2006, Ben S. Bernanke was appointed chair of the Federal Reserve, the unexpected apex of a personal journey from small-town South Carolina to prestigious academic appointments and finally public service in Washington’s halls of power. There would be no time to celebrate. The bursting of a housing bubble in 2007 exposed the hidden vulnerabilities of the global financial system, bringing it to the brink of meltdown. From the implosion of the investment bank Bear Stearns to the unprecedented bailout of insurance giant AIG, efforts to arrest the financial contagion consumed Bernanke and his team at the Fed. Around the clock, they fought the crisis with every tool at their disposal to keep the United States and world economies afloat. Working with two U.S. presidents, and under fire from a fractious Congress and a public incensed by behavior on Wall Street, the Fed—alongside colleagues in the Treasury Department—successfully stabilized a teetering financial system. With creativity and decisiveness, they prevented an economic collapse of unimaginable scale and went on to craft the unorthodox programs that would help revive the U.S. economy and become the model for other countries. Rich with detail of the decision-making process in Washington and indelible portraits of the major players, The Courage to Act recounts and explains the worst financial crisis and economic slump in America since the Great Depression, providing an insider’s account of the policy response.


Compare

In 2006, Ben S. Bernanke was appointed chair of the Federal Reserve, the unexpected apex of a personal journey from small-town South Carolina to prestigious academic appointments and finally public service in Washington’s halls of power. There would be no time to celebrate. The bursting of a housing bubble in 2007 exposed the hidden vulnerabilities of the global financial sy In 2006, Ben S. Bernanke was appointed chair of the Federal Reserve, the unexpected apex of a personal journey from small-town South Carolina to prestigious academic appointments and finally public service in Washington’s halls of power. There would be no time to celebrate. The bursting of a housing bubble in 2007 exposed the hidden vulnerabilities of the global financial system, bringing it to the brink of meltdown. From the implosion of the investment bank Bear Stearns to the unprecedented bailout of insurance giant AIG, efforts to arrest the financial contagion consumed Bernanke and his team at the Fed. Around the clock, they fought the crisis with every tool at their disposal to keep the United States and world economies afloat. Working with two U.S. presidents, and under fire from a fractious Congress and a public incensed by behavior on Wall Street, the Fed—alongside colleagues in the Treasury Department—successfully stabilized a teetering financial system. With creativity and decisiveness, they prevented an economic collapse of unimaginable scale and went on to craft the unorthodox programs that would help revive the U.S. economy and become the model for other countries. Rich with detail of the decision-making process in Washington and indelible portraits of the major players, The Courage to Act recounts and explains the worst financial crisis and economic slump in America since the Great Depression, providing an insider’s account of the policy response.

30 review for The Courage to Act: A Memoir of a Crisis and Its Aftermath

  1. 5 out of 5

    Athan Tolis

    So the central banker who defined this recent era of QE finally gets around to writing about the crisis. Paulson’s book is gathering dust on my shelf. Geithner’s I gave a miss. Bernanke’s I had to read. I wanted to read his view on how the crisis came about. We are not lacking for theories of how we ended up here. 1. A popular view is to blame it on free-market hubris. The names of Ronald Reagan, Francis Fukuyama and Bob Rubin come up a lot, with a dash of Sandy Weill and Larry Summers thrown in. So the central banker who defined this recent era of QE finally gets around to writing about the crisis. Paulson’s book is gathering dust on my shelf. Geithner’s I gave a miss. Bernanke’s I had to read. I wanted to read his view on how the crisis came about. We are not lacking for theories of how we ended up here. 1. A popular view is to blame it on free-market hubris. The names of Ronald Reagan, Francis Fukuyama and Bob Rubin come up a lot, with a dash of Sandy Weill and Larry Summers thrown in. According to this theory we have left “free markets” and deregulation run amuck and we need to go back to more government, back to the fifties when the government funded fundamental research, the era when the DARPA created the Internet and guided the world, rather than the world of companies chasing quarterly earnings and shareholder value above all else. 2. In a less “luddite” and probably more relevant version of this view, a Great Deformation has occurred, whereby the government has crept into every facet of our life, in partnership with some very powerful people who have ended up collecting the “economic rents” that come from “corporate equity withdrawal” enabled by the combination of (i) the perennial policy of tax deductibility on debt financing, (ii) perma-low interest rates thanks to Greenspan’s Fed and (iii) a regime whereby returns on capital get taxed less than earnings from work, most recently thanks to George W Bush. The people gets low rates to pay for its borrowed life; the government gets to run the show by targeting tax relief to the super-rich who use the proceeds of their wealth to buy more influence and live happily ever after. This theory also aims to explain how come the world is getting more unequal out here in the west and goes some way toward explaining the “serial bubbles” we seem to be going through. 3. The more fatalistic simply state that “the fundamental instability of capitalism is upward.” This theory (expounded by Minsky, Kindleberger and Koo for example) states that if I borrow money to compete with you in business, you are left with little choice other than to borrow money just like I did, otherwise I will out-compete you. This starts a cycle of more and more borrowing, which feeds into more and more goods and services becoming available because you and I build more capacity to provide more goods and services. This cycle of increased borrowing ends when we have gone through the three phases of borrowing (“hedged,” “speculative,” and finally “Ponzi”) and the whole thing ends in the form of a “balance sheet recession” whereby you and I and everybody else has over-borrowed and built all sorts of capacity (assets) that we must then spend years working out of, like Japan’s been doing for a couple decades. This is a more relaxed theory, in that it does not try to go into the detail. If you like Capitalism, it seems to say, get used to a bit of a depression every seventy-eighty years. We’re in one of those right now, do what you can to convince the politicians to take Keynesian measures and be patient, basically. Oh, and give it up on the monetary fixes, you’re pushing on a string, those who are in debt will not behave how you expect them to. Overindebted corporates won’t invest and overindebted consumers won’t spend. 4. Others say the crisis is borne of Globalization. As emerging economies are coming up the technology curve, the corporate world has unscrupulously chosen to re-locate production, and increasingly expertise in design, to the third world, destroying good jobs in the places we all live. So the past few years we’ve been living through a period when workers in the emerging market economies are outcompeting workers in our neck of the woods, leaving no choice to engineers here in the west other than to flip burgers or mow lawns. Moreover, the masters of the economies who are out-competing us are keeping a lid on their currency, thereby accumulating dollar reserves and creating a situation Bernanke himself dubbed the “the global glut of liquidity” which finds its way to western assets and creates bubbles. 5. Others, again, say the depression is only really starting. There’s a rather convincing 76 page book by professors Brynjolfson and McAfee that says all people who learned the three r’s (reading, writing and arithmetic) and think they’re cool had better make sure they are not using them repetitively, because if that’s the case there’s a little invention dating from 1982 called the PC that will wipe them out and it’s only really getting started. To travel agents and open-outrcy futures traders the list of over-educated burger-flippers is about to extend to radiologists and professors at lesser colleges and there’s no telling where it will end. Same way the 25% of Americans that worked in agriculture in year 1918 is now down to 2% and the 23% suffered a thing called “the Great Depression” in the twenties and thirties, basically. If you agree with this view, all the efforts expended on fiscal and monetary policy are merely serving to postpone the inevitable at the cost of distorting incentives. Difficult to disagree entirely, but many do! A competing theory, also very fancied, claims we’re in trouble for precisely the opposite reason: we’ve picked the low-hanging fruit of innovation (example: the washing machine, that freed women from the drudgery of daily work and allowed them to enter the workforce, the airplane that shrunk distances and the TV that lets information travel in real time) and now we’re ONLY benefitting from the computer. Go figure, basically. And that’s just a quick selection; there are probably as many theories of the deeper causes of the financial crisis as there are people who have looked into this. Seven years after the crisis, with the full benefit of hindsight and having run the world’s best economics department (that would be the Fed) what does Ben Bernanke have to say about all that? I was DYING TO KNOW. It turns out he has nothing to say. Nada. The Courage to Act is a dry account of the crisis days, a diary, with some autobiographical stuff thrown in. The main problem with such a book, apart from the fact that it comes three years too late and adds little that we did not already know, is that Alan Blinder’s already written it three years ago, and actually did it better. If you are looking for the ultimate in naïve, unquestioning of conventions, blow-by-blow account of the crisis, Blinder’s “After the Music Stopped” is shorter, better structured and better oriented toward the lay reader, and it’s replete with frequent explanations of the relevant economic and financial concepts that you won’t find in Bernanke’s book, much as “Courage to Act” is twice as long. There are two things Blinder does not cover that you can find here, though: 1. The bits about Bernanke’s personal life. His parents’ background, his upbringing in Dillon, South Carolina, his 26th placing at the national spelling bee contest, the fact that he held the SAT record in his state (exact scores sadly not provided), the name of the guy who told him he could get into Harvard, his first date with this wife (a double date, if you care to know), and the hoops he had to jump through to get the job at the Fed that he claims he never aspired to. If you’re looking for the details of his interview with George W Bush or the color of his socks, this is the place to go. 2. The intra-agency politics. Fed versus FDIC, Fed and Treasury versus the OTS, if you have an interest in how sausage is made, this is a pretty good tour of the factory. You get a very complete account. When you read in the paper that “Bernanke is a consensus seeker” what it means in plain English is that he plans all his moves way in advance and if you are against him you’re going to find he’s been softening up your allies for months without you having noticed. Also, you get a very good picture of how intractable the politics were, and continue to be, with the various agencies mainly protecting their turf, actively preventing other agencies from keeping tabs on the banks they are supervising (example, the regulator for thrifts would not let the Fed inspect IndyMac or Countrywide or AIG) and Congress mainly keeping an eye on the election calendar. This all makes Bernanke sound petty and mean, so I’m not describing it terribly well. When you read the book he does not come off at all as being mean. And you are left in no doubt regarding his good intentions. In fact, reading this book reinforced my belief that he meant well and in his heart of hearts was batting for the little guy. On the other hand, the book also reinforced my feeling that he made a conscious decision to only pick fights he could win and planned ahead to make sure he only found himself in fights he could win. I’m not necessarily saying he “made concessions to Wall Street that allowed him to get in a position to assist Main Street.” Perhaps he did and perhaps not, but there is no evidence of such a “pact with the devil” in these pages. My between-the-lines reading of the book is the following: Bernanke realised that he was an academic nerd, totally out of his depth swimming among the sharks of Wall Street. Rather than get swallowed whole, he made a conscious decision to stick to Hank Paulson (who was vested with Wall Street cred and Republican support) and Tim Geithner (of the Rubin / Summers / Weil / Clinton axis) and limited himself to employing technocratic, esoteric, geeky means, rather than getting the hammer out. Stuff like paying interest on reserves kept with the central bank, stuff like inflation targeting, stuff like increased communication and transparency, stuff like how to conduct monetary policy if we get ever stuck at the zero lower bound. In plain English, he made a decision to stick to his knitting. Which brings us to the fact that events did not allow him to do so. Regarding those fateful events, I brought prejudice to my reading of this book. My list of preconceived notions about how the crisis unfolded is as follows: · Hank Paulson, as a matter of ideology, was more than happy to move Fannie and Freddie into conservatorship · Hank Paulson was relaxed about bringing market discipline to Bear and Lehman, as he held both institutions in low regard · Perhaps (and this is contentious, I know) Hank Paulson considered the firm he once ran, Goldman Sachs, unfairly targeted by the market · Nobody had any idea in how deep trouble AIG was, not even Goldman and certainly not AIG itself, to say nothing of the Fed · Nobody had ever considered that money market funds could break the buck. They were on nobody’s radar. · Bernanke went with whatever Hank Paulson thought about these issues and concentrated on “pure monetary policy” issues, like inflation targeting More than anything else, I read this book with a view to revising my opinions and was looking forward to be proven wrong on some of these prejudices. I’ve now finished it and I haven’t changed my mind. Bernanke hides behind the fact that he had limited powers. The argument is made, not explicitly, not very forcefully, and not convincingly at all, that they got extremely lucky and were able to save AIG using the same limited means that had proven inadequate to save Lehman three days earlier. “Challenge,” I say! After reading the book, my view remains unchanged that they did not “break the glass” for Fannie and Freddie (quite the opposite, if anything) and they did not “break the glass” for Lehman, but when it became clear AIG would bring down everybody else they “broke the glass” for AIG a short three days later. To be clear, only the mean-spirited would dare suggest the Paulson / Geithner / Bernanke triumvirate did not do their best to save the economy. The “j’accuse” element of all criticism against them is that they abandoned the principle of market discipline sometime between the Lehman failure and the AIG bailout. It’s human. It’s precisely what Congress did when they first voted down TARP and then the stock market tanked and then they changed their mind and voted in favor. It’s what the Greek government did the other day between the referendum to leave the Euro and the acceptance of all the Europeans’ terms. But Bernanke has not used this book to admit it. He does not even admit that his Fed was one of many agencies and regulators that had not done their homework. There would have been no shame in saying “we had no idea, because we were not structured in a way that would have allowed us to gather the information” There would have been no shame in saying “we underestimated the shadow banking system’s effect on the banks we were supervising” There would have been no shame in saying “we were allowing free market ideology to blind us, but we became practical when things went terribly wrong” There would have been no shame in saying “if we knew then what we know now we would have done things differently” Instead, the book says “I regret nothing.” Very poor. Also, it’s petty. Fine, we know, Sheila Bair was difficult. It was instructive to see how much emphasis she put on protecting the FDIC, perhaps over the interest of the system as a whole. It was interesting to see that subsequently she was happy for her agency to be paid to guarantee all the banks’ debt, including the newly-christened former investment banks. But is there room in a book like this for innuendo like “she was Bob Dole’s protegee?” That’s low, no? On the flip side (and this is me being petty now) it is refreshing that Neel Kashkari’s name does not appear anywhere. Or is that because he now works at Pimco, where Bernanke consults? I don’t care, an account of the crisis where his name is missing is very refreshing. Merits of the book? Well, aside from the very complete understanding one obtains of how the relevant politics work (and thus the inevitable conclusion that Bernanke was an adept politician, first and foremost) pages 398 - 411 offer an extremely good understanding of how a financial crisis moves from the liquidity crisis phase to the solvency crisis phase. Additionally, pages 514 – 520 also explain very clearly the thinking behind various candidate policies the Fed considered, from negative rates all the way to nominal GDP targeting. Solid stuff. The concluding remarks about the prospects for the American economy on pages 575 - 578 were good too. When people say we were lucky to have a student of the depression at the helm, I believe that’s two half-truths in one sentence. Neither was Bernanke truly at the helm (his courage to act did not stretch much past technocratic stuff), nor did he (for all his studying) explain how the crash of 1929 came about. But he has formulated a theory of how the lack of liquidity turned a financial disaster into an economic depression. Pages 398-411 take you through how this works and shed a lot of light on how Bernanke went about preventing the financial crisis of 2007-08 morphing into a depression. For those pages alone, the book is worth its purchase price. Finally, on QE: As a guy who had been predicting the demise of our rotten system and as a trader who had heavily bet against its survival, I was very upset with it when it happened. Rather than a piece of Paulson and Geithner style "financial fascism" whereby the rules of engagement are broken to maintain the status quo, the purchase of dirt-cheap Tresuries was a genuine case of a good trader "knowing his market" and making people on the other side like me look stupid. He gave us doomsayers a good spanking and he did it all using powers that were already fully vested in him. Oh, and he brought everybody's attention to the existence of a "safe asset," exactly as Minsky would have wanted him to do. I’ve spent seven years thinking that, whatever people say, Bernanke is God for this reason alone: when he launched QE he understood that the economy was so deeply wounded, he was UNDERPAYING for all those Treasuries. He got the price right and the rest of the world got it wrong. Ergo, to the extent that QE amounted to the purchase of cheap assets, it was three birds with one stone: 1. It was a massive confidence booster (we’re not out of ammo after all!) and a confounder of people like Soros who were worried about who was left to buy T-Notes 2. It lowered rates for mortgages at a time when the politics of sick rantelliism was piling onto the vested interests of bondholders to make principal reduction an impossibility 3. It was guaranteed to make the Fed money, confounding the misguided critics who (in the middle of a depression!) were worried about losses at the central bank That said, there’s no mention of #3 in the book. So now I’m less sure he understood how good he was. Maybe he was just executing the steps from the famous helicopter speech. Perhaps his trading brilliance was accidental, after all. And of course we’re now left with a policy we can’t stop and a means for those who can still borrow (with enough distance, of course, for example via a company they control but has no recourse to them) to carry on getting exponentially richer, with the economy and the good companies increasingly becoming privately-owned, with a proliferation of monopolies and monopsonies, with the companies my pension fund can buy getting more indebted by the day etc. etc. But I guess that’s not his fault. He did what he had to do and then the politics took it over from him. Tough to argue you can put the QE genie back in the bottle. It’s going to have to die of natural causes. Whatever the truth may be, none of that stuff is in the book. Buy The Courage to Act if you want to find out what building the spelling bee contest was held in (the one where he came 26th) and what speech he gave there next time he visited. If you don’t care about that, get somebody to photocopy pages 398 to 411 for you and save.

  2. 4 out of 5

    Maru Kun

    Presumably "The Courage to Muddle Through, Cover Your Backside and Look After Your Mates: A Memoir of Crony Capitalism and Its Successes" was too long a title to fit on the cover. Presumably "The Courage to Muddle Through, Cover Your Backside and Look After Your Mates: A Memoir of Crony Capitalism and Its Successes" was too long a title to fit on the cover.

  3. 5 out of 5

    Aloha

    This is an in-depth look at the Great Recession of the early 2000's, and how the Feds and financial institutions averted or avoided economic disaster. Yes, it could have been a whole lot worse. Since Bernanke has a professor's background, this book is more insightful than Timothy Geithner's Stress Test, which sometimes reads like a suspense novel. Highly recommended for behind the scene information on politics and the complexity of keeping the economy in balance. This is an in-depth look at the Great Recession of the early 2000's, and how the Feds and financial institutions averted or avoided economic disaster. Yes, it could have been a whole lot worse. Since Bernanke has a professor's background, this book is more insightful than Timothy Geithner's Stress Test, which sometimes reads like a suspense novel. Highly recommended for behind the scene information on politics and the complexity of keeping the economy in balance.

  4. 4 out of 5

    Jean

    I enjoyed getting the inside view point and information about the recent financial crisis. Bernanke describes the struggle of policy makers at the Federal Reserve and Department of Treasury. Bernanke shows what it was like to develop a plan while the data is uncertain and the political environment is treacherous. Bernanke tells of his early life growing up in a small town in South Carolina, and his academic studies of the Great Depression. Bernanke went on to be a Professor of Economics at Prince I enjoyed getting the inside view point and information about the recent financial crisis. Bernanke describes the struggle of policy makers at the Federal Reserve and Department of Treasury. Bernanke shows what it was like to develop a plan while the data is uncertain and the political environment is treacherous. Bernanke tells of his early life growing up in a small town in South Carolina, and his academic studies of the Great Depression. Bernanke went on to be a Professor of Economics at Princeton University before he was chairman of the Federal Reserve. The author lays out the problem and how it came about; discussing the pros and cons of various solutions, then tells us how it was resolved. Bernanke made an important point that I have also heard from professional organization, businesses, and unions and so, it is that, many of the American workers are not trained/educated in the skills and professions we need today. We also have a shortage of teachers trained to teach in the needed skills. The author states this weakens the middle class and keeps more people in poverty; our economy works best at full employment. It is frightening to realize how close we came to matching or exceeding the Great Depression again. The author also gives his perspectives about our economic future. Last year I read “Stress Test” by Timothy F. Geithner and “Too Big to Fail” by Andrew R. Sorkin; between the two books I think I have a better understanding of the “Great Recession” we are slowly making our way out of. I read this as an audiobook downloaded from Audible. The book is fairly long at about 23 hours. Grover Gardner did a good job narrating the book.

  5. 4 out of 5

    Matthew Paniati

    An interesting dive into the mind of the head of the most powerful central bank in the world during the financial crisis. The level of detail and insight in his account are impressive and rewarding for anyone who has an interest in economics (at a base level this could almost be taught as a class). Also interesting to see the nature of the politics at the Fed, whether it be intra-board or dealing with politicians. Ben does battle back at his critics a bit in this book, but that's not really what An interesting dive into the mind of the head of the most powerful central bank in the world during the financial crisis. The level of detail and insight in his account are impressive and rewarding for anyone who has an interest in economics (at a base level this could almost be taught as a class). Also interesting to see the nature of the politics at the Fed, whether it be intra-board or dealing with politicians. Ben does battle back at his critics a bit in this book, but that's not really what its about. Rather its a straight forward account of what his mindset and rationale were in upending the traditional rulebook for central bankers.

  6. 5 out of 5

    Frank Stein

    One ironic effect of Ben Bernanke's success increasing transparency at the Federal Reserve is that it makes his book less than thrilling. Throughout his eight years as chairman, Bernanke made a real effort to explain to the public, through press conferences, Sixty Minutes interviews, and congressional hearings, what the Fed was doing and why it was doing it. Unlike his predecessor, Alan Greenspan, Bernanke trafficked in plain English and concrete explanations of complex monetary policies. We alr One ironic effect of Ben Bernanke's success increasing transparency at the Federal Reserve is that it makes his book less than thrilling. Throughout his eight years as chairman, Bernanke made a real effort to explain to the public, through press conferences, Sixty Minutes interviews, and congressional hearings, what the Fed was doing and why it was doing it. Unlike his predecessor, Alan Greenspan, Bernanke trafficked in plain English and concrete explanations of complex monetary policies. We already know much of what went on during the crisis because Bernanke was kind enough to tell us. The best parts of the book, therefore, describe Bernanke's life before the Fed. He describes how he worked his way from the son of a small town Southern pharmacist, waiting tables at the notorious South Carolina highway tourist trap South of the Border, up to Harvard undergrad. The small-town boy was shocked on his first day on campus in September 1971, when he was surrounded by rich kids smoking pot and blasting Jimi Hendrix. While others played, he cooked meals in his dorm room to earn money, without any hint of resentment. Bernanke finally decided to study economics after a class with future Reagan advisor Martin Feldstein, and after he realized economics allowed him to combine his love of history and math. Later, as an economic grad student at MIT, his advisor (and now Fed vice chair) Stan Fisher convinced him to read Milton Friedman and Anna Schwartz's Monetary History of the US. The same combination of history and numbers enraptured him, and shaped all his future work. Bernanke's later time at the Fed took place in the spotlight, and therefore, as I mentioned, there is not much that is surprising here. The description of the crisis itself often seems like one continuous mergers and acquisition bonanza, with the Fed chairman playing the role of auctioneer. But this is also where some suspicions of the usually candid and straight-shooting author begin to emerge. As Bernanke describes his creation of innumerable Fed facilities, PDCF, TALF, TAF, TSLF, CPFF, he occasionally notes that he had to balance the new financial assets the Fed bought by selling other Fed securities. He continuously argues that this was necessary to avoid "los[ing] control of monetary policy," or control of the federal funds target interest rate. What he means is that, even into early 2009, long after the full scale of the financial crisis was clear, he was still worried about too MUCH monetary ease. In other words, Bernanke was working to funnel money to particular markets all while making sure that money didn't overly boost the entire economy. One has to wonder whether Bernanke is trying to slip one by the general reader, who wouldn't notice that Bernanke is admitting that he was continuously concerned about too much lending even during the catastrophe. Even after quantitative easing began in earnest in March 2009, Bernanke still occasionally worried that the Fed could "lose control" of monetary policy. Of course, Bernanke was still much more activist than many other chairman would have been, and it's also clear that he was inhibited in his activist impulses by other members of the Federal Open Market Committee. Bernanke's desire to create a more collegial Federal Reserve meant that many "hawks" had to be placated before every move, and Bernanke subtly gestures at the constraints this put on policy. Even in his book, however, he's too collegial to dish dirt on anyone he disagreed with (though his negative feelings about Thomas Hoenig at the Fed, Sheila Barr at the FDIC, and the new Republican Congress do emerge). In the end, Bernanke may be a little reluctant to admit mistakes, but he is probably right that he did more than many others would be willing to do in his place. It may be fool-hardy to basically call yourself "courageous" in your memoir's title, but it may be deserved nonetheless.

  7. 5 out of 5

    Ernie Lavagetto

    The man who saved America from a Depression This book is a seminar on how the modern financial system works, fails and most importantly how to rescue it. We are lucky as a nation that the man at the head of Federal Reserve was a scholar expert in the failures that led to the great 1930' s Depression . All banking systems suffer from one great weakness. They borrow short and lend long. If you do not understand that simple sentence then you need to read this book. Also our financial system exists i The man who saved America from a Depression This book is a seminar on how the modern financial system works, fails and most importantly how to rescue it. We are lucky as a nation that the man at the head of Federal Reserve was a scholar expert in the failures that led to the great 1930' s Depression . All banking systems suffer from one great weakness. They borrow short and lend long. If you do not understand that simple sentence then you need to read this book. Also our financial system exists in a web of laws enacted over time by congressional committees which requires enlisting the cooperation of both politicians and bureaucrats in order respond in real time to crises. This ability alone shows Mr. Bernanke to be a singularly important person. I would support that many in the current era of hyped up over the top rhetoric will find d this book to be too quite, thoughtful and scholarly. However it is full of thought provoking observations and criticisms. Mr Bernanke has no problem describing the shortfalls in our financial system and suggesting alternatives. Just do not expect him to be screaming "We all are all going to die". Lastly I can best describe the critical comments posted on Amazon metaphorically as blaming the fireman for the fire he just put out. The criticisms by and large do not show any attempt to come to grips with the modern financial system's faults and strong points. As a retired CPA I would highly recommend this book to anyone who seriously is concerned about managing their own money.

  8. 4 out of 5

    Fred Forbes

    As a financial professional, I find it is often difficult to explain the nature of our economy and the interaction of the various components, measurements, effects and actions but Bernanke does an excellent job in this book related to the financial crunch of 2009 and onward. While he disclaims political skills he does a masterful job handling the players in this drama and there are so many you need a scorecard. Still, the mix of the story of how the Feds forestalled a greater collapse and enhanc As a financial professional, I find it is often difficult to explain the nature of our economy and the interaction of the various components, measurements, effects and actions but Bernanke does an excellent job in this book related to the financial crunch of 2009 and onward. While he disclaims political skills he does a masterful job handling the players in this drama and there are so many you need a scorecard. Still, the mix of the story of how the Feds forestalled a greater collapse and enhanced the recovery makes for interesting reading. I enjoyed the fact that as Federal Reserve Chairman he, as a student of the Great Depression, was fighting to make sure it did not happen again. Wondering why they let Lehman Brothers fail while saving Bear Sterns and AIG? Good insight into those issues. Also amazing how much profit the government made during this process despite the naysayers who felt they were headed down the wrong path. Some interesting autobiographical material as well. Good book with which to wind up the year. I may have only finished 3 of the 6 biographies I wanted to tackle - they are all long and involved - but hope to polish the rest off in 2019.

  9. 4 out of 5

    Jennifer

    Ben Bernanke's first-hand account of his time as Chairman of the Federal Reserve--at the height of one of the most serious economic crises in U. S. history--is not just an important read for anyone who's interested in the Fed, finance, or the intersection of politics and economics. It's also fascinating and well written, with the sort of dry, self-deprecating humor that I love. Though at times the details of quantitative easing are a bit of a slog, for the most part The Courage to Act is both er Ben Bernanke's first-hand account of his time as Chairman of the Federal Reserve--at the height of one of the most serious economic crises in U. S. history--is not just an important read for anyone who's interested in the Fed, finance, or the intersection of politics and economics. It's also fascinating and well written, with the sort of dry, self-deprecating humor that I love. Though at times the details of quantitative easing are a bit of a slog, for the most part The Courage to Act is both erudite and enlightening, the sort of book that would be useful to those who have read a lot on the subject, as well as others who might be new to it. Bernanke's abilities as a teacher are displayed to good effect here.

  10. 4 out of 5

    David

    I started reading this before the election, and it was painful to continue of once it became apparent that men and women like him would not be assuming the responsibilities of office for the next four years. Bernanke is not a great writer, but his Dad-like qualities (the sense of responsibility, the eagerness to focus on substance, his awkward efforts to present "human interest" elements, etc.) are endearing. His greatest professional strengths are his willingness to focus on the lessons of prio I started reading this before the election, and it was painful to continue of once it became apparent that men and women like him would not be assuming the responsibilities of office for the next four years. Bernanke is not a great writer, but his Dad-like qualities (the sense of responsibility, the eagerness to focus on substance, his awkward efforts to present "human interest" elements, etc.) are endearing. His greatest professional strengths are his willingness to focus on the lessons of prior crises rather than theory/dogma, and his embrace of the technocratic nature of his position. There will always be those who find reason to criticize people like Bernanke, but so very many of the alternatives look utterly disastrous to me.

  11. 5 out of 5

    Larry Bassett

    This audible book published in 2015 is basically a memoir of the eight years in which Ben Bernanke served as the head of the federal reserve. It was a pretty significant eight years because it included the major economic drama of the 2007 through 2009 economic crash. Sometimes it is thought that you have to get a little distance from history before you can critically examine and understand what happened. This book doesn’t have that distance and of course the author is a person who was at the ver This audible book published in 2015 is basically a memoir of the eight years in which Ben Bernanke served as the head of the federal reserve. It was a pretty significant eight years because it included the major economic drama of the 2007 through 2009 economic crash. Sometimes it is thought that you have to get a little distance from history before you can critically examine and understand what happened. This book doesn’t have that distance and of course the author is a person who was at the very pinnacle of the decision making for that period of economic crisis. As people sometimes like to say every story has two sides. This is the version of one person. When I decided to listen to this particular book I was hoping to learn a little bit about the person who was behind all the headlines. I would have to say that about 10 or 15% of the book helped with that goal. At the very beginning of the book I learned that Ben is a Jew who grew up in a household that was kosher In a segregated town in South Carolina and that he was the high school valedictorian who went on to school at Harvard and MIT. That is all pretty interesting but there is not very much about him personally in the rest of the book. You have to read between the lines a little bit to understand where he might stand politically. He was appointed by President Bush and re-appointed by President Obama. In a world of changing politics where he mostly disparaged the right and left extremes he characterizes himself as a moderate independent. Of course his job at the Fed was to try to be non-partisan. Most of the book is about pretty complicated economic manipulation as a part of a bureaucracy that is very well established but often somewhat invisible. Bernanke’s predecessor was Alan Greenspan, a pretty tough act to follow but it seems that he did that fairly well. One of the things that he would say that he did during his eight years was to increase the transparency of the fed. He had press conferences which was relatively new. And he went on television for interviews on 60 minutes twice. That’s twice in eight years. Way to go Ben! The Fed is about buying and selling a variety of financial products as well as loaning money. But the Fed does these things At an astronomical level of dollars. I think during this period the Fed had a balance sheet of 4+ trillion dollars. The way you might be most familiar with the fed through most of recent history is the process of how they release information about what they are doing or what they might do or what they are thinking about doing. They have meetings where they spend a very long time talking about which word to use or The content of one sentence in a press release. And after they have their say commentators spend the next week debating what it is they might have meant. Mr. Bernanke shares this kind of obvious information rather glibly. With a straight face. Clearly the Fed takes itself very seriously! They may well be very justified in having this kind of an attitude. Maybe in private the people on the Fed make jokes about walking on water etc. I would give this book 2 1/2 stars mostly because I think the level of complexity due to the economics makes it slightly unapproachable. It fills in making things understandable to the average person. It did give me the feeling of a lot of pretty smart people debating slightly obscure matters and then saying “let’s give this a try and see what happens for the next few days and then maybe will have to do a little more tinkering.” And of course this is a pretty male-dominated place. Oh yes there are a few women and Janet Yellen did come out on top at the end of the book. The interactions between the fed which is a non-partisan independent agency and the treasury department which is all about the president and the Congress is somewhat interesting. Bernanke’s story is that he got very little help from the Republicans in trying to do what the Fed wanted to do. He does name some names in telling that part of the story. But the Fed is a pretty tight ship and trying to maintain an appearance of mostly unanimous solidarity. Members are Obviously on a pretty short leash about what they say between meetings.

  12. 5 out of 5

    Book Dragon

    The credit crisis will always be memorable to me, as I embarked my career in the financial services during that period. Ben Bernanke along with Hank Paulson and Tim Geithner were the chief architects to helped the United States to navigate through the greatest financial crisis since the Great Depression. Ben Bernanke’s memoir provides a smorgasbord of information for anyone looking to get a better understanding of the financial crisis and the steps taken by the federal reserve to stimulate growt The credit crisis will always be memorable to me, as I embarked my career in the financial services during that period. Ben Bernanke along with Hank Paulson and Tim Geithner were the chief architects to helped the United States to navigate through the greatest financial crisis since the Great Depression. Ben Bernanke’s memoir provides a smorgasbord of information for anyone looking to get a better understanding of the financial crisis and the steps taken by the federal reserve to stimulate growth. The book has no shortage of references of government programs that were aimed at stopping the crisis—TARP, HARP, HAMP, Quantitative Easings (QE1,2 and 3), Operation Twist, among them. The memoir also provides a highly readable account that adds a sorely missed perspective to the growing pile of post-crisis postmortems i.e., regulatory framework. The Federal Reserve was chastised by both aisles of the political spectrum and media, which further fueled the fire and characterized financial firms as benighted entities and its executives as bêtes noires of this generation. However, it’s ironic that nobody complained as the securitization model which helped pour world’s saving into the United States and drove the mortgage costs down so more people can live the “American Dream”. In my opinion greed is not limited to Wall Street, it is as embedded in the human psyche as the boom and bust cycle in a capitalistic model and it was the greed on all fronts - consumers, brokers, rating agencies and more importantly congress which led to the crisis. As long as homo-sapiens remain at the top of the food chain in this world, there will always be another crisis. As Mark Twain once said “History doesn’t repeat itself, but it often rhymes.” Under Bernanke’s leadership, federal reserve embraced principles set forth by Walter Bagehot and truly became the lender of last resort and may have created another bubble with some of the policies. While 2020 was truly an annus horribilis year with respect to the health crisis, lending facilities which were originally created during the credit crisis helped alleviate the credit crunch in the financial markets during the covid-19 capital markets meltdown. Pardon me for my predilections but I also appreciate Ben Bernanke’s view as a moderate who believes in market forces but also thinks that Fed has a constructive role to play. While the United States was able to get out of the crisis in a better shape than its peer countries, but the tight fiscal policies slowed the recovery; further proving the point that monetary and fiscal policies have to complement each other. Additionally , this book also touches on Euro Debt Crisis, which had its origins to the credit crisis but was further exacerbated due to a delayed monetary response and fiscal austerity. I highly recommend this book to anyone looking to gain a better perspective of the credit crisis, federal reserve’s lending programs, and quantitative easing.

  13. 4 out of 5

    Karen

    During historic events, I often wonder what it's like for the people who are directly involved. The Courage to Act satisfies that curiosity with an interesting read about Bernanke's life, largely focused on the 2007 financial crisis and its aftermath. I felt so enthralled that although I'd borrowed the kindle version from the library, I wound up purchasing it so I can re-read later. During historic events, I often wonder what it's like for the people who are directly involved. The Courage to Act satisfies that curiosity with an interesting read about Bernanke's life, largely focused on the 2007 financial crisis and its aftermath. I felt so enthralled that although I'd borrowed the kindle version from the library, I wound up purchasing it so I can re-read later.

  14. 5 out of 5

    Hilda Hovsepian

    Definitely not an easy read but very thoughtful and insightful.

  15. 5 out of 5

    Erik Paustenbaugh

    This book has the feel of a macroeconomics textbook in story form

  16. 4 out of 5

    wpschrec

    Good, interesting. An autobiography of Bernanke during his time as the Fed chairman. It gave an interesting internal perspective on the 2008 financial crisis

  17. 4 out of 5

    Max de Freitas

    Alan Greenspan caused the Great Recession. Bernanke could have prevented it, in theory. In practice, that was impossible. The reasons were revealed in his book. At least when the Great Recession did arrive, Bernanke made all the right moves to avoid a greater disaster. It is well known that yield curve inversions can trigger stock market collapses and recessions. Greenspan inverted the yield curve three times. Each time he inflicted a recession on the nation. Because the economy rebounded from th Alan Greenspan caused the Great Recession. Bernanke could have prevented it, in theory. In practice, that was impossible. The reasons were revealed in his book. At least when the Great Recession did arrive, Bernanke made all the right moves to avoid a greater disaster. It is well known that yield curve inversions can trigger stock market collapses and recessions. Greenspan inverted the yield curve three times. Each time he inflicted a recession on the nation. Because the economy rebounded from the 1991 recession and enjoyed a period of prosperity under President Clinton, Greenspan was hailed as a great Fed chairman. He successfully blamed his 2001 recession on a “dot.com bubble”. He was gone by the time the Great Recession arrived. When appointed by President Bush in 2006, Bernanke promised to continue to implement Greenspan’s policies. Every attempt to cut the Fed Funds rate was resisted by some vocal FOMC members. Former Dallas bank president Richard Fisher insisted on tighter monetary policy throughout the recession. He is still predicting hyperinflation. Charles Plosser also pushed for higher rates during the recession. He suggested the Fed Funds rate be set by the Taylor Rule equation until the economy collapsed so rapidly that the equation suggested negative rates. In a speech on March 20, 2006, Bernanke acknowledged that yield curve inversions were usually followed by recessions but thought that this time could be different because interest rates were at historic lows. It was not different. Tight monetary conditions triggered the housing crisis which was followed by a severe recession. Subprime lending and the spread of mortgage-backed securities started to unravel as house prices fell. They had been falling slowly since 2006. The Fed provided loans and cut interest rates to ease the crisis. The FDIC resolved troubled banks. The crisis was largely contained. In the middle of 2008 a new liquidity crisis arose. Investment banks had been providing credit for oil speculators. They were also trading oil futures in their own accounts. Speculators were certain that oil supplies would be cut off when Israel attacked Iran with US support. When the news broke that President Bush would not support an attack, oil prices suddenly crashed from $145 to $90 per barrel. Investment banks suddenly suffered such steep losses that a liquidity crisis threatened world credit markets. Lehman Brothers went bankrupt. Treasury Secretary Hank Paulson asked Congress for $700 to bail out the investment banks. Falling oil prices were never mentioned. The crisis was blamed on mortgage backed securities. Nobody would have supported Paulson’s effort to bail out oil speculators. Bernanke helped to provide cover for the politically unpopular bailout. He sticks to the script in his book. Oil prices continued to fall until they reached $35 per barrel. Speculators incurred massive losses. Bailout funds from Paulson’s Treasury and asset purchases by the Fed saved the remaining investment banks and AIG who had insured the failed securities. The book reveals that Paulson showed no interest in helping underwater homeowners or preventing the foreclosures that were purported to be the root cause of the financial collapse. Republicans in Congress were opposed to bailing out the poor and unemployed who, in their view, had no right to buy homes in the first place. They acceded to President Bush's demand to bail out the banks. Sheila Bair of the FDIC and Congressional Democrats pushed for mortgage assistance for homeowners. Paulson responded with a voluntary program that failed and another program that was so restricted as to be impractical. He had already accomplished his goals. The banks received TARP funds with no restrictions on their use. Deregulated mortgage financing and unregulated commodity trading were responsible for the greatest financial crisis the world has ever faced. We are lucky that an expert on the Great Depression was running the Fed. He failed to prevent the crisis but at least he kept it from getting worse and engineered a recovery.

  18. 5 out of 5

    Marks54

    I typically do not like policy maker memoirs. There at times appears to be a nearly universal effort to shape the record in terms that are favorable to the author's legacy, even to the point of damaging the informational and analytic value of the work in shedding light on the author's work. There are exceptions to this. Robert Gates' memoir of his time at DOD is one. I also liked Hilary Clinton's memoirs of her life at the State Department. Bernanke's memoirs are very good. He is informative and I typically do not like policy maker memoirs. There at times appears to be a nearly universal effort to shape the record in terms that are favorable to the author's legacy, even to the point of damaging the informational and analytic value of the work in shedding light on the author's work. There are exceptions to this. Robert Gates' memoir of his time at DOD is one. I also liked Hilary Clinton's memoirs of her life at the State Department. Bernanke's memoirs are very good. He is informative and insightful. He also seems to have considerable self-critical capabilities, although the self-justifying bias is there. That is OK. Bias is fine, as long as it doesn't distract from the value of the book. Bernanke is unusual, in that he made his academic career in part for his historical analyses of the Great Depression and how the Fed and the US Government dealt with it -- not very well. He is also thoroughly informed of nearly everything credible that has been written about the Great Depression and about the Federal Reserve System. In terms of his prior research and knowledge, it would be hard to imagine anyone who would have been better qualified or more knowledgeable. .... but making decisions in real time is not the same as coming to conclusions about a huge event after all the action has died down and the books have been closed. Academics, especially economists, love to analyze key factors and variables while holding other factors constant (at least statistically). As the point man for the Fed during the financial crises beginning in 2007 and continuing in one form or another for quite a while afterwards, Bernanke could not analyze in terms of "all things being equal". He had to think through issues involving multiple and conflicting forces in highly dynamic settings with huge gaps in information. This is a fundamentally different analytic problem than that faced by the academic and it is what makes high stakes high level economic policy so difficult. Barry Eichengreen's recent book "Hall of Mirrors" specifically compares situations in the Great Depression with those from the more recent crises and highlights the problems decision makers like Bernanke faced. This comes across in Bernanke's book. It is a fascinating account of how problems were understood, analyzed, and reanalyzed, as well as how choices were made and sold in a hyper-political environment. How Bernanke came to understand these problems and how he learned to act - with no little degree of success - makes this a really good book, irrespective of one's philosophy of macro-economic policy may be. The Federal Reserve inspires a range of reactions, some of which seem almost crazy. Many of the critiques of the book seem to mirror one's view of the Fed. That is unfair and unfairly diminishes the work of a very fine thinker and decision maker. Most of us don't get the chance to perform either role - thinker or decision maker - in positions of any consequence. Bernanke got to do both and did the country a service in the process. I still do not like memoirs, but this one was worth it.

  19. 5 out of 5

    Martin

    We were lucky to have Bernanke at the Fed during the crisis I read the book with much interest. The writing reflects Bernanke's character: analytic, thoughtful, and respectful. The style is not super engaging, but it reads fluently and there is much to learn from his experiences. Bernanke faced difficult decisions during his tenure and his academic background on the Great Depression served him well. His actions at the Fed helped avoid a huge depression despite the fact that the financial stress d We were lucky to have Bernanke at the Fed during the crisis I read the book with much interest. The writing reflects Bernanke's character: analytic, thoughtful, and respectful. The style is not super engaging, but it reads fluently and there is much to learn from his experiences. Bernanke faced difficult decisions during his tenure and his academic background on the Great Depression served him well. His actions at the Fed helped avoid a huge depression despite the fact that the financial stress during the Great Recession was likely worse than during the Great Depression. I learned quite a bit about Fed decision making and the interaction between different agencies. I had not quite realized how many different crises the Fed was dealing with (different funding markets, repo, etc). I was surprised that Bernanke did not press more forcefully for the recapitalization of banks, but perhaps this was only politically feasible after the near collapse of the system when it did happen. I wish Bernanke had expanded a little bit more on the economic debates during his tenure, as this might have been more interesting than the many details on whom he met, etc. Bernanke left the Fed in better much shape than when he started. The institution is now more transparent and it communicates its policy much better than before which is important. Unfortunately, the independence of the Fed is under attack and this could lead to changes in legislation that would reduce the Fed's crisis fighting powers. I hope he continues to educate his (mostly Republican) detractors about the role of the Fed and its vital importance for the economy (US and the World). The world would be better if we had more people like Bernanke.

  20. 5 out of 5

    Heather Beach

    I have read almost all of the accounts of the financial crisis now and this one, by far, was the most comprehensive. Bernanke is a "no frills" tell it like it is policy maker with a unique a-political approach to explaining macroeconomics and monetary policy, all while maintaining nonpartisan explanations of the effects of fiscal policy on the greater economy. He comes across as confident, capable and humble in this book, a trifecta of true leadership. This book and Sheila Bair's book complement I have read almost all of the accounts of the financial crisis now and this one, by far, was the most comprehensive. Bernanke is a "no frills" tell it like it is policy maker with a unique a-political approach to explaining macroeconomics and monetary policy, all while maintaining nonpartisan explanations of the effects of fiscal policy on the greater economy. He comes across as confident, capable and humble in this book, a trifecta of true leadership. This book and Sheila Bair's book complement each other well. Though Bair and Bernanke were in conflict much of the time during the financial crisis with Sheila voraciously upholding her mandate to protect the FDIC deposit insurance fund for "Main Street" and Bernanke acting as the pragmatist making the argument that without Wall Street there will be no Main Street to save, they had a level of mutual respect for each other. I will call Bernanke out that his skepticism of Bair and resistance to her comes through strongly in this book even if he also seems to hold her in high regard. Where Geitner is praised for his "hands in the air there is nothing we can do but throw foam on the runway" attitude, it seems as though every decision or opinion that Bair had throughout the crisis was subjected to intense scrutiny and second guessing. Whether this underlies the inherent tension between FDIC objectives and Fed objectives or a subconscious sexism exerted towards a woman with a seat at the table and a dissenting voice is unclear. Bernanke never seems to have any question or scrutiny of Janet Yellen in the book, however she also never seems to be in conflict with him either.

  21. 5 out of 5

    Pavlo Illiashenko

    Yet another book about financial crisis, isn't it? The short answer is no.There is nothing really special about crisis itself in the book, if you read one of those books, you've probably read them all. Thus, no sensations: the story told be Paulson, Geithner and Bernanke cannot differ substantially. I guess, the question was - how much personal details Bernanke will choose to reveal? How is this guy anyway? What drives him crazy and so on? The reason this book will get a lot of 4 stars instead of 5 Yet another book about financial crisis, isn't it? The short answer is no.There is nothing really special about crisis itself in the book, if you read one of those books, you've probably read them all. Thus, no sensations: the story told be Paulson, Geithner and Bernanke cannot differ substantially. I guess, the question was - how much personal details Bernanke will choose to reveal? How is this guy anyway? What drives him crazy and so on? The reason this book will get a lot of 4 stars instead of 5 stars review is because Bernanke choose not to reveal many personal details. On the other hand, Ben Bernanke can be a simple somewhat boring academic and this is who he is. So you will find nothing spicy and controversial in the book. What you will find instead is an real life description how FED works and how FOMC discuss policy decisions. The book is obviously written for the general audience and dies not contain any new technical information for a sophisticated reader. Nevertheless it is an easy and smooth read with a lively account of the era we have been through.

  22. 5 out of 5

    Nick Klagge

    This was a pretty enjoyable recap of the financial crisis from the ultimate insider's perspective. Unsurprisingly, Bernanke is a pretty good writer. I definitely think this book would be accessible to the interested non-specialist, but never felt tedious for this specialist. I was glad to see that BSB addressed head-on some of the more controversial aspects of the Fed's crisis management, including the payoff of AIG's derivative counterparties at par and of course the non-bailout of Lehman. His This was a pretty enjoyable recap of the financial crisis from the ultimate insider's perspective. Unsurprisingly, Bernanke is a pretty good writer. I definitely think this book would be accessible to the interested non-specialist, but never felt tedious for this specialist. I was glad to see that BSB addressed head-on some of the more controversial aspects of the Fed's crisis management, including the payoff of AIG's derivative counterparties at par and of course the non-bailout of Lehman. His arguments seemed convincing, if not impregnable. It's amazing to think that the heart of the crisis was seven years ago. I guess my career is such an outgrowth of it that it still looms very large for me!

  23. 5 out of 5

    Bill Manzi

    A fairly dry, but very important book by the man at the helm of the Fed during the "great recession." Bernanke does not give us a book where shots are delivered to those who may be have been policy opponents within government, but he does manage to get his points across diplomatically. As the financial system teetered many complex and politically difficult decisions were thrust upon Washington policy makers from both the Bush and Obama Administrations. Those decisions are still debated today. Be A fairly dry, but very important book by the man at the helm of the Fed during the "great recession." Bernanke does not give us a book where shots are delivered to those who may be have been policy opponents within government, but he does manage to get his points across diplomatically. As the financial system teetered many complex and politically difficult decisions were thrust upon Washington policy makers from both the Bush and Obama Administrations. Those decisions are still debated today. Bernanke gives us his view on those decisions, and the facts on the ground that may have led, in certain instances, to decisions that were sub-optimum, or just plain wrong. Bernanke gets to some of the big decisions of the day, including the decision to let Lehman fail. The entire "bailout" of Wall Street issue is gone over, with Bernanke giving, as much as can be expected, a dispassionate analysis of why decisions were made, and what the ramifications might have been had alternative policies been adopted. Not being an economist I looked for his views on several issues that remain controversial to this day, including Lehman, the bailouts, especially the AIG bailout, the right "medicine" for an economy in a major recession. As mentioned Bernanke is diplomatic, except when it comes to the disdain he shows for the Washington political class from both Parties. The "play-acting" in the middle of a crisis, the politics first mentality of a large segment of the elected officials he had to deal with, and the flat out lack of shame or truth by these elected officials is called out by Bernanke. He defends the bailouts as necessary, but recognizes the "moral hazard" inherent in those decisions. "Some of the critics were ideologues (the free market is always right) or uninformed (the economy will be just fine if a few Wall Street firms get their just deserts). Some simply railed against the unfairness of bailing out Wall Street giants but not the little guy on Main Street. Personally, I felt considerable sympathy for this last argument. (I would wince every time I saw a bumper sticker reading “Where’s my bailout?”) But it was in everyone’s interest, whether or not they realized it, to protect the economy from the consequences of a catastrophic failure of the financial system. The opponents’ most substantive argument was that, whatever the short-run benefits of bailouts, protecting firms from the consequences of their own risky behavior would lead to riskier behavior in the longer run. I certainly agreed that, in a capitalist system, the market must be allowed to discipline individuals or firms that make bad decisions. Frank Borman, the former astronaut who became CEO of Eastern Airlines (which went bankrupt), put it nicely a quarter-century earlier: “Capitalism without bankruptcy is like Christianity without hell.” But in September 2008 I was absolutely convinced that invoking moral hazard in the middle of a major financial crisis was misguided and dangerous. I am sure that Paulson and Geithner agreed. " “You have a neighbor, who smokes in bed. . . . Suppose he sets fire to his house,” I would say later in an interview. “You might say to yourself . . . ‘I’m not gonna call the fire department. Let his house burn down. It’s fine with me.’ But then, of course, what if your house is made of wood? And it’s right next door to his house? What if the whole town is made of wood?” The editorial writers of the Financial Times and the Wall Street Journal in September 2008 would, presumably, have argued for letting the fire burn. Saving the sleepy smoker would only encourage others to smoke in bed. But a much better course is to put out the fire, then punish the smoker, and, if necessary, make and enforce new rules to promote fire safety. The firefighting argument applied equally well to Lehman Bernanke, Ben S. (2015-10-05). The Courage to Act: A Memoir of a Crisis and Its Aftermath (Kindle Locations 3874-3880). W. W. Norton & Company. Kindle Edition. Despite the ferocious nature of the debate, nobody, in my view, has been able to puncture this argument. His disdain for Congress comes through clearly, in several instances:Bernanke here gives a backhanded slap, but focuses on some who would prefer to let the fire rage unabated, with the desire to let the "market" handle it all, with bad players being punished, along with everyone else, for their poor actions. "Tim, in particular, complained about the “Old Testament” attitude of politicians who seemed more interested in inflicting punishment than in avoiding impending disaster. We were fine with bad actors getting their just deserts, but we believed it was better to postpone the verdict on blame and guilt until the fire was out. I had also over the years seen a great deal of feigned outrage in Washington, and I didn’t feel like playing that game." That "Old Testament" attitude keeps coming through again and again, and still manifests itself every time there is a debt crisis. We heard it loud and clear during the Greek debt crisis, when the desire to 'punish" the Greeks for poor fiscal practices outweighed the practical steps needed to solve the problem. Bernanke does deal with the outrageous demands for austerity in the face of a precipitous drop in demand, and like most folks with a modicum of common sense he calls out those folks who have been proven wrong from the get go. What were they wrong about? The predictions of: Currency debasement Runaway inflation Austerity being the right "medicine" in the face of a massive recession. Although Bernanke is a Republican, appointed by a Republican President, he takes on the "know nothing" wing of the Party with gusto. His comments even drew a rebuke from Rand Paul during one of the 2015 GOP debates. What did he say? "These and a few other exceptions notwithstanding, the increasing hostility of Republicans to the Fed and to me personally troubled me, particularly since I had been appointed by a Republican president who had supported our actions during the crisis. I tried to listen carefully and accept thoughtful criticisms. But it seemed to me that the crisis had helped to radicalize large parts of the Republican Party. The late Senator Daniel Patrick Moynihan of New York once said that everyone is entitled to his own opinion but not his own facts. Some Republicans, particularly on the far right, increasingly did not draw the distinction. They blamed the crisis on the Fed and on Fannie and Freddie, with little regard for the manifest failings of the private sector, other regulators, or, most especially, of Congress itself. They condemned bailouts as giveaways of taxpayer money without considering the broader economic consequences of the collapse of systemically important firms. They saw inflation where it did not exist and, when the official data did not bear out their predictions, invoked conspiracy theories. They denied that monetary or fiscal policy could support job growth, while still working to direct federal spending to their own districts. They advocated discredited monetary systems, like the gold standard. For me, these positions pushed the party further away from the mainstream and from traditional Republican views. I still considered myself a conservative. I believed in the importance of personal autonomy and responsibility and agreed that market economies were best for generating economic growth and improving economic welfare. But I had lost patience with Republicans’ susceptibility to the know-nothing-ism of the far right. I didn’t leave the Republican Party. I felt that the party left me." Important critiques which continue to be borne out. Wrong about inflation? Claim the books are cooked. Conspiracy theories abound from those who have made error, but refuse to admit they were wrong. Easier to cite wild conspiracy theories. Bernanke also weighs in on QE1 and QE2, and takes on those who criticized the Fed for the easing. Looking back on the program gives us today a clear picture of whether the Fed made the right moves, or whether the critics were right. From my perspective Bernanke comes out with the better of the argument, as the doom predicted by the critics just failed to materialize. An open letter to the Fed, signed by a group of conservative economists in 2010, said...."The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment." Wrong again. Bernanke took them on directly: "The economic logic underlying all three—the cartoon, the letter from the congressional Republicans, and the economists’ missive—was misguided and inaccurate. In particular, there was virtually zero risk that our policies would lead to significant inflation or “currency debasement” (a loaded term for a sharp decline in the value of the dollar). That idea was linked to a perception that the Fed paid for securities by printing wheelbarrows of money. But contrary to what is sometimes said (and I said it once or twice myself, unfortunately, in oversimplified explanations), our policies did not involve printing money—neither literally, when referring to cash, nor even metaphorically, when referring to other forms of money such as checking accounts. The amount of currency in circulation is determined by how much cash people want to hold (the demand goes up around Christmas shopping time, for example) and is not affected by the Fed’s securities purchases. Instead, the Fed pays for securities by creating reserves in the banking system. In a weak economy, like the one we were experiencing, those reserves simply lie fallow and they don’t serve as “money” in the common sense of the word." "If growth in money and credit became excessive, it would eventually result in inflation, but we could avoid that by unwinding our easy-money policies at the appropriate time. And, as I had explained on many occasions, we had the tools we needed to raise rates and tighten monetary policy when needed. The fears of hyperinflation or a collapse of the dollar were consequently quite exaggerated. Market indicators of inflation expectations—including the fact that the U.S. government was able to borrow long-term at very low interest rates—showed that investors had great confidence in the Fed’s ability to keep inflation low. Our concern, if anything, was to get inflation a little higher, which was proving difficult to accomplish." Bernanke remains a conservative, but shows that the "know-nothing" wing of the GOP could have done some real damage had their policies been enacted. Bernanke took some slings and arrows from the left, and criticizes Krugman specifically for some unfair criticism. But he is a student of Keynes, and of the Great Depression, where Hooverism and the fear of inflation had such a damaging impact on our ability to recover from disaster. "As new (and old) Keynesians would predict, collapsing private demand—consumer spending, home purchases, capital investment—had sent production and employment reeling. As Keynes had first suggested in the 1930s, in an economic slump public spending could replace private spending for a time. With the economy still in free fall and with short-term interest rates already near zero, the economy certainly needed fiscal help—increased government spending, tax cuts to promote private spending, or both. I had said so (albeit in my usual cautious central bank speak) during the fall, to the point that the Wall Street Journal editorialized that I had effectively endorsed Obama for president. I wasn’t endorsing a candidate, I was endorsing a program, just as I had supported President Bush’s fiscal stimulus (in the form of tax cuts) that had passed in early 2008. On February 17, less than a month after his inauguration, Obama signed a major fiscal package, the American Recovery and Reinvestment Act of 2009." Bernanke has written a fine book that is balanced, thoughtful, and will give readers, trained in economics or not, a valuable historical perspective on the actions undertaken by the Federal Reserve in response to the Great Recession. It is well worth a read.

  24. 4 out of 5

    Matt Morgan

    This was a very detailed account of the entire financial crisis - while also expanding on events leading up to the housing crisis as well as the following rounds of quantitative easing in order to revive the economy and spur growth. Bernanke is very self reflective and harsh on himself at times. There were many signs leading up to the collapse of Lehman. This was not a few single events, but a pattern of concerning key indicators that the fed was constantly monitoring and well aware of. The issu This was a very detailed account of the entire financial crisis - while also expanding on events leading up to the housing crisis as well as the following rounds of quantitative easing in order to revive the economy and spur growth. Bernanke is very self reflective and harsh on himself at times. There were many signs leading up to the collapse of Lehman. This was not a few single events, but a pattern of concerning key indicators that the fed was constantly monitoring and well aware of. The issue was that nobody knew how big it was. What I learned the most from reading this book was that the Great Recession was no single groups fault. It is not just the Wall Street investment banks that were buying and selling risky mortgage backed securities, but also the insurance firms who were backing them. As an investment banker - an insured asset is just as good as the next one. This was not all the fault of the homeowner who bit off way more than they could chew and did not properly educate themselves on their ARM loan and all of the consequences of non-payment. Subprime mortgages spiked from 5% in the 90's to 25% in 2005. 25% of the countries homeowners were not greedy and dishonest, nor were all the mortgage brokers/ secondary mortgage owners/ investment banks/ insuring agencies. And it definitely was not all the Feds fault. This was an extremely complex issue that cannot be solved with a quick fix that sounds good in a political speech. Tons of greed, a lack of oversight, and a snowball effect of massive amounts of invaluable assets being packaged, sold, and insured multiple times over are responsible. What a mess to untangle. Just wait for car loan and student loan debt crisis of the near future.... The other big takeaway was that it's hard to be very black and white when it comes to being pro bailout or anti bailout - even in hindsight. Overall, something needed to be done. When comparing the US to other industrial economies - we adjusted much better to the crisis than other based off the Feds inflation targeting and the bailout of AIG. The moral hazard created by 'bailing out' AIG was not near as dangerous as the short and long term economical effects of letting them fail and watching the American financial system (and economy as a whole) crumble. Small business live and die by credit availability. Big businesses rely on the same in order to make payroll and continue to hire and innovate. This affects everyone. Not just 'Wall Street.' This was an American economy bailout, not just a Wall Street bailout. Every penny has been paid back to the American people with interest. The executive bonuses were returned or strictly limited in most cases - many people were fired or lost their jobs who were responsible. But is it really the Feds job to go around finding out the exact individuals responsible and criminalizing them? Impossible to do, and no! This leads me to my last impression from reading this book- It is amazing to me, and "appalling" to Ben Bernanke that the Main Street sentiment in America at this time was to "screw my neighbor." Everyone was out for themselves. "Why should I be responsible for my neighbors greedy mortgage?!" Or, " the billionaires on Wall Street got us into this mess - let them burn for this and watch their firms all crumble. All the while, watching too many of your neighbors default on their mortgage and any single large US investment bank fail affects your own home value, your own salary, your job security, your food costs, etc. etc. etc. Even the largest economic dip since the Great Depression teaches us that we need to work a little harder to love our neighbors (literally or not). Speech to text notes while reading (the whole time I was thinking I'd take a little more detailed notes for when I need to help Noah with his economics homework and understanding the details of the 2007-2009 US housing crisis): He writes this book as a profile of his life to help us understand the events that led up to giving him and others during the financial crisis the courage to act - bail out Wall Street Everything from riding his bike as a boy around Dillon South Carolina and observing industrial economic effects to writing published research while a professional at Stanford about the Japanese economic deflation crisis of the 90s /this is specifically where he started to see the potential benefits of stimulus and quantitative easy and an inflation target Milton Friedman credited the central bank Federal Reserve with accountability for the great depression because of the failure to act -Bernanke said he specifically reached out to Freeman taking ownership of the US was responsible and said that it would not happen again (Once he joins federal reserve as governor, he goes into detail highlighting the following..) After tons of backstory about the federal reserves place in setting inflationary targets, he gives a great history of home lending - it all started when banks/ lenders not only kept the loans on their books (had incentive to know as much as they could about who they were lending to and for what home) but were lending to people they waved to at the grocery store... Technology introduced new options- - securitization (originate to distribute) was encouraging risky behavior *loan brokers had little skin in the game knowing they'd be packaged and sold off (a lot of times these guys were non banks who could disappear tomorrow) Had its appeals for all parties: Borrowers: lower origination fees/ higher credit availability Investors: higher yields than government debt "With house prices moving ever upward - you can always just sell the house for more if you come to the point you can't afford it" - what if home prices fall?.....no one really knew The Fed had a meeting debate in 2005 where one side was presenting why they were in a bubble and the other defending why they were not. Apparently reading the transcript today of this meeting is very painful *Summary of consensus: history showed that home values would level out slowly and naturally with possible stagnation - the signs they did not want to admit: stocks were flat in 2005 & 2006, yet homes were up 15 & 16% nationally - they admitted that regionally there could be some bubbles but failed to acknowledge that packaged mortgages were spread across the entire country in single securities which would then lead to a national bubble The hallmark of a bubble stock is when the stock continues to rise but earnings are flat *house prices were skyrocketing yet rents were flat Even Greenspan touted that HELOCs were important source of consumer spending that needed to be protected In 1994 fewer than 5% of loans were subprime By 2005 - more than 20% - interest only - no verification of income - 0 down - option to skip payments Depending on where the loan is originated the regulatory agencies are split therefor you have a large number of originators and regulatory agencies who are all seeing a smaller slice of a large subprime pie Highlighted through high volume M&A between banks during early 2000's, it was hard for banks to accurately access risks through all various channels they were exposed - actual loans underwritten by all subsidiaries or subprime securities held by them and subsidiaries All these practices were used to cheat borrowers: Bait and switch Equity stripping (intent to seize asset) Loan flipping Packing *why subprime became a thing? -Community reinvestment act -this was the antidote to redlining -it did help increase overall home ownership rights around the country especially to minorities HOPA was put in place to prevent "predatory" lending practices, (like the ones above) - but did not apply to all poor practices (such as not verifying income) Exotic lending practices were somewhat unregulated Fed Didn't use authority until it was too late - and in an attempt to prevent duplication of process, a lot of smaller institutions operated without much regulation at all.. 100's of thousands of bad loans... 30% plunge spring of 2006-2009 When it all started to come undone… - French B&P bank restricted investors from liquidating assets backed by US subprime mortgages saying that they had no way of verifying actual value - overall US and international markets reacted with a six-month low -The Fed and overall consensus was that they could keep this under control however * even if a massive percent of subprime loans defaulted - this would have no more effect than a single bad day in the markets - banking as a whole appeared to be healthy * had no idea the panic that it would trigger Trigger = subprime market (small percent) Reaction = huge panic and bank runs (Asset backed commercial paper was susceptible to bank runs during mass panic) Because there was no way to tell what these assets were worth, there was a clear credit and liquidity issue. Fire sale ensued...... - fed encouraged big commercial banks to discount rate window (stigma) The fed worked closet with the whitehouse in developing programs for central banks to help homeowners have other options than foreclosure - BUT loan modifications were difficult because: - second mortgages - loss of income altogether - banks saw it as promoting poor consumerism *Rate cuts and adding liquidity helped - they had reason to believe they'd make it out of this .......but then banks started reporting financial losses. - Merrill - largest loss in 94 yr history - they had $15B in CBO's (credit backed) - Citi, same story (CEO also resigned) Any bank that held, sponsored, or insures these instruments were affected as investors bailed rapidly. - Main Street then fetch the effects of tightened lending (construction in steep decline) Investors were withdrawing from risk and banks weren't lending - economic downturn Fed performed largest rate cute since 1981 (.75) - knew that not acting would be worse Ppl were still forecasting slow growth instead of recession - thought they were at the end of the crisis (goes to show how hard it is to see a bible about to explode) - he references John meynard Keynes - animal spirits and that panic was brewing and how he acknowledged even at the time that boiling panic could lead to a downturn Fed, fomc, legislators had multiple gatherings debating whether "bailing out" Behr Sterns was: - in order to shield (American people) from the effects of an all out financial market crisis, or - using the safety net to bail out the fifth largest investment bank from their 'bad investments' 13.3 loans - only in cases when broad economic affects They did invoke 13.3 in order to allow market participants to swap mortgage backed securities for treasuries (then they could go get cash in repo market) The fed was scrutinized for bailing out Behr stearns before JP Morgan bought them for $2/ share ($170 just a year earlier) - but this was a prime example as to protecting the financial market from collapse, not a wall street bailout because Main Street and Wall Street are interconnected - jobs - business loans - home loans - company balance sheets ....all dependent on a stable financial market where there are willing investors and borrowers Attention then shifted to Fannie & Freddie - they got stuck with exposure to not only the mortgages on their own books but the trillions of $$ of mortgages they guaranteed *by this point it was like 'hot potato' for private institutions to make sure they dumped these MBS before they got stuck with them - Fannie and Freddie were stuck with a huge portion of the underlying mortgages - there was very little regulation on the amount of capital these institutions needed to carry in order to cover losses Lots of attention was on WAMU -survives depression bank runs and 1980 savings & loans crisis by diversifying (buying other companies) - through this process they wanted to become largest hole lender.....leading to lots of subprime assets *JP Morgan ended up buying WAMU in what became the largest bank failure in US History Lehman Bros. Dates back to before Civil war Posted first loss in 2008 since 1994 Fed could .... Force them to bankruptcy Help them get acquired/ merge 50% bigger 2x more derivative holdings than behr .....something needed to be done. But banks were all too worried about keeping themselves afloat that they would not provide capital for Lehman bros. - the Fed was highly scrutinized in media for creating moral hazard (not letting market punish) if they were to bail out Lehman. *bernanke would wince every time he saw a 'where's my bailout' bumpersticker - however, would later tell analogy: Man (your neighbor) smoking in his bed starts a fire in his house You might think, "I'm not going to save him, he deserves to have his house burn down." But if your house is right next door and made of wood, and if the entire town is made of wood - you'll all suffer because of his mistakes if you don't stop his fire." - punish him and further regulate smoking in bed/ house - but you put his fire out They were left with no option but to let Lehman go bankrupt when none of the banks were willing to step in and buy - during these meetings BofA negotiated the purchase of Merrill Lynch - when Lehman declared bankruptcy, the Dow plummeted by 500+ points, but it was less about the stock market and more about the lending market. *without a stable lending market, Main Street really gets hurt - AIG stock lost half of its value after Lehman (they were the ones insuring so many of those assets AIG- Did not increase capital when it sold protection on MBS - fails to adequately protect itself from catastrophic loss (reinsurance) - by selling of larger portions of its insured assets *couldn't even value the securities they were insuring - fed became increasingly aware that AIG failing would have colossal affect on the entire economy Saving AIG vs letting Lehman fail.... - couldn't find a buyer for Lehman - fed loans were only government funds available - TARP (tarnished asset relief program) *Fed devised plan to take as many of these MBS off the market as possible by buying them themselves - this way banks could use money for lending Preserving market in long run would require dramatic government intervention in short run (bush) Tons of hearings with house and senate republicans and democrats all turned into debates over - moral hazard (fairness) vs saving the economy (not just financial market) - lots of ppl said that Main Street had not been feeling the negative affects of this crisis but bernanke was very clear that they would (he was right, even with the bailout) TARP was set up so that the fed would purchase these assets through auctions. (This addressed the problem of valuing these assets) range: Fire sale prices Auction prices Hold-to-term prices Republicans wanted as little intervention as possible, while democrats wanted even more - including specific guarantees for Main Street (the tax payer footing the bill) and strict limits on Executive pay (would not let execs if these firms make $$ of this) - if there were too harsh of penalties/ requirements in order to participate in TARP, larger institutions may opt out - defeating the whole purpose This presented the issue of Solve vs punish *bernanke was much more concerned about putting out the fire than punishing those responsible while it's still burning the city down This also got highly political - McCain called for a meeting in which he and Obama both attended to discuss with congressional leaders and Bush *mccain never seemed to care about a solution as much as wanting the political capital, while Obama always lent support and met with bernanke to check in on progress and talk about opportunities for reform after crisis was averted House vote did not approve TARP - stock market plunged highest point loss ever and largest percent dip since 9/11 - later approved after there was more insured against loss Main Street started to feel major credit tightening: - unemployment - haunting all discretionary business spending - missing payrolls *no borrowing = no investment Solution = capital injection in banks bug and small *this was allowed through TARP Depressed recession ensued..... One of the first things Obama administration did while in office was the $787 Billion stimulus package (tax cuts and social programs) in order to jump revitalize economy *in retrospect most economists today say that it needed to be larger (787 B for 15 Trillion US economy) - only 2 senate republicans voted in favor, no house republicans did (on account of "how it was sold") ***bernanke described being perplexed that Main Street was no more excited to bail out their neighbors then they were to bail out Wall Street. -HARP made it possible for distressed homeowners to get adjustments in their mortgage payments if they were able to keep up with new (easier) requirements -he talks about Rick Santelli now famous rant on MS NBC where he yelled at daytraders if they wanted to pay their neighbors mortgage and everyone yelled back no and then he asked Obama are you listening -he thinks occasions like this are what spurred the tea party movement (what a bunch of selfish bastards) So what happened?… - regulations did not keep up with rapidly changing technology and security options - looking back, fear and panic (animal spirits) may have had more of an influence than subprime mortgages themselves 1. Credit boom 2. Single institution failure 3. Bank runs 4. Fire sale 5. Illiquidity and insolvency expected by investors 6. Injections and short term lending required 7. Investors hold only safest assets 8. Credit disappears or is over stringent 9. Household wealth falls 10. Businesses hit pause button 11. Recession (unemployment, lack of growth) 10% unemployment 25% of homeowners were upside down in their mortgages Tv interview "I care about Wall Street for one reason only - because what happens on Wall Street FX Main Street" Adam smith - fear and risk aversion prevent invisible hand in free markets QE1- $1.25 trillion of aggressive securities purchases - The overall goal here was to increase credit access (bring down rates) ***public/ political anger!!!!! $180 B (was total AIG bailout) $165 M (were bonuses awarded to financial products division) There's always two sides to every story though.. -They were contractually promised before -These reviewing individuals were ones with expertise in unwinding the crisis -Many returned their bonuses During his renomination it got very political - so many republicans did not vote for him even if they agreed with his actions purely because of their own reelection bids - far right (tea party) credited fed and Fannie & Freddie for being responsible for the crisis - far left (Bernie sanders) lived in delusion that corporations and the wealthy were out to get everyone else and that bailing them out was the worst mistake ever Rebuilding the financial sector: Regulatory agency Too big to fail..... Glassed eagle (breaking up big banks) was shut down by Obama admin Larger institutions = more rules, you let them decide if it's worth growing so large So many decisions of how they would dismantle the regulatory agencies after the crisis got so political.. *SEC and CFTC could not be allowed to merge because congress oversaw CFTC and saw this as giving up power - consumer protection agency was born out of this and they regulated banks over $10 B Lots of QE talk and debate......inflation rate targeting *used rates and unemployment as threshold and targets in order to revive economy. Balancing act between easy monetary policy and controlling inflation all to promote jobs They always needed to justify to politicians because.... "....(blogs, social media, etc.) ...Favored the Trident and uninformed over the calm and reasonable the personal attack over the thoughtful analysis"

  25. 5 out of 5

    Ayman

    No one could provide a better behind-the-scenes view of the 2008 financial crisis and its aftermath than Ben Bernanke. The head of the Federal Reserve from 2006 to 2014 and the one who orchestrated the Fed’s evolution from a conservative bank regulator to a stabilizing force of US and global economy during that ravaging crisis. Well, they thought it was ravaging because they didn’t see COVID-19 yet. The Quantitative Easing – QE program the Fed’s implemented in 2008 was unprecedented in the histor No one could provide a better behind-the-scenes view of the 2008 financial crisis and its aftermath than Ben Bernanke. The head of the Federal Reserve from 2006 to 2014 and the one who orchestrated the Fed’s evolution from a conservative bank regulator to a stabilizing force of US and global economy during that ravaging crisis. Well, they thought it was ravaging because they didn’t see COVID-19 yet. The Quantitative Easing – QE program the Fed’s implemented in 2008 was unprecedented in the history of US central banking, but it was what’s needed to save the world from another 1930s style Great Depression. It was named after a similar program invented by Japan in 2001 to revive her sluggish economy. Using QE1 in 2009, the Feds bought $1.0 trillion worth of mortgage baked securities- MBS to stabilize the mortgage market. As the country, nevertheless, stepped into recession, QE2 was used in 2010 to lend another $800b to banks hoping it will trickle into and revive the struggling economy. Before the end of his tenure in 2014, another package, QE3, added $2.0t of MBS and other securities to the Fed’s balance sheet. By the end of QE3, the Feds holdings increased six folds from 2007 levels to $4.5 trillion, a balance that persisted till end of 2019. Now picture this: In the last 3 months of March to May 2020, the Fed’s injected $3 trillion of liquidity by buying all sorts of debt securities, including junk rated bonds! In 3 months, the Fed dumped as much liquidity as it did in six years from 2008 to 2014! The figure is expected to DOUBLE over the next few months as the economic effects of COVID-19 start to materialize!!! Mohamed El-Erian, in his book The Only Game In Town, warned that we became accustomed to the Fed’s expanding mandate, but economic growth, sustainability, and inequality are much larger problems for the monetary policy alone. Governments need to step up! A must read for anyone who wants to understand what’s going on.

  26. 5 out of 5

    David Holoman

    I reached for this book on the strength of what Adam Tooze stated repeatedly in Crashed: How a Decade of Financial Crises Changed the World : that Bernanke had essentially and literally saved the world starting around 2008 from a financial disaster much worse than the one that we might have seen under lesser leadership. Tooze has no water to carry for the US or anybody in it, so his viewpoint can be considered less biased for or jaded against a domestic opinion. It is tempting to suggest that he I reached for this book on the strength of what Adam Tooze stated repeatedly in Crashed: How a Decade of Financial Crises Changed the World : that Bernanke had essentially and literally saved the world starting around 2008 from a financial disaster much worse than the one that we might have seen under lesser leadership. Tooze has no water to carry for the US or anybody in it, so his viewpoint can be considered less biased for or jaded against a domestic opinion. It is tempting to suggest that he did it single-handedly, but the facts are that Tim Geithner and Hank Paulson are consistently nearby to support, innovate, and enable alongside the Chairman. As always, it is a distinct pleasure to spend time with a smart and articulate person, or in this case, his book. I found Bernanke to be uniformly likable, and as the title suggests, courageous. The book made me thirsty for only the brightest and most intelligent sorts for the US Presidency and politics generally; persons of vision and statesmanship. We have come to allow so much less these days, it seems. Bernanke cast the US Congress of this day in disturbing light. As for the Chairman of the Fed, to me the clear prescription for the job candidate is to beat the bushes for the absolutely most qualified and brilliant macro-economist available, and then protect him/her as well as possible from anything resembling elective politics.

  27. 5 out of 5

    Jim Breslin

    I picked the wrong month to read Ben Bernanke's memoir about the financial crisis of the last decade. Bernanke takes the reader "into the weeds," detailing the Fed's extended discussions and debates on how they worked to keep the crisis of 2008 from becoming a full-on economic depression. Themes that struck me included how reckless the banks were in creating and selling CDO's, investment vehicles that they themselves didn't understand and how interconnected the worldwide banking system has becom I picked the wrong month to read Ben Bernanke's memoir about the financial crisis of the last decade. Bernanke takes the reader "into the weeds," detailing the Fed's extended discussions and debates on how they worked to keep the crisis of 2008 from becoming a full-on economic depression. Themes that struck me included how reckless the banks were in creating and selling CDO's, investment vehicles that they themselves didn't understand and how interconnected the worldwide banking system has become. He explains how "too big to fail" correctly should be called "too interconnected to fail." Bernanke talks about the debate of whether or not to save certain investment banks and the theory of "moral hazard," whereby saving a bank after they make bad decisions leads others to believe they will also be saved. Bernanke also discusses how he led the Fed and the importance of listening to the regional Presidents with differing opinions to build a consensus or middle ground among the finest minds in economics. Perhaps the most frightening theme of the memoir is that the stock market is only strong if we have confidence in the system and our leaders. While reading this book the stock market in December 2018 has dropped 18% due to the trade war, the government shutdown, and confidence shattering moves by Trump that undermine the Fed, as well as Treasury Secretary Mnuchin's ill-considered announcement of liquidity. While the last crisis was caused by Wall Street, we can only hope that the current market doesn't develop into a crisis caused by the executive branch.

  28. 5 out of 5

    Michael Stubel

    The Courage to Act is a dispassionate history of the financial and economic crises of roughly 2007-2009, including the run-up to the banking panic, the mortgage crisis, and the aftermath of the Great Recession. On the one hand, Bernanke makes a credible case for the Federal Reserve's aggressive actions during and after the crisis and the reader (at least this one) comes away convinced that anything less than what was ultimately done by the Fed and Treasury Departments across two administrations The Courage to Act is a dispassionate history of the financial and economic crises of roughly 2007-2009, including the run-up to the banking panic, the mortgage crisis, and the aftermath of the Great Recession. On the one hand, Bernanke makes a credible case for the Federal Reserve's aggressive actions during and after the crisis and the reader (at least this one) comes away convinced that anything less than what was ultimately done by the Fed and Treasury Departments across two administrations would have made the recession far worse for everyday Americans. What's more, I left the book feeling grateful to both President Bush and Obama for their respective selections of Bernanke, Paulson, and Geithner, among others. On the other hand, Bernanke is at times too clinical in his recounting of the Fed's actions. This is no doubt a byproduct of his background in academia and economics, but he often falls back on the point that "X program cost $Y billion and taxpayers, in the form of Fed repayments to the Treasury, ending up making $Z million in interest." That's all well and good, but I would've loved to hear Bernanke expand on the threats of moral hazard and whether the financial system was sufficiently restructured through Dodd-Frank. Bernanke argues that it was not practical to sort out punishment for wrongdoers while policymakers were trying to ward off a complete economic collapse. I agree with that take. But when's a good time to do it? And was it ever truly addressed in the wake of the crisis?

  29. 5 out of 5

    Grace Cao

    This is certainly an important and informative book. But I had higher expectations. My biggest disappointment is that I’m not really sure what is the point of the book. It includes a lot of details on Benarkes personal life but it’s not an autobiography; it explains the basic central banking but does not provide comprehensive arguments for the policies made during the crisis - it often describes the rationale for a highly controversial policy in one sentence. It records so much details on the pro This is certainly an important and informative book. But I had higher expectations. My biggest disappointment is that I’m not really sure what is the point of the book. It includes a lot of details on Benarkes personal life but it’s not an autobiography; it explains the basic central banking but does not provide comprehensive arguments for the policies made during the crisis - it often describes the rationale for a highly controversial policy in one sentence. It records so much details on the procedures at the Fed and stock market reactions that I cant help but wonder if he’s recording history for history’s sake, or worse - if at the time he was micro-managing monetary policies to please the short-term markets. In the epilogue, he gives comprehensive thoughts about US economy, including on issues like healthcare and education. I did not expect a Fed person to have the best insight on education, and did not find anything original. I thought including them here was a waste of readers time because no reader would have read this book to seek his opinion on education, and if he had something important to say it should be said in a more visible place. It seems to me that Tim Geithner’s book (Stress Test) has a point - fighting financial crisis can be counterintuitive and unpopular. I did not find a clear message from this book. This is unfortunate because I’m so interested in monetary policies and Benarke should have been the best one to explain it to people like me.

  30. 4 out of 5

    Kevin Atkinson

    I am just starting down the road of becoming an acolyte of the 2007 economic crisis. This book was high on my list, since the perspective of one of the key players in the economy at the time should be very important. As I read I found myself more and more relating to Bernanke and the political struggles he faced. Starting with his middle of the road view on the Kayenisan vs. Austrian economics debate, and then into his disillusionment with vast amounts of conspiracy theories surrounding the Fed. I am just starting down the road of becoming an acolyte of the 2007 economic crisis. This book was high on my list, since the perspective of one of the key players in the economy at the time should be very important. As I read I found myself more and more relating to Bernanke and the political struggles he faced. Starting with his middle of the road view on the Kayenisan vs. Austrian economics debate, and then into his disillusionment with vast amounts of conspiracy theories surrounding the Fed. I have felt much of the same feelings he has had in debating everyone from socialists to idealistic libertarians. While I still don't agree with every action Bernanke took as chairman, this book shed some light into his reasoning for all his decisions, and I certainly have more sympathy for his choices having read this. This book is a must-read for any aspiring central banker, and I highly recommend it to anyone interested in the world of finance and macroeconomics.

Add a review

Your email address will not be published. Required fields are marked *

Loading...
We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy.