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In the fall of 2008, the United States was plunged into a financial crisis more severe than any since the Great Depression. As banks collapsed and the state scrambled to organize one of the largest transfers of wealth in history, many--including economists and financial experts--were shocked by the speed at which events unfolded. In this new book, John Bellamy Foster and In the fall of 2008, the United States was plunged into a financial crisis more severe than any since the Great Depression. As banks collapsed and the state scrambled to organize one of the largest transfers of wealth in history, many--including economists and financial experts--were shocked by the speed at which events unfolded. In this new book, John Bellamy Foster and Fred Magdoff offer a bold analysis of the financial meltdown, how it developed, and the implications for the future. They examine the specifics of the housing bubble and the credit crunch as well as situate current events within a broader crisis of monopoly-finance capitalism--one that has been gestating for several decades. It is the "real" productive economy's tendency toward stagnation, they argue, that creates a need for capital to find ways to profitably invest its surplus. But rather than invest in socially useful projects that would benefit the vast majority, capital has constructed a financialized "casino" economy that neglects social needs and, as has become increasingly clear, is fatally unstable. Written over a two-year period immediately prior to the onset of the crisis, this timely and illuminating book is necessary reading for all those who wish to understand the current situation, how we got here, and where we are heading.


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In the fall of 2008, the United States was plunged into a financial crisis more severe than any since the Great Depression. As banks collapsed and the state scrambled to organize one of the largest transfers of wealth in history, many--including economists and financial experts--were shocked by the speed at which events unfolded. In this new book, John Bellamy Foster and In the fall of 2008, the United States was plunged into a financial crisis more severe than any since the Great Depression. As banks collapsed and the state scrambled to organize one of the largest transfers of wealth in history, many--including economists and financial experts--were shocked by the speed at which events unfolded. In this new book, John Bellamy Foster and Fred Magdoff offer a bold analysis of the financial meltdown, how it developed, and the implications for the future. They examine the specifics of the housing bubble and the credit crunch as well as situate current events within a broader crisis of monopoly-finance capitalism--one that has been gestating for several decades. It is the "real" productive economy's tendency toward stagnation, they argue, that creates a need for capital to find ways to profitably invest its surplus. But rather than invest in socially useful projects that would benefit the vast majority, capital has constructed a financialized "casino" economy that neglects social needs and, as has become increasingly clear, is fatally unstable. Written over a two-year period immediately prior to the onset of the crisis, this timely and illuminating book is necessary reading for all those who wish to understand the current situation, how we got here, and where we are heading.

30 review for The Great Financial Crisis: Causes and Consequences

  1. 4 out of 5

    Ms. Rocket Pie

    The Great Financial Crisis, written by the editors of the Monthly Review, articulates the current economic condition of the United States. The book looks at the current situation in a historical context, particularly in relation to the Great Depression and subsequent developments: automobilization, suburbanization, the re-industrialization of Europe after WWII, and the military industrial complex. These temporary economic stimulants pulled the US economy out of the Great Depression in the The Great Financial Crisis, written by the editors of the Monthly Review, articulates the current economic condition of the United States. The book looks at the current situation in a historical context, particularly in relation to the Great Depression and subsequent developments: automobilization, suburbanization, the re-industrialization of Europe after WWII, and the military industrial complex. These temporary economic stimulants pulled the US economy out of the Great Depression in the 1930's, and since then various bubbles have been propping up a limping economy. The job of capitalism is to funnel money from the working class, to those who own the means of production. People want to make money. When capital goods are turned into a finished commodity and sold, the revenue is greater than the cost of production, leaving a surplus. The most malleable cost input is wage-labor. The lower the wages, the more surplus goes to the top. BUT! If workers are not paid enough to purchase back all of the goods that they make, there is a lower demand for the products. Production is based on the demand for products, without the monetary incentive to invest in more production, production stagnates, less jobs are available, less wages are distributed, and the incentive to produce is decreased. Without inputs external to capitalism, capitalism tends towards a state of stagnation. All of the money in the world wants to go where all of the money in the world is. When Alan Greenspan lowered the interest rates on Treasury Bonds, the safest place money can go to be profitable, in order to stimulate investment and lending after the dot-com bubble burst, it needed another place to go to be profitable. This led to investment in the US mortgage market. Debt was packaged, and sold. The purchaser would receive mortgage payments for the next 30 years and the bank had their capital freed up to make more mortgages to sell. The value of the securitized loans was based on the projected value under the assumption that all home-owners continue to receive wages, and continue to make payments. The demand to consume securitized loans pushed down the requirements to acquire mortgage. This meant more people could get loans. The demand for houses kept housing prices rising, and rise in housing values allowed home-owners to continue re-financing their homes in order to maintain their standards of living. When interest rates rose, home-owners could not longer pay their mortgages. The more homes that are foreclosed on the more will be. Less buyers and more homes in the market decreases home values. As home values drop people find themselves paying a higher mortgage than their house is worth, and more homes go back to the bank. This leaves the supposed assets, or securitized loans that had been purchased, pretty worthless. Banks had been insuring the securitized loans, and gambling on the success and failures of other firms. This has turned into a summary rather than a review. In review - The Great Financial Crisis offered a clear, detailed analysis of events leading up to 2009. To find out more, go read a book.

  2. 4 out of 5

    Lee

    Interesting take on the financial crisis. The authors, who are editors of the socialist journal Monthly Review, locate the cause of the crisis in the intrinsic tendency toward stagnation in the "real" (i.e., goods and services producing) portion of capitalist economies. The problem in their view is that this stagnation coupled with the intense accumulation of capital in the top echelons of the society result in a situation where there is a chronic lack of good investment opportunities for the Interesting take on the financial crisis. The authors, who are editors of the socialist journal Monthly Review, locate the cause of the crisis in the intrinsic tendency toward stagnation in the "real" (i.e., goods and services producing) portion of capitalist economies. The problem in their view is that this stagnation coupled with the intense accumulation of capital in the top echelons of the society result in a situation where there is a chronic lack of good investment opportunities for the capital. One result among others: financialization of the economy, which promises high returns in capital, but also large-scale risks and nothing productive to show for those returns in the "real" economy. So financialization isn't a cause of the current crisis in their view, but a symptom of the "real" crisis. Not sure I'm on board with all the theses expressed here -- especially their view that stagnation is a *necessary* rather than contingent feature of any particular sort of economic organization -- but it's worth reading if you're interested in reading an intelligent perspective from the left on the current crisis.

  3. 4 out of 5

    John

    I'd read most of this in Monthly Review over the years. It's fun to see the "power of prediction" of Marxist science (in its Baran/Sweezy variety) on display with the earlier articles that were written before the housing bubble burst and the worldwide crisis began. (Of course the state of the world itself is not very fun.) I would give the book five stars for those who have not read MR analysis before. It is short and not difficult to understand.

  4. 5 out of 5

    Michael

    excellent little primer on the rise and contradictions of financialization.

  5. 4 out of 5

    Barak

    A very interesting book, which gives a modern enlightening Marxist/Socialist view of contemporary economics. Most of the essays in the book were written with prescience before the GFC, and one or two during/after. The authors promulgate and examine the hypothesis that stagnation is inherent in economics, one would almost say, its natural state, and what can/was done to battle it. They look at the financialization that started in the 70's and picked up in later decades and view it as a channel used A very interesting book, which gives a modern enlightening Marxist/Socialist view of contemporary economics. Most of the essays in the book were written with prescience before the GFC, and one or two during/after. The authors promulgate and examine the hypothesis that stagnation is inherent in economics, one would almost say, its natural state, and what can/was done to battle it. They look at the financialization that started in the 70's and picked up in later decades and view it as a channel used for creating some (if perhaps artificial) boost to the economy. This channel was taken by corporations as an alternative to investment in real products in the "real" economy (which to some extent explains why real wages remained the same or even got lower in the US over the last couple of decades), because with the inherent stagnation of economics and the over-capacity of production, the traditional investments have become unattractive. This in a nutshell caused the economy to become a series of bursting bubbles becoming bigger and more devastating each time. There is much more in there, so I recommend reading the articles instead of my words about them, so then I can do other stuff instead of continuing to write this review: win-win at its best!

  6. 4 out of 5

    Sabyasachi mitra

    One of the best book explaining why Capitalism has always stumbled to breath. Indeed, this book aroused my interest to embark upon a deeper and wider study of the 'overproduction ailment' Capitalism has been suffering from since its very inception. Contrary to popular notion which claims that greater regulation - which prevailed in 50s and 60s - can overcome the existential threat to Capitalism and the Great Recession is only an offspring of human greed - thereby playing down Capitalism's One of the best book explaining why Capitalism has always stumbled to breath. Indeed, this book aroused my interest to embark upon a deeper and wider study of the 'overproduction ailment' Capitalism has been suffering from since its very inception. Contrary to popular notion which claims that greater regulation - which prevailed in 50s and 60s - can overcome the existential threat to Capitalism and the Great Recession is only an offspring of human greed - thereby playing down Capitalism's greatest contradiction, this book shows that Financialization was rather an inevitable tool to circumvent - though briefly - the crisis of overproduction and falling rate of profit than a mere accident of human greed !! If Military expenditure - aided by Imperialistic design - was the savior of Capitalism in the 1940s , 50s and 60s, Financialization was that in the 70s, 80s, and 90s. What remains to be seen is how Capitalism reinvent itself to shun a death blow dealt by the failure of Financialization. Sabya

  7. 4 out of 5

    Liam Hanlon

    Excellent book. Explains in easy to understand terms the causes behind the financial crisis and offers solutions to how we can avoid the same in the future. Of course the solution is socialism. Does a great job to show how capitalism has been in decline since the 70s and how the war machine that used to prop the system up in time of need is now unable to do so (2 wars and the US is still in a major recession!). Gives great insight of the change of the capitalist system in western countries from Excellent book. Explains in easy to understand terms the causes behind the financial crisis and offers solutions to how we can avoid the same in the future. Of course the solution is socialism. Does a great job to show how capitalism has been in decline since the 70s and how the war machine that used to prop the system up in time of need is now unable to do so (2 wars and the US is still in a major recession!). Gives great insight of the change of the capitalist system in western countries from a production model to a service model, which ultimately leads to more and more bubbles, which of course have to burst. Gives brief explanations of Marxist economic theory and Keynesian theory. 5 stars for sure and would recommend to anyone who has an interest in economics, even if you're like me and don't quite understand how it all works.

  8. 5 out of 5

    Arn Kawano

    A selection of lead articles since May 2006 through 2008 from The Monthly Review (a socialist political economic journal) that predicted the current economic crisis and provides the best available coherent and concise explanation of its causes (in 132 pages). This book and succeeding articles in the journal are the best antidote to the confusion that results from reading Paul Krugman's "The Return of Depression Economics." (See my review under that title.) This periodical began 60 years ago with A selection of lead articles since May 2006 through 2008 from The Monthly Review (a socialist political economic journal) that predicted the current economic crisis and provides the best available coherent and concise explanation of its causes (in 132 pages). This book and succeeding articles in the journal are the best antidote to the confusion that results from reading Paul Krugman's "The Return of Depression Economics." (See my review under that title.) This periodical began 60 years ago with an article by Albert Einstein entitled "Why Socialism?" That article is available on The Monthly Review website at www.monthlyreview.org.

  9. 4 out of 5

    Zachary Welch

    With sobering clarity, Foster and Magdoff provide a unique and historical perspective to the latest economic meltdown, tracing its roots to the financialization of capital and a chronic tendency towards stagnation in the "real" economies of advanced industrial societies.

  10. 4 out of 5

    A_altamimi

    قرأت هذا الكتاب بترجمة الدكتور عطية الظفيري من الكويت.. والكتاب جيد يقدم تصوراً تاريخياً عن أزمات الرأسمالية عبر التاريخ الحديث وأنها مستمرة ومرتبطة بالمنظومة ذاتها.. وقدمت تلخيصاً للكتاب في مقالة في مجلة الطليعة هذا رابطها http://altaleea.com/?p=8563

  11. 5 out of 5

    Titus Hjelm

    Poignant and clearly written socialist critique of where the USA was heading in the early days of the crisis. It got worse...

  12. 4 out of 5

    Brandon Prince

  13. 5 out of 5

    Lady_dray2015

  14. 4 out of 5

    Cedric

  15. 4 out of 5

    Doug

  16. 5 out of 5

    Michael

  17. 5 out of 5

    Alberto Garzón

  18. 5 out of 5

    Bekah

  19. 5 out of 5

    Hielke

  20. 5 out of 5

    Jasper

  21. 4 out of 5

    Royal

  22. 5 out of 5

    Ravikumar Paulpandian

  23. 4 out of 5

    Alex McGuire

  24. 4 out of 5

    Greg Schwartz

  25. 5 out of 5

    r.g.groenhuijzen

  26. 5 out of 5

    RJHall

  27. 5 out of 5

    Joe Huennekens

  28. 4 out of 5

    Unique Snowflake

  29. 5 out of 5

    Ross

  30. 4 out of 5

    Xdnation

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