Financial Crisis 2007
More material on my page in Islamic Banking and Finance: [link]
The failure to anticipate the global financial crisis of 2007 is by itself a major critique of neoclassical economics, which supposes that universal and time-invariant laws operate, and changes in stock prices are driven by rational forces. Among others, Nobel winners Krugman and Stiglitz has stated that this shows a failure of conventional theory.
Among the huge literature on this phenomenon, a few key readings are as follows:
Maulana Taqi Usmani relates crisis to failure to follow Islamic principles.View Download
Liaquat Ahamed - The Lords of Finance: The Bankers who broke the world
Financial Crises: Goldman-Sachs has engineered them for profits for a long time:
NATURE|Vol 455|30 October 2008
Economics Needs a Scientific Revolution, Jean Phillipe Bouchaud.
The most terrifying moment in modern economic history occurred two years ago this month. For several long days after the fall of Lehman Brothers on Sept. 15, 2008, the financial system was in danger of total collapse, and the United States seemed on the precipice of another Great Depression in that “Black September.” Just as bad, our economists and senior policymakers had barely any idea why this was happening. The assumptions of an entire era had been proved wrong. The “Great Moderation”—the period of post–Cold War prosperity in which capitalism was said to have been tamed and risk mastered—was revealed to be an illusion. Alan Greenspan professed his “shocked disbelief” that the Wall Street institutions he had trusted in were so reckless as to blow themselves up. “The whole intellectual edifice has collapsed,” the former Fed chairman told Congress that fall. Economists said they would have to come up with new theories for how markets worked, in particular how the financial system functioned and interacted with the “real” economy. “Large swaths of economics are going to have to be rethought on the basis of what happened,” Larry Summers, the presidential adviser who doubles as a world-renowned economist, told me in an interview shortly after Barack Obama took office.
Published on Thursday, August 4, 2011 by CommonDreams.org
The Beast Is Starved:
Welcome to the Next Great Depression
By John Atcheson