Casino Capitalism. How the Financial Crisis Came About and What Needs to be Done Now

Hans-Werner Sinn

Oxford University Press, Oxford 2010, 400 pages, second edition (Paperback) 2012. Korean edition, Ecopia, Korea, 2010, 421 pages. (Revised and updated translation of Kasino-Kapitalismus).

The updated and revised English edition of Hans-Werner Sinn’s book Kasino-Kapitalismus: Wie es zur Finanzkrise kam, und was jetzt zu tun ist (Econ 2009; revised paperback edition Ullstein 2010) was published by Oxford University Press in August 2010. Hans-Werner Sinn explains how the financial system became a casino for gamblers and analyses the reasons for the crisis: the failings of the rating agencies, the regulating authorities and the banks. He points out the flaws in the economic rescue packages and presents a master plan for the reform of financial markets.

Details

Casino Capitalism. How the Financial Crisis Came About and What Needs to be Done Now
by Hans-Werner Sinn

Oxford University Press, August 2010, 400 p., 37 fig. (Hardback)
ISBN-13: 978-0-19-958827-5, £25.00

Oxford University Press, August 2012, 400 p., 37 fig. (Paperback)
ISBN-13: 978-0-19-965988-3, £16,99

Order via www.amazon.de or www.hugendubel.de

Reviews on Amazon

Contents

  1. The world in crisis
  2. Life on credit
  3. Bank failures
  4. Why Wall Street became a gambling casino
  5. Main Street also gambled
  6. Hot potatoes
  7. Policy failure
  8. The extent of the damage
  9. Rescue attempts
  10. Will the West retain its stability?
  11. Ways to a better banking system

Endorsements

‘An important German economist has written a sharply perceptive, hardhitting book about the deep origins of the crisis in institutional and even cultural laxity. Seeing events in the US from abroad provides Hans-Werner Sinn with a perspective worthy of Jonathan Swift. Even where I agreed with him, I learned something. In the places where I disagreed, I was forced to think things out anew. Try it.’
Robert Solow, Professor of Economics, MIT and Nobel Laureate in Economics

‘Once again Hans-Werner Sinn has shown how much can be learned by combining simple but rigorous economics with a mastery of the facts. Nowhere else can you find such a clearly reasoned and comprehensive analysis of the global financial crisis and what to do about it.’
Peter Howitt, Professor of Economics, Brown University

‘I strongly recommend this book to anyone concerned as it will become a bible in the field of money and banking in a highly integrated global economy. It analyses comprehensively and meticulously the recent (and still non-ending) financial upheaval that engulfed the world, and finds that fundamental causes of the upheaval lie in failure in properly regulating limited liability and irresponsible securitizations (that were based on the assumption of stochastically independent risks), all of which induced rational investors to take socially excessive risks. To establish a stable world finance system, the author proposes various unique regulatory reforms mainly aimed at strengthening the principle of liability. Well-organized presentations and clear expositions make the book accessible to a wide audience, despite its highly sophisticated contents.’
Hirofumi Shibata, Professor of Finance, Osaka University

‘An excellent and balanced explanation of the emergence of a highly leveraged international financial system and its downfall.’
Assar Lindbeck, Professor of the Institute for International Economic Studies, University of Stockholm and Former Member of the Nobel Committee

‘This book is as gripping as a thriller and provides meticulous analysis instead of moralizing appeals. Recommended for everyone who wishes to understand the financial crisis and its consequences.’
Clemens Fuest, Professor of Economics, Oxford University and Chairman of the German Finance Ministry Advisory Committee

‘Fascinating reading, convincing arguments, clear presentation - exactly what you would expect from Hans-Werner Sinn.’
Otmar Issing, Professor of Economics, Würzburg University and former Chief Economist, European Central Bank

‘Today’s competing policy orthodoxies tend to treat the state and the market as alternative instruments for organizing economic life. But in the German liberal tradition, which has served that country so well for six decades, they are more often viewed as working together: the state creates and maintains an institutional framework within which the market then functions, either well or badly. This conception provides the unobtrusive but systematic basis of Hans-Werner Sinn’s entertaining and provocative book. Even—perhaps particularly—those who do not fully share it should pay careful attention to his diagnoses of what has lately been ailing the international financial system, and to his prescriptions for its future.’
David Laidler, Professor of Economics, University of Western Ontario

‘In this book Professor Sinn thinks hard about what caused the recent financial crisis and what to do about it. Highly recommended for readers who are similarly prepared to think hard about the causes of the crisis and the future of the financial system.’
Barry Eichengreen, Professor of Economics, University of California, Berkeley

‘Praise for the German edition: A factually rich and clearly structured analysis.’
Gerald Braunberger, FAZ

‘Sinn's analysis is the most readable and best (popular science) account of the financial crisis that has yet appeared.’
Sebastian Dullien, Financial Times

‘Professor Sinn’s book, Casino Capitalism, ranks undoubtedly among the most thoughtful, best researched, and complete of all books written on the crisis. The book is addressed to the normal interested reader while explaining some of the most complex financial products and transactions that contributed to the global crisis. Sinn proves again his deep and subtle expertise in global financial economics, which has contributed to his ranking among the most reputable economists of our times.’
Andre Horovitz, Investment Banker

‘Sinn’s book is argumentative, against the overly simplistic explanations of the financial crisis - but also against those who do not draw any conclusions from it. I have read many books on the financial crisis. Sinn’s book belongs amongst the two, three best ones.’
Bernd Ziesemer, Chief Editor, Handelsblatt

‘Hans-Werner Sinn’s Casino Capitalism has shaped the discussion of the financial crisis in Germany like nearly no other book. It is a must-read.’
Nikolaus Piper, Correspondent of Süddeutsche Zeitung and author of Die Große Rezession

‘Casino Capitalism is a brilliant, factually rich analysis of the 2008 crisis and its possible consequences. It is a highly enjoyable read: warmly recommended not only for economists!’
Reint Gropp, Professor of Economics, Business School Oestrich-Winkel

‘Even if I do not subscribe to some of Hans-Werner Sinn’s labour market or social policy diagnoses, Casino Capitalism has convinced me of his high competence to explain the financial crisis in its entirety. He exposes the public finger-pointing, namely at individual misconduct, as a half-truth, uncovering in detail the systemic failures of the global financial system and convincingly substantiating how the state is not the saviour but itself part of the crisis. Reading the book impressed and inspired me deeply.’
Friedhelm Hengsbach, Professor of Christian Sciences and Economics and Social Ethics, Graduate School of Philosophy and Theology Sankt Georgen

‘Hans-Werner Sinn’s book still provides the best analysis of the crisis. It should be read in particular by those responsible for the regulatory framework and for regulating markets and institutions, but also by the so-called experts in the media and in courts of justice.’
Albrecht Schmidt, Former CEO of HVB (HypoVereinsbank)

‘There are bad and good books on the financial crisis. And there is Hans- Werner Sinn’s book, by far the best book on the subject—a book one wishes to have written oneself.’
Wolfgang Wiegard, Professor of Economics and Member of the German Council of Economic Advisors

‘Hans-Werner Sinn has given us a convincing and unique analysis of how the US housing and banking crises of 2006–2007 led to the Black Friday stock market collapse of October 2008, and then to the ‘Great Recession’ from which we are now recovering. Sinn describes how artificial incentives for excess risktaking (due to limited liability and encouraged by lax regulation and expected public sector rescue) resulted in catastrophically risky housing and banking decisions. He explains how the systemic collective failure in these sectors then infected the world economy. While Sinn’s analysis will not be universally accepted, his arguments will have to be addressed by all serious discussions of the causes of, and cures for, this sad outcome.’
Robert Haveman, Professor of Economics, University of Wisconsin and former Editor of the American Economic Review

‘The Great Recession may have subsided, but it has left us with many scars and, one may hope, many lessons. In his wide-ranging book, Casino Capitalism, Hans-Werner Sinn discusses how the limited liability corporation, once viewed as ‘the greatest single discovery of modern times,’ engendered a family of mutant offspring that nearly brought down the world financial system. Sinn’s lucid description of the financial crisis, its antecedents and its aftermath provides a clear picture of what happened and sets the stage for the book’s final chapter, a careful evaluation of a range of potential reforms.’
Alan Auerbach, Professor of Public Finance, University of California, Berkeley

‘The book provides a most welcome contribution to the analysis and debate about the causes and consequences of the financial crisis, and about the policy prescriptions on how to get out of it. The book is well-written and contains a wealth of information. It is extremely insightful and benefits from having a - sometimes controversial - point of view. I could not put it down once I started to read it.’
Xavier Vives, Professor of Economics and Finance, IESE Business School, Barcelona and Former President of European Economic Association

‘I started reading this book with the anticipation that I could not learn much new on the financial crisis. How wrong I was! The book has the suspense of a thriller and the inevitable outcome of a Greek tragedy. Given the bizarre incentives that guided financial operators, all the actors in the tragedy behaved rationally, while the music kept playing. Unfortunately their actions were leading to a disaster and there was no invisible hand capable of leading to a different outcome. Readers will appreciate the careful description of events and especially the European interpretation of some peculiarly American legal institutions. This book should be considered a must in the fast-growing literature on the financial crisis.’
Vito Tanzi, Professor of Economics and Former Head of the Fiscal Affairs Department, IMF

‘The complexities, esoteric terminology, and minute-by-minute dramas of the financial crisis make it hard to grasp the fundamental economic forces that created it, and so also hard to know how to prevent the next one. In this book, Hans-Werner Sinn once again uses his unparalleled ability to isolate the basic economic principles that underlie difficult problems to do exactly that—and his penchant for the telling phrase to make his analysis as readable as it is persuasive. The result is an account of the crisis that is informative, deeply insightful and more than a little scary. Some of his recommendations for reform will be controversial. Policy makers, as usual, will do well to consider them all carefully.’
Michael Keen, Professor of Economics and Head of the Fiscal Affairs Department, IMF