Gambling with Borrowed Chips: The Common Misdiagnosis of the Crisis of 2007–08

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Abbott Press, Feb 14, 2012 - Business & Economics - 176 pages
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The United States experienced a meltdown in its financial system that devastated much of the economy in the years 2007 to 2008. In Gambling with Borrowed Chips, author Christopher C. Faille reexamines what is becoming settled wisdom about that financial crisis and the economic troubles that have plagued the country ever since.

In his analysis, Faille challenges what he calls the common misdiagnosis that speculation—especially on the short side—combined with indebtedness, leverage, deregulation, and greed, produced mayhem. In Gambling with Borrowed Chips, Faille contends that speculation, or “gambling,” serves valuable functions in an economy. It steers money and other resources to where they can be most of use; it punishes profligacy and rewards foresight; and it disturbs overly cozy arrangements such as those of entrenched corporate managements.

Gambling with Borrowed Chips argues that it is acceptable to gamble, even with borrowed chips. Faille helps us understand the real problem: gambling in a casino that hands out the chips too readily or one that is always eager to manufacture new chips in order to stimulate activity.

 

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Contents

Speculators as Parasites
1
From Thomas Aquinas to Henry George
8
Dartmouth to Enron
17
Greenspan and Bernanke
26
First Eight Months
36
Final Four Months
47
Netting Out Derivatives
56
Accounting and Valuation
61
Too Big to Fail
87
Sound Money
97
Efforts at Recovery
107
Collective Bargaining
116
Home Ownership
128
Fuel Prices
137
Final Thoughts
147
Are Equations the Problem?
153

A Hypothesis
71
ECMH Qualifications
77

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About the author (2012)

Christopher C. Faille, a member of the Connecticut bar since 1982, has written on a variety of financial and legal issues. He was an early reporter with HedgeWorld and is also the coauthor, with David O’Connor, of Basic Economic Principles. He lives in Enfield, Connecticut.

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