The Anatomy of Financial Crises: Understanding Their Causes and Consequences

Crises have been a feature of the financial landscape for hundreds of years. They often appear with little warning, as the sub-prime mortgage crisis of 2007 and the Asian crisis of 1997-1998 illustrate. It's not always clear what causes crises, whether they can be avoided and how their impact can be reduced. A recent book, titled Understanding Financial Crises (Oxford University Press), by Wharton finance professor Franklin Allen and Douglas Gale, a professor of economics at New York University, tackles this subject from a number of different angles. The authors review the history of financial crises in addition to offering their own approach to examining the underlying causes. Allen and Gale also discuss asset price volatility, the interaction between banks and markets, bubbles and financial contagion, among other topics.

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We are smarter than me: How the wisdom of crowds can help businesses succeed

In We Are Smarter than Me (Wharton School Publishing), authors Barry Libert and Jon Spector -- and a community of more than 4,000 people who contributed insights to the book -- illustrate how businesses can profit from the wisdom of crowds. Using case studies from product development, manufacturing, marketing, customer service, finance and management, the book, whose subtitle is How to Unleash the Power of Crowds in Your Business, shows what works, and what doesn't, when managers try to build community into their decision making.

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Transcript: Pimco’s Bill Gross on recession, investments and subprime

Bill Gross, founder and managing director of Pimco, discussed interest rates, recession, investments, Mohamed El-Erian, subprime and government intervention with Chrystia Freeland, the FT’s US managing editor.

FT: US interest rates?
MR GROSS: Long.

FT: Hillary Clinton?
MR GROSS: Long.

FT: Oil?
MR GROSS: Short.

FT: Manhattan real estate?
MR GROSS: Short.

FT: Hedge funds?
MR GROSS: Short.

FT: Mitt Romney?
MR GROSS: Short.

FT: The euro?
MR GROSS: Short.

FT: Ben Bernanke?
MR GROSS: Long.

FT: Barack Obama?
MR GROSS: Long.

FT: China?
MR GROSS: Long! [laughs]

Interview I

Interview II

The Global Economy’s Inevitable Hard Landing

In recent weeks, the global liquidity and credit crunch that started last August has become more severe. This is easy to show: in the United States, the euro zone, and the United Kingdom, spreads between Libor interest rates (at which banks lend to each other) and central bank interest rates – as well as government bonds – are extremely high, and have grown since the crisis began. This signals risk aversion and mistrust of counterparties.

To be sure, major central banks have injected dozens of billions of dollars of liquidity into the commercial banking sector, and the US Federal Reserve, the Bank of England, and the Bank of Canada have lowered their interest rates. But worsening financial conditions prove that this policy response has failed miserably.

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Warren Buffett's "Bet on America": The Complete CNBC Interview

In a live interview this morning on CNBC's Squawk Box, Warren Buffett called his purchase of a big Marmon stake as a "bet on America over a long time." He also revealed that while he has been approached by financials companies about buying a stake, "we have not seen a deal that causes me to start salivating." A summary appears in the WBW post Warren Buffett tells CNBC He's Been Approached by Financials But Hasn't Seen Anything He Likes So Far.

Interview Transcript

Thomas Russo Says Marmon Stake to "Deepen" Berkshire's Business: Video