Panic: The Betrayal of Capitalism by Wall Street and Washington

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Andrew Redleaf, founder and CEO of a multibillion-dollar hedge fund and credited by the New York Times with predicting the crisis in surprising detail, and Richard Vigilante, reveal the Crash of 2008 as the 'predictable outcome of an ideology that has dominated the American financial establishment for upwards of forty years.'

This 'ideology of modern finance' replaced the capitalist's appreciation for free markets as a context for human creativity with the worship of efficient markets as substitutes for that creativity. The capitalist understands free markets as an arena for the contending judgments of free men. The ideologues of modern finance dreamed of efficient markets as a replacement for that judgment and almost a replacement for the men. Under the influence of contemporary financial theory, bankers and regulators abandoned basic tools of financial analysis and judgment for elaborate, statistically based insurance schemes and a blind faith in the efficiency of modern securities markets.

The result: it became impossible for either executives or regulators to fully understand the financial condition of any great modern bank. Believing that financial systems could transcend the need for human judgment the bankers and regulators combined to create financial institutions with balance sheets no one could judge.

Redleaf and Vigilante guide the reader through the history of the crash with wisdom and wit, presenting a refreshingly commonsense approach to understanding how markets actually work. Panic makes sense of a nonsensical moment in market history and reveals why booms and busts have become so common in recent decades, and what we can do about it.