The Cato Journal, the academic policy journal published by the Cato Institute, has devoted its Winter 2009 issue to the financial market crisis and free-market policy reforms. The issue includes many of the world’s leading free-market authorities on banking and regulation.
Here is this issue’s table of contents:
Bailout or Bankruptcy?
By Jeffrey A. Miron
Miron assesses the causes of the current financial crisis and of the most dramatic aspects of the government’s response—the Treasury bailout of Wall Street banks. Miron states that rather than bailing out banks, U.S. policymakers should have allowed the standard process of bankruptcy to operate. Further, the article states that the U.S. should stop bailing out private risk-takers to avoid creating moral hazards.
Origins of the Financial Market Crisis of 2008
By Anna J. Schwartz
Schwartz describes major factors that contributed to the financial market crisis and proposes policies that could have prevented the baleful effects that produced the crisis. At least three factors exercised significant influences on the emergence of the global financial crisis: an overly expansive monetary policy, the collapse of the market for some financial instruments, and flawed financial innovations—such as securitization, derivatives, and auction-rate securities.
Reflections on the Financial Crisis
By Allan H. Meltzer
Meltzer discusses how we got into this financial crisis and suggests some needed changes to reduce the risk of future crises. The suggested changes are (1) get a “lender of last resort” standard; (2) get the Congress to appropriate the amount of money that they are going to use to subsidize housing; (3) improve the compensation system in the market; (4) get rid of some of the worst of the Basel Capital standards; and (5) close down Fannie and Freddie.
Monetary Policy and Asset Prices Revisited
By Donald L. Kohn
Asset Prices and Monetary Policy
By Otmar Issing
What Lessons Can We Learn from the Boom and Turmoil?
By Jeffrey M. Lacker
Financial Innovation, Regulation, and Reform
By Charles W. Calomiris
Federal Reserve Policy and the Housing Bubble
By Lawrence H. White