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The Financial Crisis and the Free Market Cure: Why Pure Capitalism is the World Economy's Only Hope Paperback – May 28 2018

by John A. Allison (Author)
4.5 4.5 out of 5 stars 277 ratings
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WHAT HAVE WE LEARNED FROM THE FINANCIAL CRISIS?NOTHING.
The informative bestseller that shows us where our economy went wrong―and what we can do about it―with a timely new introduction.
One of the most important books to emerge from the 2008 economic crisis, this powerful wake-up call from financial expert John Allison has become a classic in the field. Now, in light of emerging global trends and shakeups in the stock market, the book’s message is more timely than ever: The government should stop trying to fix our economy. The free market is our best and only hope. In this eye-opening book, Allison reveals:
•How the Federal Reserve has even more power than before the Great Recession―and why this is a problem.
•How Wall Street has been wrongly blamed for our slow economic recovery―and why it’s Washington’s fault.
•How government regulations like Dodd Frank have burdened banks―and stifled growth.
•How socialized medicine and entitlements drive up costs―and how government policies exacerbate unemployment and income inequality.
•Why free market capitalism offers a proven cure for our economy―and how to make it work for all Americans.
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  1. ISBN-10
    1260143457
  2. ISBN-13
    978-1260143454
  3. Edition
    1st
  4. Publisher
    McGraw Hill
  5. Publication date
    May 28 2018
  6. Language
    English
  7. Dimensions
    17.53 x 1.52 x 22.86 cm
  8. Print length
    288 pages
  9. See all details
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Product description

From the Back Cover

"The Financial Crisis and the Free Market Cure is a sophisticated yet accessible analysis of the causes and solutions to America's financial meltdown."―Ed Crane, President Emeritus of the Cato Institute
"An indispensable contribution to the debate about the future of the American economy."―Arthur Brooks, President, American Enterprise Institute
"No one is better equipped to understand what is going on today and the causes of the financial crisis. Please pay attention to what he says here."―Bernie Marcus, Chairman, The Marcus Foundation, and cofounder, Home Depot
"Allison explains the unintended consequences of government policies and their impact on the financial crisis . . . and recommends practical steps to improve the economy and individual liberty."―James M. Kilts, former Chairman and CEO, Gillette Company
"[This is] the best, deepest explanation of what caused the crisis and the consequences of our government's response to it."―Yaron Brook, Chairman, Ayn Rand Institute
"John Allison is superb with his comprehensive and thought-provoking explanation for our current economic crisis and a clear and compelling path to a brighter future."―Steve Reinemund, former Dean, Wake Forest University Schools of Business, and retired Chairman and CEO, PepsiCo

About the Author

John Allison is the retired President and CEO of the Cato Institute and retired Chairman and CEO of BB&T. He was named one of the decade’s most successful CEOs by the Harvard Business Review.

Product details

  • Publisher ‏ : ‎ McGraw Hill; 1st edition (May 28 2018)
  • Language ‏ : ‎ English
  • Paperback ‏ : ‎ 288 pages
  • ISBN-10 ‏ : ‎ 1260143457
  • ISBN-13 ‏ : ‎ 978-1260143454
  • Item weight ‏ : ‎ 340 g
  • Dimensions ‏ : ‎ 17.53 x 1.52 x 22.86 cm
  • Customer Reviews:
    4.5 4.5 out of 5 stars 277 ratings

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John A. Allison

John A. Allison

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Customer reviews

4.5 out of 5 stars
4.5 out of 5
277 global ratings

Top reviews from Canada

Celestra Cassidyne-Hook
5.0 out of 5 stars Excellent first-hand analysis. Highly recommended!
Reviewed in Canada on August 19, 2016
Verified Purchase
"When politics mixes with business, whether as subsidization or regulation, the inevitable by-product isn't merely economic disarray and decay, but moral corruption." p.102

This is a very comprehensive account of how government regulations and incentives imposed on US banks caused a massive misallocation and redistribution of wealth culminating in the 2008 Financial Crisis. John Allison provides a wide-angle systemic view that illustrates how short-sighted bureacratic interventions distort and corrupt what would otherwise be a productive, self-correcting market economy. He takes you through the short- and long-term consequences of government interference from an insider's---a CEO's---first-hand perspective.

What I also loved about this book is that the author provides positive, well thought out, and principled recommendations on how America can transition from an economy crippled by an increasingly destructive welfare state to a moral and productive economy with limited government. Highly recommended! This book should be part of the curriculum in colleges and universities.
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helena slampova
5.0 out of 5 stars ESSENTIAL read
Reviewed in Canada on April 18, 2014
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THIS IS A STORY THAT VERY MUCH NEEDED TELLING about why we are in such a mess and which way is out. It is one of the very few reads that WILL leave you wiser after you are done. The author knows his stuff and has a gift for telling it with clarity, so that even an ordinary person can understand, (except perhaps for some more technical parts).
It especially elucidates the numerous examples of the workings of the unfortunate law of unintended consequences. This is, of course, absolutely essential if we hope to do better in future.
I would very much recommend reading this book and making it a priority over many others to anyone who is searching to understand how our society works.
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garret seinen
4.0 out of 5 stars An understandable explanation of the financial crisis
Reviewed in Canada on September 6, 2014
Mr Allison has a superb grasp of banking and finance, as his ability to explain the crisis in terms a layman can understand. The person who wants to place the blame on the bank themselves will be disappointed as the author rather support his claim that the regulatory process is to blame very well. His free market solution flies in the face of the popular theme - more government will solve all things. Hopefully his wise words will not be ignored
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tbulba
5.0 out of 5 stars Read it!
Reviewed in Canada on February 2, 2014
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Very worthwhile. I did jump over some of the technical parts, the most important message is in the chapters on philosophy, values and beliefs.
Whoever really wants to understand how our world works, read this book!
Helena Slampova,
Toronto
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Yodel
5.0 out of 5 stars Great Insights
Reviewed in Canada on May 9, 2014
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I enjoyed the information contained in this book. He doesn't have a hidden agenda and I agree with his insights and admire his success
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Mark Taylor
2.0 out of 5 stars A bitter libertarian trying to push the failings of banks onto government. Lots of personal emotion in the book, little evidence
Reviewed in Canada on September 26, 2016
This book is nothing more than a personal attack on government. The rational arguments in this book are so flawed it's painful at times to read. The author makes his views clear pretty early on. He is a libertarian with a hate on for any form of rules. Which is fine, but if you want that point of view, skip his book and go right to his source - Ayn Rand - Atlas Shrugged (an excellent book). The Author blames the Fed (The Federal Reserve) for misleading him and his fellow banker. He argues without evidence that if the Fed didn't mislead them the Financial Crisis wouldn't have happened. Yet ironically the Fed was run by a 'free marketer libertarian' like himself. He claims the Fed has a 100% error rate, but then admits he followed the Fed. He argues government rules are extortion at the the front of gun. He argues Canada didn't have a housing crisis because the Canadian government wasn't involved in the housing market. This is very false, the government underwrites the vast majority of all mortgages. This book is a sour grapes attempt to explain the failure of the banking industry by blaming it on government rules - often with no evidence and examples that if examined carefully tend to prove the opposite.

That said, I agree with his argument that cronyism has hurt our economy. He is right that even 'too large to fail' companies and the many other smaller funds and banks that were bailed out deserve to have failed. He is right that shareholders investing in failed companies were falsely rewarded. And he is right that the market has been distorted.

He is mostly wrong in assuming that a free market would solve this. His 'evidence' is based upon libertarian theory with no grounding in reality. Free markets don't exist as all markets are created by rules and governments. And while the US may currently have bad rules, the rules are there because free markets frequently collapse on their own. While reading this book, pay attention to the huge number of times he makes blanket statements about governments, rules, banks without evidence or argument. This book is an attempt to push blame away from the failings of banks.
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Top reviews from other countries

park3r
5.0 out of 5 stars So many nuggets of good information.
Reviewed in the United Kingdom on September 1, 2018
Verified Purchase
Superb break down of major components of what caused the financial crash of 2007/08. I stumbled across his speech on YouTube and thought it was superb. The book is more detailed and clear. I think it’s a gold mine of information about the crash, but also banks and government regulations. I’m interested in finance and economics and found this book extremely enlightening.
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nathsaund
5.0 out of 5 stars Brilliant
Reviewed in Australia on August 3, 2020
Verified Purchase
I do not know why people listen to academics. This man was there all the way before, through, and after the GFC. If you want to know what space flight is like listen to someone who has been in space. Do not listen to people who are all theory. This is why I read the whole book. John knows what the hell he is talking about.
I used it a lot for for uni studies too. His view has tremendous weight.
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A. Hilse
5.0 out of 5 stars Clear and powerful
Reviewed in the United States on June 2, 2013
Verified Purchase
This book was written by John Allison, who served as the CEO of BB&T Bank for many years, and helped that company to grow into one of the largest and most successful financial institutions in the country. His knowledge, insights and years of experience working within the financial industry and with the government agencies, politicians and bureaucrats form a solid basis from which he lays out a clear and compelling case for the causes of the financial crisis and following Great Recession.

Although I had a couple of minor issues with the book (being not a financial person myself, a little bit better explanation of certain financial terms would have been nice in a couple of places, and there were a number of typos), overall I was extremely impressed with Allison's clear explanations of various aspects of the financial industry, including the use of good, simple metaphors to help concretize complex issues or aspects of the industry that are on a scale too large to easily contemplate without financial expertise.

Furthermore, he digs very deeply not just into the proximate causes of the financial crisis (the "housing bubble," a massive misallocation of money encouraged by Federal Reserve monetary policy and political incentives pushing home ownership), but also into the deeper underlying economic problems that government agencies and policies represent (such as the impossibility of the sort of currency manipulation that the Federal Reserve attempts to do, the inevitable and damaging inflation that necessarily results, the monopolizing effect of agencies such as Fannie Mae and Freddie Mac, etc.). Allison shows clearly why it is not just that the current political and bureaucratic actors in these agencies made poor decisions (which they did), but that no one in any sort of "centralized control" position in an economy can ever make correct or good decisions - there is simply no way that one person, or one group of people, can make economic and financial decisions which actually need to be made by every single individual who is in any way part of the economy. Allison also hits very hard against the idea of any company being "too big to fail," pointing out that in fact the bigger a company is, the more important it is to allow it to fail if it does poorly, so that the people and resources of that company can be re-allocated and reinvested into parts of the economy where they will actually do some good.

One aspect of the book that I especially liked were his points about incentives and human action. While laying blame on both government actors and the management/employees of various companies where it is due, he is also careful to point out the reasons why a certain CEO acted in a certain way even though it was harmful to his company in the long-term, and why a political appointee or a lifetime bureaucrat are going to have incentives that are necessarily in conflict with individuals trying to act in a market economy. He explains, often in detail, how various government regulations that are supposed to make the economy "safer" and more stable in fact have the exact opposite affect; by providing a "safety net," companies are in fact incentivized to take on more risk, rather than less, and it is U.S. taxpayers who then have to bear the burden when inevitably that risk-taking (which would not have happened in a truly free market) has negative consequences.

Lastly, Allison takes his analysis one level deeper, and looks at the underlying philosophical premises in our culture today that encourage government intervention in the economy despite its proven negative consequences, and the philosophical ideas that we will need to learn (or in some cases relearn) in order to move towards a freer and more stable economy. His treatment of these issues is perhaps somewhat brief, but fits well into the context of the book, and he provides clear suggestions of further sources for a more in-depth look at the connection between philosophical and political/economic ideas.

I enjoyed this book a great deal, and I definitely learned a lot. I would recommend it to anyone interested in the financial crisis and the economic, political and philosophical issues surrounding it, especially if you are looking for the views of a knowledgeable and qualified insider, and a very non-mainstream point-of-view.
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Anshuman Arun
5.0 out of 5 stars Balanced and fair!
Reviewed in the United Kingdom on June 12, 2016
Verified Purchase
Well balanced book!
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Pete from across the River
5.0 out of 5 stars Clear, concise, and the most reasonable explanation of the Financial Crisis.
Reviewed in the United States on December 12, 2012
Verified Purchase
I've spent months reading news articles and commentators remarks about the causes of the financial crisis -- most of what I've read was obviously politically motivated (greedy bankers) or just plain naive. What I was able to draw out of the thousands of words (in a multitude of articles, columns, and editorials) led me to believe that the bottom line basis of the financial crisis was in the politics and not unexpected incompetence of the Congressional policy makers and the Federal regulators involved.

This book, written by the former chairman of one of the larger and most successful regional banks, digs down and explains the root causes of the financial crisis -- and how Federal housing policies coupled with a credulous Congress assisted by useless regulators and boosted by an out-of-control Federal Reserve manage to bring the economy of the United States into a serious crash.

This is NOT a partisan book, as politicians from both the Democratic and Republican party have their fingerprints all over the problems that they, together, created. This was not a matter of "greedy bankers or investors" but rather it was homebuyers, lenders, banks, investors, and insurance companies following the incentives established by the political elite and exacerbated by rules established by regulators -- following political directives that did not comport with setting reasonable levels of risk.

While this book does get somewhat technical at times, it is still relatively easy to read and you can follow the trail of the breakdown easily through the thicket of rules, regulations, and interference by politicians and bureaucrats (with outside pressure groups further pushing us toward financial disaster). I give high marks to the author for keeping a focus on basic principles of moral behavior while it seemed as if the whole world was caught up in "can't lose" financial manipulations.

Well worth reading.
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