What Caused The Global Financial Crisis according to Kevin Dowd

The Global Financial Crisis according to Kevin Dowd

Kevin Dowd coauthored Alchemists of Loss: How modern finance and government intervention crashed the financial system. Dowd is a Partner at Cobden Partners (London) and is a Professor of finance and economics at Durham University.

1. Which FCIC View best represents the causes of the Financial Crisis?

Dissenting Views By Wallison

2. Which narrative presented by Douglas Elliott and Martin Baily of the Brookings Institute in Telling the Narrative of the Financial Crisis: Not Just a Housing Bubble best represents the causes of the Financial Crisis?

“Everyone” was at fault: Wall Street, the government, and our wider society.

3. I believe the Global Financial Crisis is ongoing and I project it will end in the year
2013 or beyond

4. What were the primary causes of the Global Financial Crisis?
Two idealogical causes: interventionist economics (esp. managed economy stuff, Keynesianism) and modern finance. I regard both as essentially alchemical, i.e., more or less consistent bodies of thought, but based on misconceived assumptions. The latter gave idealogical cover to the deterioration of modern capitalism into what is now clearly cronyism.

5. What still should change as a result of the crisis?
Need to discredit interventionist economics and implement concomitant reforms (going back to laissez faire, gold standard, no central banking, limited government, low tax, low government debt, etc.), and throw modern finance (going back to earlier, pre-quant theories of finance, Graham and Dodd, etc.).

Dowd refers those interested in further explanation of his research and opinions to view his summary of the Current Financial Crisis and his page on Alchemists of Loss.

Compiled by Gary Karz, CFA
Host of InvestorHome

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