Summary of Alan S. Blinder's After the Music Stopped

By IRB Media

Please note: This is a companion version & not the original book. Book Preview:

#1 The 2008 financial crisis was a result of many financial manipulations that ordinary people did not understand, and in which they played no part. It cost millions of Americans their livelihoods and their homes, and bankrupted many businesses.

#2 Americans’ well-justified anger is affecting our political discourse, and it is important to understand the why and the what of the financial crisis and its aftermath in order to better function as a democracy.

#3 The U. S. financial system, which had grown too complex and too fragile for its own good, experienced a perfect storm in 2007–2009. When the once-copious flows of credit began to dry up, the economy nearly suffered cardiac arrest.

#4 The United States avoided a complete meltdown of its best-in-class financial system, and a second Great Depression. However, American macroeconomic performance since the fall of 2008 has been the worst in post–World War II American history.

• Language: English
• Publisher: IRB Media
• Release date: Jun 10, 2022
• ISBN: 9798822538351

IRB Media

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Insights on Alan S. Blinder's After the Music Stopped

Contents

Insights from Chapter 1

Insights from Chapter 2

Insights from Chapter 3

Insights from Chapter 4

Insights from Chapter 5

Insights from Chapter 1

#1

The 2008 financial crisis was a result of many financial manipulations that ordinary people did not understand, and in which they played no part. It cost millions of Americans their livelihoods and their homes, and bankrupted many businesses.

#2

Americans’ well-justified anger is affecting our political discourse, and it is important to understand the why and the what of the financial crisis and its aftermath in order to better function as a democracy.

#3

The U. S. financial system, which had grown too complex and too fragile for its own good, experienced a perfect storm in 2007–2009. When the once-copious flows of credit began to dry up, the economy nearly suffered cardiac arrest.

#4

The United States avoided a complete meltdown of its best-in-class financial system, and a second Great Depression. However, American macroeconomic performance since the fall of 2008 has been the worst in post–World War II American history.

#5

Americans still don’t understand what happened to them, and why it happened. They need and deserve an explanation.

#6

The effects of financial ruin do not stay in Vegas. They soon have a profound effect on the real economy, which is where Americans live and work. With many Americans desperate to find work, the effects of the financial crisis are still being felt today.

#7

The United States has experienced a massive jobs deficit since the Great Recession of 2008. By August 2012, total employment was back to only about May 2005 levels, which is zero net job growth over a period of more than seven years.

#8

The American economy has never experienced long-term unemployment like we do now. In 1948, 13 percent of the unemployed were jobless for more than six months in a month. By 2010, this figure had reached an astonishing 45 percent.

#9

The Great Recession was the worst by far in seventy years, both in terms of job loss and GDP decline. It is hard to escape the conclusion that the 2008–2009 period was the worst by far in sixty-one years.

#10

It is overly pessimistic to say that the American economy can’t sustain job growth of 3 million a year over multiple years, or that we’ll never get back to 5 percent unemployment. Nothing has changed so fundamentally about the U. S. labor market in six years that would prevent us from getting back to within shouting distance of 5 percent unemployment again.

#11

The growth spurt that started in 2005 was not powered mainly by building more houses. In fact, business investment grew at essentially the same rate as housing. The economy looked to be in decent shape on the eve of the Great Recession, but there were hints of trouble: house prices were falling, the homebuilding industry was dying, and employment growth was meager.

#12

The Case-Shiller index dates the peak of house prices a year later than the FHFA index, but both indicate that the housing bubble burst long after new home construction went into decline. The economy did not slip into a recession until the final month of 2007.

#13

When an economy is inching along, with employment drifting down, spending weakening, and its financial system reeling from a gut-wrenching year of ups and downs, that economy is in a weak position to withstand any adverse shock.

#14

The start of the recession can be dated to September 15, 2008, when Lehman Brothers collapsed, triggering a financial crisis. The economy continued to fall at a slower rate after that.

#15

The visual impression left by these two figures, and many others I could show, reinforce the case that the darkest days came in February and March of 2009. After that, the U. S. economy began to climb out of the hole.

#16

The years 2008 and 2009 are often referred to as America’s worst macroeconomic performance since the Great Depression. However, this depends on what you mean by since the Great Depression. The Great Contraction began in August 1929 and ended in March 1933.

Insights from Chapter 2

#1

The seven villains of the financial crisis are: inflated asset prices, excessive leverage, lax financial regulation, disgraceful banking practices, the crazy-quilt of unregulated securities and derivatives, and the perverse compensation systems in many financial institutions.

#2

There were two bubbles that blew up during the last decade, and