The Financial Times gets to grips with Freefall: America, Free Markets, and the Sinking of the World Economy by Nobel-prize winning economist Joseph Stiglitz declaring it "the best book so far on the financial crisis":

Joseph Stiglitz, the Nobel prize-winning economist, is knowledgeable about the historical background, immersed in the policy debate and a pioneer of the economic theories needed to understand the origins of the problems. Although the material is necessarily difficult at times, the book is also easy to read. It is therefore indispensable not just for those who (like me) are broadly sympathetic to the Stiglitz position but for those who would rebut these charges.

Stiglitz's account begins in the 1980s, the decade of deregulation and privatisation. The symbol of these changes for financial markets was the replacement of Paul Volcker by Alan Greenspan as chairman of the Federal Reserve Board. This set the way for light regulation of the banking system and created a willingness to respond to any market setback with a relaxation of monetary policy -- the "Greenspan put". These developments were not the result of policy oversight but of policy design. Conservatives and Wall Street got the policy framework they had sought (more...)