Financial Alchemy in Crisis

Financial Alchemy in Crisis : The Great Liquidity Illusion

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In July 2007, the combination of a seemingly unstoppable rise in house prices and bullish banks swimming in liquidity meant that almost anyone could get a mortgage in the UK or US. Little more than a month later the supply of credit dried up practically overnight, leaving the world wondering how bank liquidity could suddenly vanish.

In Financial Alchemy, Anastasia Nesvetailova shows that this liquidity never actually existed. The rise of sophisticated financial instruments created what appeared to be an abundance of liquid funds but was in fact a credit pyramid. As soon as house prices stopped rising the reality was exposed.

Nesvetailova's bold and radical analysis explains why the credit crisis was an inevitable consequence of entrusting the world economy to financiers who believe that they can 'create' money and wealth.
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Product details

  • Paperback | 224 pages
  • 135 x 215 x 12.7mm | 272.16g
  • London, United Kingdom
  • English
  • 2 figures
  • 0745328776
  • 9780745328775
  • 1,320,143

Table of contents

Introduction. The End of a Great Illusion

1. The Stages of the Meltdown

2. The Tale of Northern Rock: Between Financial Innovation and Fraud (Anastasia Nesvetailova and Ronen Palan)

3. How the Crisis Has Been Understood

4. Some Uncomfortable Puzzles of the Credit Crunch

5. 2002- 2007: The Three Pillars of Liquidity Illusion

6. After the Meltdown: Re-Writing the Rules of Global Finance?

Conclusion. A Very Mundane Crisis


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Review quote

'In a crisply-written book that reads like a detective novel, Anastasia Nesvetailova shows how fraud, gaps in regulation, unchecked risk-taking, the sheer complexity of contemporary markets, and hubris by financial 'masters of the universe' have all played their part in the ongoing financial and economic crisis' -- Gary Dymski 'Anastasia Nesvetailova is one of a small handful of economists who understands what has gone wrong in the financial markets. Without condescension or incomprehensible and uncomprehending jargon, she reveals the structural flaws in the financial system that was supposed to be the highest achievement of our business civilisation' -- Jan Toporowski. Reader in Economics and Chair of the Economics Department, The School of Oriental and African Studies, University of London, and Research Associate in the Research Centre for the History and Methodology of Economics, University of Amsterdam. 'There has always been a tendency to confuse money and wealth. Anastasia Nesvetailova shows that, from the beginning of securitisation until the crisis, this confusion transferred to the creation of the bewildering array of new financial instruments' -- Victoria Chick, University College London 'An excellent attempt to reinsert social and psychological notions into our views of 'the market' and its functions' -- Paul J Davies, Financial Times
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About Anastasia Nesvetailova

Anastasia Nesvetailova is the author of Financial Alchemy in Crisis: The Great Liquidity Illusion (Pluto, 2010) and Fragile Finance: Debt, Speculation and Crisis in the Age of Global Credit (2007).
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Rating details

5 ratings
4.2 out of 5 stars
5 20% (1)
4 80% (4)
3 0% (0)
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