Cassidy

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FARRAR, STRAUS AND GIROUX. NEW YORK

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Farrar, Straus and Giroux 18 West 18th Street, New York 10011

Cop}7ight © 2009 by John Cassidy All rights reserved

Printed in the United States ofAmerica First edition, 2009 Grateful acknowledgment is made for pennission to reprint material from Irrational

Exuberance, Second Edition, by Robert]. Shiller, Cop}'Tight © 2005 by Princeton

UniverSity Press. Reprinted by permission of Princeton University Press. Library of Congress Cataloging-in-Publication Data Cassidy, John, 1963How markets fail: the logic ofeconomic calamities I John Cassidy.

p. cm.

Inchules bibliographical references alIa index.

ISBN: 978-0-374-17320-3 (hardc(1(ler)

1. Financial crises. banking.

2. Stock exchanges. 3. .I\101Jetary policy. 4. Banks and

1. Title.

HB3722.C372009 381-dc22 2009029529 Desiglzed by Abby Kagan www.fsgbooks.com

10 9 8 7 6 5 4 3 2

-:- n everyday language, a market is simply somewhere things are : bought and sold. The convenience store on the corner is a market, .:. as is the nearest branch of Wal-Mart, Target, and Home Depot. Amazon.com is a market, so is the NASDAQ, and so is the local red­ light district. Many tmvns and cities have organized street markets, in­ cluding Leeds, in northern England, where I grew up. Every few days, my grandmother, who kept a boardinghouse, would go to Leeds mar­ ket in search of cheap cuts of meat and other bargains. If Alan Green­ span is at one end of the spectrum when it comes to thinking about how markets work, she was at the other. An Irishwoman with little formal education but a wealth of personal experience, she regarded the shopkeepers and tradesmen she dealt with as "robbers," "villains," and "feckers," each of whom was out to cheat her in any way he could. That is an extreme view to hold. So, too, is the idea that free...