too big to fail
Short Paper: Too Big to Fail
Changyu Li
7724294
Course No: GMGT4210
Section: A02
Instructor: Dr. Howard Robert Harmatz
Date: October 17th, 2014
After the financial crisis in 2008, there were many famous economists started their analysis about the causes of this crush. Many of them published their own books aimed to discuss the existed problems in the capitalism system. After looking through these books, I found out a book, Too Big to Fail, is written by Andrew Ross Sorkin who is the chief correspondent and columnist of New York Times.
This is an interesting book which also had been adapted for film by Curtis Hanson in 2011. “The author delivers the first true behind-the-scenes, moment-by-moment account of how the greatest financial crisis since the Great Depression developed into a global tsunami. From inside the corner office at Lehman Brothers to secret meetings in South Korea, and the corridors of Washington, Too Big to Fail is the definitive story of the most powerful men and women in finance and politics grappling with success and failure, ego and greed, and, ultimately, the fate of the world’s economy.” (Andrew, 2010, p. 4)
Based on the point of Andrew, “Too big to fail” means several financial unions are so big that they could have serious influence on system risk. Because the executives combine their companies with the whole capitalism system together, taxpayers needs to give their money to save these companies in order to prevent the collapse of the economy. (Andrew, 2010, p. 8) The book mainly focuses on discussing such dilemma: Because these large-size companies believe taxpayers would cover the high risks of big losses from their derivatives and large investment, their companies would be willing to take such actions to make great profits. Although the government let Lehman Brothers bankrupt at the initial stage of the financial crisis, finally the government still use the money from taxpayers invest in those large-size companies in order
Changyu Li
7724294
Course No: GMGT4210
Section: A02
Instructor: Dr. Howard Robert Harmatz
Date: October 17th, 2014
After the financial crisis in 2008, there were many famous economists started their analysis about the causes of this crush. Many of them published their own books aimed to discuss the existed problems in the capitalism system. After looking through these books, I found out a book, Too Big to Fail, is written by Andrew Ross Sorkin who is the chief correspondent and columnist of New York Times.
This is an interesting book which also had been adapted for film by Curtis Hanson in 2011. “The author delivers the first true behind-the-scenes, moment-by-moment account of how the greatest financial crisis since the Great Depression developed into a global tsunami. From inside the corner office at Lehman Brothers to secret meetings in South Korea, and the corridors of Washington, Too Big to Fail is the definitive story of the most powerful men and women in finance and politics grappling with success and failure, ego and greed, and, ultimately, the fate of the world’s economy.” (Andrew, 2010, p. 4)
Based on the point of Andrew, “Too big to fail” means several financial unions are so big that they could have serious influence on system risk. Because the executives combine their companies with the whole capitalism system together, taxpayers needs to give their money to save these companies in order to prevent the collapse of the economy. (Andrew, 2010, p. 8) The book mainly focuses on discussing such dilemma: Because these large-size companies believe taxpayers would cover the high risks of big losses from their derivatives and large investment, their companies would be willing to take such actions to make great profits. Although the government let Lehman Brothers bankrupt at the initial stage of the financial crisis, finally the government still use the money from taxpayers invest in those large-size companies in order