Financial Whirlpools book cover

Financial Whirlpools

A Systems Story of the Great Global Recession

How do economists reconcile their expertise with their failures to predict and manage the 2008 financial crisis? This book goes a long way toward an answer by using systems theory to reveal the complex interdependence of factors and forces behind the crisis. In her fully integrated view of the economy, how it works, and how the economic crisis burst, Karen Higgins combines human psychology, cultural values, and belief formation with descriptions of the ways banks and markets succeed and fail. In each chapter she introduces themes from financial crisis literature and brings a systems-theory treatment of them. Her methodology and visual presentations both develop the tools of systems theory and apply these tools to the financial crisis. Not just another volume about the crisis, this book challenges the status quo through its unique multidisciplinary approach.

Audience

Primary:  upper-division undergraduates and graduate students worldwide studying the 2008 financial crisis and financial crises in general. 

Secondary:  people interested in financial risk management and operational research.

Paperback, 400 Pages

Published: April 2013

Imprint: Academic Press

ISBN: 978-0-12-405905-4

Reviews

  • "This work applies ‘systems thinking’ (drawing on insights from economics, psychology, philosophy, ethics, and management) in order to analyze the dynamics of the global economic crisis that began in 2008. Unlike linear thinking, the systems framework takes into account such dynamics as feedback Loops, Lags between decisions and actions, Limits to systems such as the economy, and Levers for applying change in the most effective manner."--Reference & Research Book News, December 2013
    "This book delivers revealing insights about how systems theory can inform the way we think about financial systems. It has the power to change the way we think about economic crises." --Luke Houghton, Griffith University, Australia
    "Financial Whirlpools insists that the economy must be studied as a complex whole that is capable of producing unexpected results and brings these insights to bear on the financial sector. The book is a welcome departure from the individualistic and mechanistic thinking that blinded a profession to the possibility of the recent financial crisis." --Mark Setterfield, Trinity College, US 


Contents

  • PART I FOUNDATIONS

    1. LINES OR CIRCLES: The Basics of Systems Thinking

    2. AS THE GEARS TURN: Policies, Practices, Markets, and Risk

    PART II YIN: HUMAN BEHAVIORS

    3. WHERE CAN I BUY ONE? Humans and the economy

    4. WHO ARE YOU ANYWAY? Values, beliefs, and behaviors

    5. VISIONS OF GRANDEUR: Expectations and behaviors

    6. A CRISIS OF HUMAN PROPORTIONS: Ethics and behaviors

    7. SELF SPEAKS LOUDLY AND CARRIES A BIG STICK: Sources of unethical behavior

    PART III YANG: ECONOMIC MECHANICS

    8. WHAT GOES UP MUST COME DOWN: The Housing Bubble

    9. ON TOP OF DEBT MOUNTAIN: High Risk Loans and Credit

    10. THE RISK TIGER POUNCES: Financial Market, Risk, and Securitization

    PART IV YIN AND YANG: INTEGRATION

    11. HUMAN ROOTS ARE DEEP: Yin meets Yang

    12. CONCLUSIONS

    Appendix A

    Appendix B

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