Annotations for my research paper

Mishkin, Frederic S. Financial Crises and the Subprime Meltdown Boston: Pearson, 2009.

Federal Reserve Governor Frederic S. Mishikin's most recent book, Financial Crises and the Subprime Meltdown is a must-read book for those studying economics or anyone wanting to gain greater familiarity with the economic crisis. The current financial crisis is the biggest economic event since the Great Depression. Unlike other analysts and experts who only write about what is currently going on with the financial crisis, Mishkin explains the causes of the crisis and their international impact and implications. Mishkin relies upon a 3-step projection plan to reveal the current economic crisis (step 1:Asset price boom/bust; step 2: banking crisis; step 3: debt deflation). Furthermore, he also compares the current crisis with other crises in the past from around the world including an extensive analysis of South Korean and Latin American crises. Since he has intended this book for academic audiences, he describes the crisis at the advanced level including the discussion of collateralized debt obligations. Mishkin however may rely too heavily upon his research, and he avoids sharing his own interpretations. Compared to his previous books, Mishkin is now more focused on current events than the theory. Although directed towards academics, any curious reader can benefit from Mishkin's analysis of the economic crisis.

Mishkin, Frederic S. The Economics of Money, Banking, and Financial Markets Boston: Pearson, 2007.

Mishkin's best selling book,The Economics of Money, Banking, and Financial Markets covers topics from the structure of financial markets to monetary and fiscal policy. His book provides an in-depth understanding of the basics of our financial markets and how they operate. Mishkin wrote this book to answer most of our questions; he explains speculative demand for money by applying Keynes and Tobin's theories to support his assertions. Mishkin also covers the Great Depression, Savings and Loans Crisis, and other international crises in detail and they are very valuable tools for anyone who wants to compare previous crises with the current crisis. The highlight of his book is when he discusses how moral hazard influences the financial market, but instead of providing the real world example, he created a hypothetical example. Also, he answers the novice investors' most frequently asked question, "how the market sets stock prices?" When Mishkin answers this question, he heavily focuses on the dividend side of the valuation and he has fails to mention that the future earnings of a firm have an even greater impact on stock prices. Despite the highly academic nature of his writing, those who are interested in learning more about the background of the financial crisis and financial markets should read this book.


Bernasek, Anna. "When Does A Housing Slump Become A Bust?" The New York Times 17 June 2007: 6.

Bernasek, in her article, "When Does A Housing Slump Become A Bust?" discusses the definition of housing market bust. While we have the exact definition of a stock market crash and a recession, economists have not agreed on what constitutes a housing market bust. Bernasek claims that because the only national housing bust happened during the Great Depression and the market statistics are not clear-cut, economists have avoided this topic. I found her presentation of arguments between two economists about the definition of the housing bust very weak since she failed to convince readers by not interviewing more economists. Bernasek, however made a strong point that measured prices may not reflect the actual sales price and they underestimate the declines. Lastly, she argues that we may be able to agree on the definition of the bust during this downturn "as people would feel the pain." What kind of pain is she talking about? Her unclear conclusion draws a clear distinction between an academic journal and a mass media article. Bernasek's article will benefit those who study economics and those who are interested in the real estate market since she explains the challenge of identifying a clear definition of the bust and its ambiguity. Her article will assist me in supporting my argument that the fate of the real estate market is still unknown.

Roubini, Nouriel. "The Worst Is Yet To Come." Foreign Policy (2008): 63-68.

Nouriel Roubini, in his article, "The Worst Is Yet To Come," published in March 2008 (Foreign Policy), forecasts the negative economic outlook not only in the United States, but in the global economy. Despite the fact that asset bubbles burst throughout the world, he predicted that more bursts would happen in the near future. His arguments seem very convincing since he claims that the credit crunch will continue because of deleveraging by hedge funds and other institutional investors. Since the publication of the article, his claims have come true: the global financial markets have seen the worst deleveraging in human history. Roubini also predicted that commodities and credit-default swaps in particular would create further market bursts. Again, his infamous forecast shocked the world; the price of oil fell sharply and the bankruptcy of Lehman Brothers brought huge losses on credit-default swaps. Lastly, Roubini argues that the only way to avoid further economic downturn is agressive actions by policy makers. Although his predictions turned out to be accurate, he did not make any effort to use sources that would have made his statement more convincing. Today, however because Roubini is considered the only economist who predicted the subprime crisis, he does not need to cite others' work even though other scholars and journalists cite his work all the time. Roubini's article would benefit almost everyone in the world since his analysis can help us to plan our financial future.

Belke, Ansgar and Marcel Wiedmann. "Boom or Bubble in the US Real Estate Market?" Intereconomics (2005): 273-284.

Ansgar Belke and Marcel Wiedmann, in their article, "Boom or Bubble in the US Real Estate Market?" published in September 2005 (Intereconomics), question whether the United States real estate market boom that lasted until summer of 2006 was driven by expansion in the economy or just speculations. Belke and Wiedmann try to convince readers by presenting a wide array of sources including scholarly journals, web sites,official government data, and financial magazines such as The Economist. Also, graphs and tables showcasing house data add greater credibility to their article. Belke and Wiedmann express how they worried that a rapid increase in available credit to borrowers would cause significant problems should the economy begin to contract. Their worries came true and it is very interesting how we are paying the price for not following their recommendations. For example, Belke and Wiedmann criticize the US government for implementing monetary policy to control the housing market. They argue that instead of monetary policy, fiscal policy should be implemented. It is no surprise that the government is now placing a great emphasis on fiscal policy. Belke and Wiedmann introduce new terms such as a strategy of "leaning against the wind" and "negative feedback trading." They, however do not explain what "negative feedback trading" is and expect the readers to know what that is. Also, their usage of vocabulary is somewhat complex, using many technical terms such as "positive deviations." Despite some negative aspects of their article, policy makers and those who are interested in the current economic issues should read the article since it would help them to understand the underlying causes of housing boom and bust.

Kimble-Ellis, Sonya. "Real Estate Blues." Network Journal (2008): 28.

Sonya Kimble-Ellis, in her article, "Real Estate Blues" published in November 2008 (Network Journal), discusses the changing environment in the real estate market. Kimble-Ellis claims that real estate agents are having a hard time getting mortgages for their clients since banks have changed their lending requirements. Kimble-Ellis interviews a real estate broker who argues that the new lending requirements put a higher barrier to inner-city home buyers. When one begins to read this article, one should notice that Kimble-Ellis starts the article by mentioning African-American real estate agents when she could have just said real estate agents. She purposely emphasizes "African-American" to let readers know that this article will discuss the real estate market in minority's views. Kimble-Ellis explains the term, "short sale" in simple language so that readers who have not received any financial education could understand. She mentions that the No Income Verification Loan is available to certain borrowers; however, that loan type had completely disappeared right after the financial crisis started.It must be true that Kimble-Ellis has no knowledge in the real estate industry. Since she does not verify the information she has obtained, her article loses credibility.Kimble-Ellis, however makes an attempt to represent the views of the minority when other journalists only write about the mainstream. Thus,those who study about the current economic condition of the minority may find this article interesting. In addition, this article could be beneficial in sociology and economics researches since the article presents the issue of social problems and financial regulations.