The 2008 global financial crisis (GFC) echoed the same systemic flaws in relation to investment financing that gave rise to the 1930s great depression (GD). Although triggering factors and regulatory concerns are qualitatively different in the two crises, the diagnosis in Islamic perspective relates to two major sources: (1) an inherently destabilising force of the interest rate as it strictly separates investment and financing decisions, (2) and an ever- widening distance between capital markets and productive sectors due to unrestrained financial engineering that feeds on short term speculative returns. The first problem is shown to invoke Fisher and Tobin's Separation Theorems in the mainstream economics as they state the theoretical appeal of investment/financing separation in terms of capital market optimality. The second problem has a long history in modern capitalist markets as it has lately resulted in transforming traditional concepts of investment, financing and liquidity. Recent studies have provided evidence that financial derivatives in capital markets constitute 80% of global liquidity, implying that the world economy is becoming much like a big gambling casino having producers of goods and services like sellers of nuts and crisps! The paper sets out from a brief background on the GD, shedding light on the profound structural impact of the 1933 Glass-Steagall Act as it negatively affected traditional bank intermediation and encouraged money and capital market disintermediation. The present GFC has marked the apex of major intermittent events between the GD and the GFC that have contributed to radical shifts of profitability from productivity-based traditions to highly leveraged speculation. In conclusion, interest-free Islamic finance can be part of the global financial solution not only through advocacy of an equity driven economic order but also through stricter control on financial engineering that feeds purely on speculative bubbles.

Crisis and Response: An FDIC History, 2008¿2013 reviews the experience of the FDIC during a period in which the agency was confronted with two interconnected and overlapping crises¿first, the financial crisis in 2008 and 2009, and second, a banking crisis that began in 2008 and continued until 2013. The history examines the FDIC¿s response, contributes to an understanding of what occurred, and shares lessons from the agency¿s experience.

The Financial Crisis Inquiry Report, published by the U.S. Government and the Financial Crisis Inquiry Commission in early 2011, is the official government report on the United States financial collapse and the review of major financial institutions that bankrupted and failed, or would have without help from the government. The commission and the report were implemented after Congress passed an act in 2009 to review and prevent fraudulent activity. The report details, among other things, the periods before, during, and after the crisis, what led up to it, and analyses of subprime mortgage lending, credit expansion and banking policies, the collapse of companies like Fannie Mae and Freddie Mac, and the federal bailouts of Lehman and AIG. It also discusses the aftermath of the fallout and our current state. This report should be of interest to anyone concerned about the financial situation in the U.S. and around the world.THE FINANCIAL CRISIS INQUIRY COMMISSION is an independent, bi-partisan, government-appointed panel of 10 people that was created to "examine the causes, domestic and global, of the current financial and economic crisis in the United States." It was established as part of the Fraud Enforcement and Recovery Act of 2009. The commission consisted of private citizens with expertise in economics and finance, banking, housing, market regulation, and consumer protection. They examined and reported on "the collapse of major financial institutions that failed or would have failed if not for exceptional assistance from the government."News Dissector DANNY SCHECHTER is a journalist, blogger and filmmaker. He has been reporting on economic crises since the 1980's when he was with ABC News. His film In Debt We Trust warned of the economic meltdown in 2006. He has since written three books on the subject including Plunder: Investigating Our Economic Calamity (Cosimo Books, 2008), and The Crime Of Our Time: Why Wall Street Is Not Too Big to Jail (Disinfo Books, 2011), a companion to his latest film Plunder The Crime Of Our Time. He can be reached online at www.newsdissector.com.

​The Financial Crisis, though originating in the US, is global and comparable with the Great Depression of the 1930s. The book takes both micro and macro view of the crisis. It examines the evolution of the global monetary system and looks at the crisis from a systemic angle. It examines the institutional changes in American capitalism and market mechanisms. The dynamics of the market and its cyclical characters are discussed. It examines the structural changes in the US economy. The role of globalization and international funds flow, their changing character and the growing interdependence among nations have been examined. At the micro level, the book discusses the subprime market and the gaps in the system that created the crisis. It deals with the supervisory structure and growing influence of the derivatives market and the synthetic products that are threatening the financial system. It also analyzes the fundamental changes in the global trading and payments patterns, which are influencing the US balance of payments and the US dollar. The secular changes in the structure of the US economy are impacting the global economy. The work deals with the measures taken to resolve the crisis both in the US and on a global scale. The reforms necessary to avoid the recurrence of the crisis are outlined. The study aims to underline these factors and draw a perspective for the US dollar. It is also proposed to draw a scenario for a more efficient and equitable global monetary system with a role for the US dollar along with a new vehicle for international payments and finance. This would also include the reform of the global economic system and the IMF. The special feature of the book is that it takes a holistic view of the problem. The systemic and macro issues are discussed in addition to its microanalysis.

In The Death of Capital, respected portfolio manager and longtime investment professional Michael Lewitt looks at how the U.S. economy has increasingly been dominated by short-term speculation rather than industrial expansion in recent years. These disastrous trends, described here as financialization, ignore the fact that capital itself is a highly unstable process rather than a fixed object or category. As a result of our failure to understand the true nature of capital, we have developed a financial and regulatory system that does exactly the opposite of what it should be doing—favoring obscurity over transparency and fomenting instability rather than growth. In explaining where we have gone wrong Lewitt pulls few punches in criticizing some of the counterproductive forces that have led to the death of capital—including Wall Street practices such as private equity and derivatives trading—which he views both as economically unproductive and morally misguided. Page by informative page, this timely guide: Addresses "financialization" and its consequences, such as a weaker U.S. dollar, the destruction of American industries, and the loss of American economic and political influence Explores the most important aspects of capital and capitalism through the prism of four of the world’s great economic thinkers Discusses how the legal system aided economic weakening by privileging short-term investment goals Calls for politically controversial reforms such as stricter regulation of hedge funds and private equity firms, banning naked credit default swaps and Structured Investment Vehicles, and principles-based reforms to improve systemic stability Financial reform is needed to make sure capital does not die again. Filled with in-depth insights and practical advice, The Death of Capital is not just a play-by-play of the recent financial crisis, but an original and passionate analysis of the trends that led to it and what can be done in a regulatory sense to address the problems.

This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises—currency crises, sudden stops, debt crises, and banking crises—and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.