Fragile by Design: The Political Origins of Banking Crises and Scarce Credit, by Charles W. Calomiris and Stephen H. Haber (Princeton, 624 pp., $35)
If you have time to read only one book about the causes of the 2008 financial collapse, read this one. You will discover that the banking crises that occur in some countries but not others are part of the “fragile design” of the banking system. They are not simply random occurrences, but come about as the product of political systems, part of a bargain among competing political interests.
Charles W. Calomiris and Stephen H. Haber, professors at Columbia and Stanford respectively, have written an exhaustively researched and readable volume. It compares banking systems in five countries and shows why some are more stable than others. (Full disclosure: Calomiris is a member of the Shadow Open Market Committee, a partner of the Manhattan Institute’s Economics21.org project, of which I am the director.)