Can "It" Happen Again? Essays on Instability and Finance

by Hyman P. Minsky

List Price:	~~$32.95~~
Amazon Price:	$26.06 & eligible for FREE Super Saver Shipping on orders over $25.
You Save:	$6.89 (21%)
Average Rating:
Lowest New Price:	$26.06
Availablitiy:	Usually ships in 1 to 3 weeks

Editorial Reviews
No Editorial Reviews yet

Customers who bought this item also bought

All Customer Reviews
Average Customer Review: 4 out of 5 stars

7 of 7 people found the following review helpful:

4 out of 5 stars

Misnky's several essays on the FIH, 2008-06-16
This great book is composed of thirteen essays restating and elaborating Minsky's great contribution to economics: the Financial Instability Hypothesis (FIH). The basic idea is that because the realized returns on any investment project are uncertain (and not merely risky), the contractual debts firms and entrepreneurs incur in financing these investments are inherently unstable. The "subjective state of expectations" will give rise to three different methods of financing: hedge, speculative, and ponzi. Hedge financing occurs when there are considerable margins of safety between fixed payments and *expected* returns. Speculative financing is defined by a project which over the course of its operations will generate *expected* revenue that will be greater than fixed payments, even though in the short-term these payments will be larger than initial realized returns. This gives rise to refinancing, which occurs if both parties to the agreement (lender and borrower) agree on the expected rates of return. Ponzi financing is a very unstable state in which the *expected* realized returns are not even sufficient in paying either the interest or principal on loans.

Now one moves from hedge to speculative and then to ponzi finance according to the general mood of the market. If the market is experiencing a "state of tranquility," then the typical margins of safety that characterize hedge finance will be displaced by speculative finance which is still considered safe according to entpreneurial optimism. This is all subject to change, however. The performance of the market, interest rate changes, rapid changes in animal spirits, etc. etc. are all conditions which give rise to market instability.

In so many words, this is basically Minsky's FIH. Minsky believed that this concept was a logical implication of Keynes' work, although he is careful to point out that the FIH stands on its own even if it is interpreted as being inconsistent with Keynes' message.

Minsky is a pleasure to read and I recommend this book to anyone interested in "endogenous instability". Minsky believed that all market disruptions are *systemic* and not merely accidental. This sets his work apart from most professional economists.

Price is accurate as of the date/time indicated. Prices and product availability are subject to change. Any price displayed on the Amazon website at the time of purchase will govern the sale of this product.