Good Book on the Finanical Crisis

I finished reading SLAPPED BY THE INVISIBLE HAND: THE PANIC OF 2007 by Gary Gorton. It is the best book I have read on the crisis. The only drawback to the book is that it is mostly a collection of previously written articles. Most such books lack some continuity. It is less true for this book though since two long chapters were written after the crisis began.

Gorton's book isn't the complete story, but it covers a key component to the crisis--how did problems in subprime markets lead to the collapse of the banking system? He shows how it happened and shows that it was basically a bank run. The difference between the recent situation and traditional bank runs is that it took place out of sight in the "shadow banking system." That is, the run was by firms on other firms and didn't involve tradional depositors.

Unfortunaely, Gorton's book is unlikely to get the wider readership that it deserves since it is more technical and doesn't focus on the conflicts among different business and government leaders or see evil around every corner. I found the book very enlightening and highly recommend it.