What caused the Great Crash of 2008? The proximate cause was the collapse of house prices. Why did house prices collapse? There is an interesting post over at Freakonomics which suggests that the collapse in US house prices was triggered by the large increase in gas (petrol) prices in 2006-7, which dramatically increased the cost of commuting from the suburbs. The full paper is available here. However, the increase in gas prices was only a trigger, and it cannot explain the extent of the fall in house prices in the USA, Ireland, UK, and other economies.
Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne...