Firefighting: Anatomy of a Crisis and the Mechanics of Saving the System

This article provides a deep analysis of the 2007–2009 financial crisis, moving away from simplistic narratives of greed toward a technical understanding of the mechanics of the panic. The text offers the perspectives of key decision-makers—Bernanke, Geithner, and Paulson—who grappled with the toxic combination of opaque assets and short-term financing. The authors introduce the metaphor of "dry kindling" to describe the foundations of modern instability, including the role of shadow banking and the repo market. The analysis encompasses the evolution of intervention tools, the dilemmas of the lender of last resort, and the regulatory changes introduced by the Dodd-Frank Act. This study is crucial for understanding how mechanisms such as "E. coli" and maturity transformation impact global economic security.