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In 1999, in The Return of Depression Economics, Paul Krugman surveyed the economic crises that had swept across Asia and Latin America, and pointed out that those crises were a warning for all of us: like diseases that have become resistant to antibiotics, the economic maladies that caused the Great Depression were making a comeback. In the years that followed, as Wall Str In 1999, in The Return of Depression Economics, Paul Krugman surveyed the economic crises that had swept across Asia and Latin America, and pointed out that those crises were a warning for all of us: like diseases that have become resistant to antibiotics, the economic maladies that caused the Great Depression were making a comeback. In the years that followed, as Wall Street boomed and financial wheeler-dealers made vast profits, the international crises of the 1990s faded from memory. But now depression economics has come to America: when the great housing bubble of the mid-2000s burst, the U.S. financial system proved as vulnerable as those of developing countries caught up in earlier crises and a replay of the 1930s seems all too possible. In this new, greatly updated edition of The Return of Depression Economics, Krugman shows how the failure of regulation to keep pace with an increasingly out-of-control financial system set the United States, and the world as a whole, up for the greatest financial crisis since the 1930s. He also lays out the steps that must be taken to contain the crisis, and turn around a world economy sliding into a deep recession. Brilliantly crafted in Krugman's trademark style--lucid, lively, and supremely informed--this new edition of The Return of Depression Economics will become an instant cornerstone of the debate over how to respond to the crisis.


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In 1999, in The Return of Depression Economics, Paul Krugman surveyed the economic crises that had swept across Asia and Latin America, and pointed out that those crises were a warning for all of us: like diseases that have become resistant to antibiotics, the economic maladies that caused the Great Depression were making a comeback. In the years that followed, as Wall Str In 1999, in The Return of Depression Economics, Paul Krugman surveyed the economic crises that had swept across Asia and Latin America, and pointed out that those crises were a warning for all of us: like diseases that have become resistant to antibiotics, the economic maladies that caused the Great Depression were making a comeback. In the years that followed, as Wall Street boomed and financial wheeler-dealers made vast profits, the international crises of the 1990s faded from memory. But now depression economics has come to America: when the great housing bubble of the mid-2000s burst, the U.S. financial system proved as vulnerable as those of developing countries caught up in earlier crises and a replay of the 1930s seems all too possible. In this new, greatly updated edition of The Return of Depression Economics, Krugman shows how the failure of regulation to keep pace with an increasingly out-of-control financial system set the United States, and the world as a whole, up for the greatest financial crisis since the 1930s. He also lays out the steps that must be taken to contain the crisis, and turn around a world economy sliding into a deep recession. Brilliantly crafted in Krugman's trademark style--lucid, lively, and supremely informed--this new edition of The Return of Depression Economics will become an instant cornerstone of the debate over how to respond to the crisis.

30 review for The Return of Depression Economics and the Crisis of 2008

  1. 4 out of 5

    Arn Kawano

    Reading this book reminded me of The Confessions of St. Augustine in which St. Augustine expounded on all the reasons that he should be an atheist yet he could never break from his faith in God and saw his questioning as a symptom of not having enough faith. In this book, Paul Krugman describes numerous recent financial crises that naturally arise from global capitalism yet he cannot break from his faith in capitalism (perhaps because professed socialists don't get Nobel Prizes in Economics nor Reading this book reminded me of The Confessions of St. Augustine in which St. Augustine expounded on all the reasons that he should be an atheist yet he could never break from his faith in God and saw his questioning as a symptom of not having enough faith. In this book, Paul Krugman describes numerous recent financial crises that naturally arise from global capitalism yet he cannot break from his faith in capitalism (perhaps because professed socialists don't get Nobel Prizes in Economics nor write for The New York Times). Mr. Krugman gives numerous examples of how capitalism fails to provide sustainable growth, yet he clings to his faith with hopes that believing in capitalism even mightier (with massive government stimulus of the capitalist system) will revive the system under cardiac arrest. One concludes Mr. Krugman's book completely confused as to the actual causes of the series of crises he chronicles. Is society just at the mercy of inter-related but seemingly unresolvable economic riddles? The best antidote to this confusion is "The Great Financial Crisis" by Foster and Magdoff. These authors are not afraid of being intellectually honest and breaking away from blind faith in capitalism resulting in a coherent analysis of our present economic predicament.

  2. 4 out of 5

    Kristian Hermansen

    I just finished reading "The Return of Depression Economics and the Crisis of 2008" by Paul Krugman, recipient of the 2008 Noble Prize in Economics. Great read. This book, given as a gift to me by my step-mother for xmas, turned out to be a real gem. Putting it all into perspective, I believe I have a better understanding of how complex economies of scale seemingly always return into major depressions for some time, even despite vast regulations meant to compensate for sharp short-term fluctuati I just finished reading "The Return of Depression Economics and the Crisis of 2008" by Paul Krugman, recipient of the 2008 Noble Prize in Economics. Great read. This book, given as a gift to me by my step-mother for xmas, turned out to be a real gem. Putting it all into perspective, I believe I have a better understanding of how complex economies of scale seemingly always return into major depressions for some time, even despite vast regulations meant to compensate for sharp short-term fluctuations. In the book, we revisit the crises of mid-90's Mexico (aka. The Tequila Crisis), 97-98 Asian markets, 2000 US market, 2002 Argentina crash, and the recent 2007/8 US and world market collapse. Most of these crashes can be attributed to situations where the markets distance themselves too far from market fundamentals. Unregulated activity and financial loopholes allow some speculators to take advantage of many situations. In the case of Britain in 1992, George Soros was able to net a cool 1 Billion dollars in a short amount of time, merely by provoking the GBP to deflate. I knew this story in passing already, but the book has the gritty details of what made this possible. Additionally, I learned more about the IMF, and how the US utilizes them to bail out flaky third-world economies to ensure that they don't fall into complete disarray, thus perhaps ensuring their dependence on the US even further, and thus perhaps even enslaving them to our superiority. Hrmmm, chew on that :-) In conclusion, I now recognize the gravity of the crises we are currently in. If the book is correct, our markets are in for much more damage in the coming months. Be prepared! Also, we probably won't find our way out of this official depression until 2010, judging by the data presented. We will also likely see a stimulus on the order of 4% of US GDP at least. Much of this, the author claims, would be wise to place into infrastructure revitalization, since this slump will probably be longer lived than most, thus ensuring longer term projects are more formidable. Interesting stuff. Let's see what happens!! Cheers and happy new year...

  3. 4 out of 5

    Daniel

    This is an excellent review of the reasons why the American economy has turned into the debacle that is before us. Must read explanation at the end of Chapter 8 which dispels all the partisan B.S. and fingerpointing about the alleged causes behind the meltdown and focuses blame where it should properly reside. Very interesting as well is the way that he deals with "moral hazard" not making judgments but allowing the reader to determine if this is a factor in causing fiscal chaos or not. How much This is an excellent review of the reasons why the American economy has turned into the debacle that is before us. Must read explanation at the end of Chapter 8 which dispels all the partisan B.S. and fingerpointing about the alleged causes behind the meltdown and focuses blame where it should properly reside. Very interesting as well is the way that he deals with "moral hazard" not making judgments but allowing the reader to determine if this is a factor in causing fiscal chaos or not. How much of economics is just an extension of psychology and sociology? Well, Krugman doesn't say, but he shines a light on the topic and lets you decide. Market prejudices, self-fulfilling prophecies, short-sale exacerbation of problems are all presented in matter-of-fact positions that outline them as trip-wires in the process without calling them good or bad. He takes on the Keynesian notions of free-market and explains why Paulson's TARP and stimulus packages should work, but at least freely admits when they aren't as effective as predicted. A great and easy read for the layman trying to understand the difficulties of the current economic crisis.

  4. 4 out of 5

    Trevor

    This isn’t nearly as good a book as it could have been – the book it could have been is Freefall: America, Free Markets, and the Sinking of the World Economy, which, if you were looking for a book to read on the GFC that is quick, easy and jaw-dropping, that is the one I would recommend. This book was really looking at the Asian Financial Crisis, but has been updated to include information on the GFC of 2008. The most interesting parts of the book relate to the need to re-regulate the financial s This isn’t nearly as good a book as it could have been – the book it could have been is Freefall: America, Free Markets, and the Sinking of the World Economy, which, if you were looking for a book to read on the GFC that is quick, easy and jaw-dropping, that is the one I would recommend. This book was really looking at the Asian Financial Crisis, but has been updated to include information on the GFC of 2008. The most interesting parts of the book relate to the need to re-regulate the financial system. When capitalism is booming there is a general desire by capitalists to get rid of all regulations. However, it is precisely this removal of regulations that sets up the Ponzi schemes (what used to be called Pyramid Schemes) that inevitably lead to bubbles and in their turn to crashes. Capitalism’s worst enemy is its own excessive self-belief. Was there ever a boom in which the participants did not claim busts had become a thing of the past? Was there ever a boom in which participants warned that things might be getting out of hand or attempted to do something to take the heat out of the boom before the inevitable bust? With the smashing of the wealth of Middle America, with the crushing impoverishment of large swathes of the US population (lose your house and you lose most of your wealth), it will be interesting to see what happens next. Will the vast majority of US citizens just roll over and take the consequences of their financial security evaporating into thin air? Will the majority of Americans continue to accept that the only way to have a secure financial future is to direct ever more billions to the people made rich in the bubble and who remained rich after it burst? So far it looks like the most likely outcome of the GFC is that the Republicans will be re-elected in the next election. The most likely outcome of that will be another round of excessive social security directed at the already obscenely wealthy. The kind of reverse Robin Hood syndrome you would think most people would find revolting in the extreme, but that the poorest seem to cheer along with as long as Fox News is singing its praises. We live in interesting times. It is hard not to be pessimistic, in fact, I’ve given up trying.

  5. 4 out of 5

    Will Byrnes

    This is a reworking of a book Krugman released in 1999, now new and improved. It is a popular-audience piece on the current economic debacle, focusing on the mechanics of banking. Krugman gets what is going on in the world of economics better than just about anyone. The Nobel committee would agree. He links the current downfall to several that have come before across the world and shows how we have arrived at a sort of financial perfect storm condition. It is readable and very incisive.

  6. 5 out of 5

    Hieu Cao

    In how many ways can economic crises happen? Paul Krugman answers: “a lot!” In his book "The Return of Depression Economics," Krugman thrills us with the fact of how little we know about crises, how vulnerable our financial system is, and how dangerous globalization could be. In fact, he gives us three reasons to be obsessed about our economy: the breakdown of Japan, the vicious circle of financial crisis, and the haunting ghosts of non-bank banks. From 1953 to 1973, Japan stunned the world wi In how many ways can economic crises happen? Paul Krugman answers: “a lot!” In his book "The Return of Depression Economics," Krugman thrills us with the fact of how little we know about crises, how vulnerable our financial system is, and how dangerous globalization could be. In fact, he gives us three reasons to be obsessed about our economy: the breakdown of Japan, the vicious circle of financial crisis, and the haunting ghosts of non-bank banks. From 1953 to 1973, Japan stunned the world with its miracle of transforming into the second largest economy from the destruction of World War II. The economy of Japan was superior with well-educated workers, state-of-art technology, and high saving rate. Krugman points out two important sources of Japanese propensity: a prudent government with strategic designs and distinctive economic style with protections for major companies from short-term financial pressure. The result of this system was "a country able to take a long view" and develop stable development for strategic industries "one-by-one." Some would think that the propensity of Japan is unbreakable. No, it is not. The irony is that "those same distinctive characterizes - the cozy relationship between government and business, the extenuation of easy credit by government-guaranteed banks to closely allied companies - come to be labeled crony capitalism and seen as the root of economic malaise." More traumatically, the direct cause was just a slight deregulation by the Japanese government over banking system; the government gave banks "more freedom and more competition." A land bubble at the beginning of 1990 was the only need to make moral hazard spread throughout Japan's financial institution. The bubble burst and Japan's economy plummeted. Hence, Krugman shows us the first two ways that a sound economy can go wrong: crony capitalism and bank deregulation. The next obsession that Krugman notices us is the vicious circle of financial crisis. This nightmare circle starts with one eerie word: panic. The distressing truth in economics is that “the panic itself makes panic justified.” Similar to Japan, Thailand experienced estate and stock bubbles during 1990s, and suddenly, the bubble burst. The confidence in Thailand’s currency and economy shrank, and thus, in panic, investors exchanged baht for dollars or yen and plunged the value of the Thai currency. Meanwhile, the Thai government was stuck with the confidence game and had to raise interest rates. Consequently, financial institutions and companies were caught in a double trap of rising-value-dollars, and rising-interest-baht debts. The combination of baht depreciation and high interest rate ultimately sank the economy in deeper recession, which further washed away the confidence. The financial crisis fulfilled its vicious circle of melting down Thai economy. More importantly, panic is contagious. “It turned out that whatever the differences among all those economies, one thing they did have in common was susceptibility to self-validating panic.” The crash of Thailand initiated the domino effect leading to the crash of Asia. Thus, Krugman tells us another stories of recession. Just thinking about it chills our bones. All economies depend on confidence. A moment somebody somewhere loses his confidence, not only does his own economy quickly melt away, but also his neighbor’s economy. Finally, the evil speculator globalizes the financial system by forming a “parallel banking system” or “shadow banking system,” “a set of institutions and arrangements that act as ‘non-bank banks.’” If we take an overall view of all crises --Tequila wreck, Japan’s trap, and Asia’s crash-- we find a striking pattern. The banking system lacks proper regulation and engages in too many risks. Then, estate and stock bubbles swell and burst. Consequently, people lose confidence and panic starts. Now you should shiver when knowing that a whole shadow bank system operated on a global scale that was “never regulated in the first place.” Those financial institutions participate in different sorts of “risky cross-border bets.” The housing market crisis in U.S creates a “transmission mechanism” driving “fresh rounds of crises overseas”. Also, there is a “special point of vulnerability” called “carry trade” in the emerging markets. The borrowing from low-interest-rate countries and lending in high-interest-rate ones complete our picture of full-scale financial globalization. When the housing bubble in the U.S. burst, all non-bank banks, regardless of country borders, shrink together in a vicious cycle of deleveraging. The mechanism of this circle is similar to the circle of financial crisis. The loss of confidence damages some institutions. “Highly leveraged players in the economic system suffered losses, which forced them into actions that led to further losses, and so on. In this case the losses occurred through the collapsing value of risky financial assets rather than through the collapsing value of risky financial currency.” After providing us many obsessions about economies, Krugman alleviates our worries: “The world economy is not in depression; it probably won’t fall into depression, despite the magnitude of the current crisis (although I wish I was completely sure about that).” For sure, he does not intend to scare us. In fact, Krugman tries to lessen the gravity, voids all dry jargon, and enlivens the book with ton of questions and a quizzical tone. Certainly you will enjoy reading the book. However, the matter Krugman tries to convey is itself serious. About 70 years ago, John Maynard Keynes said: "We have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand." Krugman simply repeats: the machine is big and we know nothing.

  7. 4 out of 5

    Krishna Kumar

    Krugman analyzes the many financial crises the world had in the 20th century and this decade. He derides the economists who say that the Depression is a thing of the past. The first edition of the book did not have anything to point out, but Krugman was proved right with the collapse of the financial markets in 2008. Krugman uses the example of a baby-sitting co-op to illustrate how money supply and inflation play their part in financial booms and busts. He also provides solutions on how the simp Krugman analyzes the many financial crises the world had in the 20th century and this decade. He derides the economists who say that the Depression is a thing of the past. The first edition of the book did not have anything to point out, but Krugman was proved right with the collapse of the financial markets in 2008. Krugman uses the example of a baby-sitting co-op to illustrate how money supply and inflation play their part in financial booms and busts. He also provides solutions on how the simple lessons from the coop can be applied to large-scale economies of countries. He explains the dangers of large financial firms in creating modern banking crises that can devastate the financial workings of countries. The major shortcoming of this book is that it does not consider realpolitik in the formulation of economic policies. Of course, this is not Krugman’s domain as he is an economist, not a politician. But as a practical matter, economic and financial policies in democracies are based on political considerations. Ignoring that means that the solutions will remain idealistic.

  8. 5 out of 5

    Krista

    This book was disappointing. In every way, disappointing. The book was about the return to depression Economics. What are depression economics, you ask? I don't know. He never actually explains what he means by that! He ends the book by saying we have to go back to 'good old Keynesian macro-economics'. But he never explains what that means either!!!!! The book is SUPPOSED to be for non-economists. That's the whole reason he uses the 'Capital City Baby Sitting Co-op' in a 'whimsical' fashion to exp This book was disappointing. In every way, disappointing. The book was about the return to depression Economics. What are depression economics, you ask? I don't know. He never actually explains what he means by that! He ends the book by saying we have to go back to 'good old Keynesian macro-economics'. But he never explains what that means either!!!!! The book is SUPPOSED to be for non-economists. That's the whole reason he uses the 'Capital City Baby Sitting Co-op' in a 'whimsical' fashion to explain stuff. Well, suffice it to say, he didn't succeed. I like my stories just as much as the other person, and the first time he did it, it kind of sort of made sense, because he explained what it meant, but the rest of the book was basically just him self-congratulating himself on predicting various economic downfalls. Basically the book was a litany of economic recessions, slumps, and liquidity traps where economic growth didn't happen and what the governments did to get out of them. It was kind of funny though. He was like, in Asia the governments did this!...and it didn't work. In Mexico the government did this!....and it didn't work. In the U.S.A. the government did this!...and it didn't work. In Japan the government did this!....and it didn't work. In Argentina the government did this!....and it didn't work. Surprisingly, in most cases, the government did what the central bankers and economists wanted it to do and...it didn't work. You would think that he would catch up on the underlying theme here, but he didn't. There are only two things I got from this book: economists like the author are full of themselves and think that they are smart enough to manage the complexity of global markets as central bankers and they aren't. The arrogance was palpable. It was as if he was saying 'If I had been in charge it would have been fine.' I'm pretty sure if he had been in charge the slumps would still have happened. The other thing is that economists like the author are idiots. He said at one point that there wasn't enough coupons (ie. money) in circulation so they should just print more. It's like...um...that's inflation. I don't know about you, but having lived in a couple of countries now where inflation ran wild, it is definitely not a good thing. And here he is thinking he will know exactly how much inflation is 'good' and how much is 'bad'. ....I don't think he, or anyone, is smart enough to manage an economy like that. There are too many variables. The other thing I came away with is I am starting to think that credit is a terrible idea. For most of the depressions, slumps and recessions since the 1930s the problem came about essentially because banks overextended themselves in the credit that they offered people. They lent out too much of the money that people had entrusted to them and then didn't have enough cash on hand to pay them all back, they lost money on bad ventures and didn't have enough cash to pay their depositors back. That was basically the underlying theme. Once the banks were regulated, savings and loans over extended themselves on credit. Once those went out of business, hedge funds and securities accounts over-extended themselves on credit. And yet somehow he came to the conclusion at the end of the book that we need MORE credit. The mind boggles. I suppose that some credit in small amounts is good, but this over dependence on credit where people buy houses, cars, and whatever else they want purely on credit, then struggle for decades to pay it all back seems kind of stupid to me. The only people who get money off of that are those who are already well to do. Finally, he keeps talking about millions and trillions of dollars in wealth disappearing. Um. I don't agree. That 'wealth' isn't wealth. It's inflation....basically. So the housing market in the U.S. was a bubble, houses were 'worth' more than they actually were, so when the market adjusted back to a more suitable price for houses, the overprice 'wealth' disappeared. But it never actually existed! It was just a projected value! A projected value that turned out to be wrong because no one could or would pay for it. You can't really call that 'lost wealth' more like 'dashed expectations'. I'm not saying that it didn't have awful consequences on the people it happened to. I'm saying that viewing something this ethereal as wealth in the first place is the wrong attitude.

  9. 4 out of 5

    Brian

    Paul Krugman, if you haven't been paying attention to economics for a while, writes a column for the New York Times. He has a reputation as a modern-day Cassandra, who repeatedly describes the state of modern economics and lays out policy goals for how to fix them, only to not be listened to by anyone in power. His columns have definitely become more annoyed over the past five years because of that, and he even has his own image macro: ...which is honestly pretty appropriate, considering the utte Paul Krugman, if you haven't been paying attention to economics for a while, writes a column for the New York Times. He has a reputation as a modern-day Cassandra, who repeatedly describes the state of modern economics and lays out policy goals for how to fix them, only to not be listened to by anyone in power. His columns have definitely become more annoyed over the past five years because of that, and he even has his own image macro: ...which is honestly pretty appropriate, considering the utter idiocy coming from both sides of the political divide nowadays (thought not in equal amounts, admittedly) But this book was written before any of that happened! Long before, actually--the original The Return of Depression Economics was published in 2000 in response to the Asian financial crisis of the late 90s, and this version updates it with additional thoughts about the banking crisis of 2008 and how its roots are traceable in the same sort of problems that caused the Asian financial crisis. I originally had this as five stars, but changed it to four stars after a bit of thought. The why is down at the end. Most of the beginning of the book is a parable of economics in the form of the Capitol Hill Baby-Sitting Co-op. A group of couples composed of staffers on Capitol Hill get together and start a baby-sitting co-op, where they agree to provide baby-sitting for each other. They print up a bunch of coupons, distribute them evenly to all founding members, and each coupon is good for one hour of baby-sitting. Anyone who wants to go out more will have to baby-sit more and save up the coupons to spend later. Here, you have the basics of an economic system. Now, what happens if a group of couples are worried that in the future, they'll want to go out several nights in a row, and maybe a bit after that, and they won't have enough coupons saved up because the supply is limited? They stop going out now and start looking for more opportunities to baby-sit. The problem is, that reduces the pool of available baby-sitting nights for everyone, so pretty soon more people start worrying that they won't be able to go out when they want to, and they stop going out, which makes things worse and worse as more and more baby-sitters are chasing fewer and fewer baby-sittings. Congratulations! You're in a recession! The main reason Krugman brings this is up is to show how malicious or stupid (or both) most arguments about recessions tend to be. It's not because workers are lazy, or because their skills don't fit the new economy, or because regulations are too tight, or because of some quirk of "Capitol Hill culture," or whatever the excuse is. Perfectly rational people can drive an economy into recession by following perfectly rational goals. One way to fix this is for the co-op to issue more coupons. If the supply of coupons is larger, than the couples worried that they won't have enough coupons will be assured that there will be plenty of chances to get them, so they start going out now, thus increasing the supply of chances of baby-sit, thus mollifying everyone else who was worried, and bringing things back to normal. And that's why banks issue more money during recessions, and what the point of quantitative easing is. Another way is for coupons to devalue over time. Since fewer people want to go out in the winter, the logical choice for any single couple is to baby-sit in the winter and go out in the summer, but that leads to supply issues in both seasons. But if each coupon buys one hour of babysitting in winter, but only 45 minutes of babysitting in the summer, couples have an incentive to spend them instead of hoarding them, thus keeping them circulating, and so the co-op economy survives. And that's why persistant inflation can be a good thing. Obviously, this is incredibly simplified, and in a real economy there are dozens or hundreds of other things to consider, but it's a surprisingly good example for how concise it is and how silly it seems. I don't want to go into too much detail about the various crises covered in the book, because Krugman does an excellent job, but a lot of them come down to three things: A) speculators gonna speculate or B) failure by the government to properly regulate or C) moral hazard. Moral hazard is probably the most immediately relevant to Americans like myself, since it's a huge reason for the banking crisis that's currently still going on and was never properly dealt with. The basic principle is that betting with other people's money means you don't really care as much when you lose, and most of modern finance is betting with other people's money without risk--the government will always bail out the banks, then if they win they keep all the money, and if they lose they suck the extra from the government, and thus win either way."I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank. ... You are a den of vipers and thieves." -Andrew JacksonAnd almost 200 years later, things aren't that different. The book says that austerity is precisely the wrong way to deal with the kind of crises depicted within, because seizing up a market further when the flow of money has already been choked will just make things worse. And in the years since this was written, with what's happened to Europe and it's own policies of austerity, which have multiple times threatened the very existence of the Euro and brought Greece to the brink of financial apocalypse (youth unemployment is above 50%)...well, no wonder they call him a modern Cassandra. Here is the warning, and it was not listened to. He suggests that the government temporarily nationalize the banks and directly lend to the consumer while the financial system was sorted out. Unfortunately, due to supply-side idiocy and Protestant work ethic moralizing that economy needed to "suffer" to purge out the "rot," none of that happened. And now housing prices in Southern California are approaching or exceeding the level they were before the crash, bank profits are at an all-time high, and unemployment remains above 7%. Crash 2.0, anyone? Unfortunately, the book loses a star from me because I don't think that the solutions proposed really work. Krugman says that governments need to be sure to regulate the "shadow banking system" that provides a lot of the benefits of the actual banking system without the same restrictions. Most of the solutions are on the national level, but as Krugman admits, a lot of the problems were caused by global finance, and without any sort of international organization to regulate that, the end result of regulations in any individual country are the creations of more Monacos and Cypruses and Canary Islands.Exactly what form the next response should take isn't clear, but financial globalization has definitely turned out to be even more dangerous than we realized.Indeed. But if we, and Europe, can't even handle our own national financial systems, how can we regulate the international system? If only we had an answer.

  10. 4 out of 5

    Andrew

    Mostly very good. Krugman's claim at the front of the book that he intends to make it more readable to the wider non-economic savvy public doesn't really hold up by the end sadly. There are many head-scratching paragraphs that I had to read multiple times to properly understand. Economics to me is like most sciences, I'm sorry, but no matter what people say, they are the sort of subjects that can never be fully accessible to the average Joe. The very nature of their subject requires jargon, near Mostly very good. Krugman's claim at the front of the book that he intends to make it more readable to the wider non-economic savvy public doesn't really hold up by the end sadly. There are many head-scratching paragraphs that I had to read multiple times to properly understand. Economics to me is like most sciences, I'm sorry, but no matter what people say, they are the sort of subjects that can never be fully accessible to the average Joe. The very nature of their subject requires jargon, near impenetrable concepts and a hefty dose of a good Maths background to properly appreciate. Still, Krugman is better than most, and has some very funny turns of phrases here and there. His baby co-op metaphor at the beginning of the book for the way the housing market was treated by banks was particular inspired, and an excellent way to clarify the complex clusteruck of CDOs, sub-prime mortgages, derivatives and others that lead to the crash. Overall, his analysis is one I agree with. Unregulated banking, along with their wanton stupidity and their ever increasing, never ending demand for more money (that all capitalists share alike) led to the collapse. Not, as the pernicious, worthless, dishonest little scum in the UK Conservative Party have managed to suggest, because of Labour's spending (A ludicrous claim. How does a spending deficit cause a banking collapse?) Krugman provides a clear, insightful, hugely detailed outline of how things went wrong, and subsequently gives an informative plan for a global recovery. Sadly, the book, being published in 2009, now seems a disappointingly lost cry, as his plans for a worldwide economic recovery (V.Keynesian spending and growth increases) have not been pursued. In actuality, we have the perverse situation in which a neo-liberal free market capitalist failure is trying to be resuscitated with a neo-liberal, free-market capitalist solution. In continental Europe it's been an absolute disaster, with mass unemployment and huge political and economic unrest stemming as a result of it. In the UK it would seem to be on the surface doing much better (high employment, low inflation etc.) which is a shallow cover for a deeply flaky recovery, with jobs being self-employed, very low paid until very recently, on zero-hour contracts, and with no chance of it being a long-term secure recovery. It may well be shown to be made of sand when the winds of another economic judder (which under neo-liberal free-capitalism is almost certain) possibly putting people’s lives at risk again. Also, the wider and more crucial point to make is that austerity, if not an economic red herring based on shaky and ill-founded principles (the report George Osbourne used to justify his austerity plans were subsequently proven to be dogshit, which numerous data errors in it), has utterly failed on a moral level. It is an absolute obscenity to humanity. It has produced a destroyed NHS health care system, which (as Noam Chomsky has so astutely identified) is a classic case of stealth privatisation, where you defund something to the point of collapse, look at the numerous failings, let the media go "look! See! Public services don't work!” and then usher in for the private vultures to come and feast on it. The benefit social security system has ripped to pieces, with the mass majority of people who need benefits to, you know, live, being cruelly stripped off it, leaving them starving and reduced to poverty because of the fanatical determination of the Conservatives to stamp out the minuscule crime of benefit fraud (which counts for something like 3.0% of benefit spending). Disabled people have suffered even worse through the social cleansing programmes, being chucked out of their wheelchairs in order to be shunted back to work, and sometimes actually killing themselves out of despair. For the youth of today, they have seen public education struggle, their EMA cut, and higher tuition fees. For women, lack of money into the police force they are failing to record 800,000 crimes a year, including one in four sex offences in the UK. Also, 74% of austerity money grabbing has come from women's pockets, with women now being the majority of low-paid workers. Women are left caring for both small children and the elderly as their childcare services are cut. Funding for refuges and rape crisis centres has also been cut. At local levels, councils have essentially become a pointless club where councillors and local MPs meet to sit around twiddling their funds, as local government money have been so slashed it has left services such as local NHS hospitals in dreadful states, and libraries constantly under threat of closure, and with little to no power left to them. I could go on. There is a litany of abuses and abominations committed under the guise of a rational "technocrat" way of dealing with the economy. It is of course, not technocratic, but deeply ideological. The right wing have always hated the concept of the state. They've always hated social democracy. They've always hated the idea of helping the poor and protecting the weak. They've always sneered and spat on the concept of a society worthy of being called one, where the poor, the working, women, ethnic and racial minorities, the disabled and the young are treated equally and with fairness and decency. They've harboured these hatreds since the end of WW2, but put on a brave face and pretended to go along with the enormous social and economic changes produced after WW2. Thanks economic crash, it has given the Right the chance to utterly and finally destroy the state, and drag us all back to their utopia of the 1930s reborn. Their decades long plan to get rid of all that “universal suffrage bullshit” (in the words of fanatical Right-winger and hack blogger Paul Staines) is nearly complete. I feel glad that people like Paul Krugman are around to constantly poke holes and demonstrate the lies and idiocy surrounding right-wing neo-liberal thinking. I only wish more people had listened to him. The three stars is because although very detailed, and containing a vast knowledge of economic catastrophes of roughly the past 30 years, it’s still quite dry. It acts more like a textbook sometimes than a work of political theory (which is probably what it was meant to roughly be :/). But it is still very erudite, and a great educational tool for understanding the mess we're in now. In conclusion, when reading Krugman's account of the myriad of economic recessions and crashes from the 80s onwards, finally ending in its tragic crescendo with the 2008/09 crash, never before have Marx's words about how under the constant insatiability of capitalism "All that is solid melts into air, all that is holy is profaned" seemed so apt.

  11. 4 out of 5

    Mark Valentine

    I read this because I wanted to hold an informed opinion about the recent financial crisis both to help me interpret many of the headlines that have appeared lately and also to help me understand just how bad it is--I mean, really, is this going to be the unraveling that will cause us to implode? Krugman clearly taught me well on both counts. Reading the initial chapters (about Japan's economic crisis in the late 80s and 90s, Argentina's in 2002, Thailand in the late 90s) I thought less benefici I read this because I wanted to hold an informed opinion about the recent financial crisis both to help me interpret many of the headlines that have appeared lately and also to help me understand just how bad it is--I mean, really, is this going to be the unraveling that will cause us to implode? Krugman clearly taught me well on both counts. Reading the initial chapters (about Japan's economic crisis in the late 80s and 90s, Argentina's in 2002, Thailand in the late 90s) I thought less beneficial until I saw how he referred to them in the later chapters. By the end of the book, I saw that his initial chapters were clearly needed for a full understanding of the what ails us. The last three chapters are worth the price of admission alone. Take note of some of these choice sentences: "I'm tempted to say that the crisis is like nothing we've ever seen before. But it might be more accurate to say that it's like everything we've seen before, all at once: a bursting real estate bubble comparable to what happened in Japan at the end of the 1980s; a wave of bank runs comparable to those of the early 1930s (albeit mainly involving the shadow banking system rather than conventional banks; a liquidity trap in the United States, again reminiscent of Japan; and, most recently, a disruption of international capital flows and a wave of currency crises all too reminiscent of what happened to Asia in the late 1990s" (p. 165-6). Most of the book deals with factual and detailed economical policy and since my background is in Liberal Arts, I was able to follow most of it gingerly even though it may be dispassionate reading. There are only a few times in the short book in which Krugman gives financial and moral advice. Here is one: "Nothing could be worse than failing to do what's necessary [to recapitalize the financial sector with stimulus money] out of fear that acting to save the financial system is somehow 'socialist'" (p. 186). Finally, literally, the last sentence of the book (how can it be a spoiler if there is no plot?): "Some people say that our economic problems are structural, with no quick cure available, but I believe that the only important structural obstacles to world prosperity are the obsolete doctrines that clutter the minds of men" (p. 191). I am glad I read this book.

  12. 5 out of 5

    Karen

    CLIFF-NOTES VERSION: Interesting and very readable, but left some questions unanswered. FULL REVIEW: This book was very readable. Paul Krugman does a great job providing simple, succinct, easy-to-understand explanations of economic ideas and also to-the-point, in-a-nutshell historical information. I haven't yet found anything of his a slog to read, which I do appreciate. His main thesis seems to be that economists don't know as much as they thought they did, and the profession needs to ditch the fa CLIFF-NOTES VERSION: Interesting and very readable, but left some questions unanswered. FULL REVIEW: This book was very readable. Paul Krugman does a great job providing simple, succinct, easy-to-understand explanations of economic ideas and also to-the-point, in-a-nutshell historical information. I haven't yet found anything of his a slog to read, which I do appreciate. His main thesis seems to be that economists don't know as much as they thought they did, and the profession needs to ditch the facile advice too many of its practitioners have been giving over the last 20-30 years and do a lot more thinking and researching. His biggest specific point seems to be that when nations open up their economies to global capital flows (as they have been advised by the IMF etc. to do), they are also exposing their economies to risks - first and foremost being the risk of self-fulfilling panics like the one that caused the Great Depression. He says the Latin American crisis that began in Mexico in 1994, the Japanese struggles that began in 1991, and the Asian crisis that began in 1997 foreshadowed the current global crisis and should all have served as warnings for the rest of us. He thinks we need to find a way to protect our economies from sudden massive capital flight, which for no obvious reason afflicted Argentina as well as Mexico in 1994-5 (Argentina had been doing well and acting responsibly). Such capital-flight events are much like bank runs, because they can devastate even a sound bank - or economy. He doesn't do that great a job tying Japan into that story. Krugman uses the story of a babysitting co-op, which was a kind of mini-economy, as an explanatory tool. But that story wasn't fully fleshed out, and left me with a burning question: WHY did the co-op have a recession? Why was the number of babysitting coupons fine for a while, but then somehow not fine anymore? Were some people accumulating them, causing others to have fewer? Or did everyone start wanting to have more coupons in reserve at the same time? And if so, then why? It seems to me that simply issuing more coupons may be only a temporary fix that holds the seeds of other problems down the line.

  13. 5 out of 5

    Daniel Solera

    Though I have a reasonable grasp of the current global financial crisis, I wanted to know a little more about its inner workings. After reading several articles by Paul Krugman, I decided to pick up his book, especially since it now has updates from the 2008 financial crisis. Krugman strikes a fine balance between simplifying global investment banking and unloading the economist jargon. In order to explain the basic characteristics of a recession (and several other market fluctuations) he uses t Though I have a reasonable grasp of the current global financial crisis, I wanted to know a little more about its inner workings. After reading several articles by Paul Krugman, I decided to pick up his book, especially since it now has updates from the 2008 financial crisis. Krugman strikes a fine balance between simplifying global investment banking and unloading the economist jargon. In order to explain the basic characteristics of a recession (and several other market fluctuations) he uses the parable of a babysitting co-op, where each family has coupons worth 1 hour of babysitting that they can earn, spend and save. The simple transactions between couples signify market activity and resources. Eventually, even this parable gets a bit involved, but serves its purpose well. Though I must admit that many of the book’s topics were over my head, I did come out with a better understanding of global banking. One particular point of interest concerned what Krugman calls the “Keynesian Compact”, an unwritten agreement between the public and the state, which says that the citizenry of a given nation will respect and practice capitalism as long as the government can keep the system running and able to withstand crises. It is with this understanding that Krugman wrote this book in the first place. He argues that the Great Depression gave the world a taste of financial catastrophe but also provided the history and macroeconomic theory to prevent future collapses. Despite that, there have been many brutal recessions that could have been avoided had policy-makers taken the proper steps. Krugman details the events that led to the Tequila crisis in Mexico of 1994, Japan’s Lost Decade, the Asian crash of the late 90’s and Argentina’s crisis of 2002. For good measure, he throws in a de-glorification of Alan Greenspan. Finally, he ties it all together with the Hydra that is our current financial crisis, one that combines calamity in housing, credit and currency. Although his attitude is cautious optimism, it is apparent that we’re not out of the woods yet. For anyone looking for a succinct breakdown of the current financial crisis, this book does the job.

  14. 5 out of 5

    Shira

    This book is brilliantly accessible. He first chastises economists for not expaining things clearly. Then, he uses the simple example of a babysitting coop to explain the business cycle. Without using the term Demurage, he cites the Keynesian and Gesellian idea of forced spending into the economy which increases circulation and ends the deflation cycle. But he expains it without using any of these terms. Brilliant. Too bad phd students are not allowed to do this in a thesis (Yes I saw one such This book is brilliantly accessible. He first chastises economists for not expaining things clearly. Then, he uses the simple example of a babysitting coop to explain the business cycle. Without using the term Demurage, he cites the Keynesian and Gesellian idea of forced spending into the economy which increases circulation and ends the deflation cycle. But he expains it without using any of these terms. Brilliant. Too bad phd students are not allowed to do this in a thesis (Yes I saw one such thesis, but I think it was sociology, not economics, nor economic social policy, which was my area.) I recall reading this in 2006 for my thesis, and wondering how my office-mate, an economics phd student, could know almost nothing about the history of economics. Now I know, sadly, that most economists seem to ignore history. Or brush it aside. Other authors mention a roughly 19 year boom-bust world economic cycle, but the cycle is there, and is not stable. Yet the warnings of Keynes and even Greenspan were ignored. The Asian crises had all the hallmarks of the Great Depression, and international reaction follows, it seems, the errors of the Depression. He warns "As in the Victorian era, capitalism is secure not only because of its successes-which, as we will see in a moment, have been very real-but because nobody has a plausible alternative. This situation will not last forever. Surely there will be other ideologies, other dreams; and they will emerge sooner rather than later if the current economic crisis persists and deepens." Some of those dreams will be utopian, and viable if we will it, but other ideologies may not be so utopian. Let's not "learn all the wrong lessons" again. Shira of The MEOW CC Blog, MEOW Date: 9 September, 12014 H.E. (Holocene/Human Era)

  15. 5 out of 5

    Julie Christine

    My hope is that a) this book is on the nightstand, desk, bathroom book caddy, and coffee table of every economic policy wonk this side of the Potomac (and the other side, too!) & that b) these wonks read it. Krugman, who wrote this book in 1999 and updated it during the 4th quarter of 2008, clearly and succinctly presents the multiple case studies, warning signs and missteps that led to our current economic crisis. From Mexico and Argentina fiscal failures in the 1980s and early 90s to the Japan My hope is that a) this book is on the nightstand, desk, bathroom book caddy, and coffee table of every economic policy wonk this side of the Potomac (and the other side, too!) & that b) these wonks read it. Krugman, who wrote this book in 1999 and updated it during the 4th quarter of 2008, clearly and succinctly presents the multiple case studies, warning signs and missteps that led to our current economic crisis. From Mexico and Argentina fiscal failures in the 1980s and early 90s to the Japanese recession and the Asian Tiger meltdown of the 90s to the tech stock and housing bubbles bursting in our own country, Krugman offers concrete insights as to the why and well-reasoned solutions that we could have and still can use to pull ourselves out of the quagmire. Any fan of Krugman's and anyone new to his philosophies will appreciate his lucid, layman, refreshing writing style. He does not present his facts and opinions with the doom and gloom of a partisan propagandist. He speads the blame and the praise equally and there is always a gentle sense of humor and a respect for the intelligence of his readers. Big hand clap for this Nobel-winning economist. I feel better knowing such calm and wise minds continue to speak loudly in defense of common sense and compassionate economics.

  16. 4 out of 5

    Tim Owens

    Two generations ago we solved the economics of the great depression of the 1930 19s and many economist thought it wouldn 19t happen again. Unfortunately we still don 19t learn from our mistakes. Paul Krugman uses a baby-sitting co-op as his economic model to explain how an economy can become imbalanced as to supply and demand. The US has been ignoring the demand side of this equation.He next explains recent economic crisis in Latin America and Asia, before addressing the panic of 1907 and the gr Two generations ago we solved the economics of the great depression of the 1930 19s and many economist thought it wouldn 19t happen again. Unfortunately we still don 19t learn from our mistakes. Paul Krugman uses a baby-sitting co-op as his economic model to explain how an economy can become imbalanced as to supply and demand. The US has been ignoring the demand side of this equation.He next explains recent economic crisis in Latin America and Asia, before addressing the panic of 1907 and the great depression of the 30 19s. His explanation of what has happened recently to cause our current recession is relative to these previous crises. How we get out of this mess isn 19t rocket science since we 19ve been here before, but unfortunately our economic ignorance isn 19t allowing our political will to go back to what we already know. Most fascinating to me was the strange resemblance the 1907 panic is to today 19s problem and the development of the shadow banking system. Anyone who has taken econ 101 or paid close attention in high school econ class won 19t be surprised by the solutions offered.

  17. 4 out of 5

    Peteralee1

    First, I'm not a huge Krugman fan to begin with, so keep that in mind. I tried to be as objective as possible when reading his book, however. Most of the book is just background of various financial crises of the past 100 years. Of course in hindsight, Krugman in all his wisdom can see how if the different parties in the crises had just done what he thinks they should have, everything would have turned out fine. I'm not an economist, so I can't really argue intelligently about his conclusions. M First, I'm not a huge Krugman fan to begin with, so keep that in mind. I tried to be as objective as possible when reading his book, however. Most of the book is just background of various financial crises of the past 100 years. Of course in hindsight, Krugman in all his wisdom can see how if the different parties in the crises had just done what he thinks they should have, everything would have turned out fine. I'm not an economist, so I can't really argue intelligently about his conclusions. Maybe he's right. But who cares, that's all in the past. When it comes to the current crisis, he comes out with a whole lot of nothing. Maybe I missed it, but there was no big "here's how we fix this". Maybe that wasn't his intent, but it sure felt like he was leading up to that sort of moment. So overall, I was left with a distinct feeling that there really wasn't a point to his book except for him to make money. Luckily I didn't help with that, someone else bought the copy I read.

  18. 5 out of 5

    Jun Chen

    This book re-ignited my interests in economics and put my college economics knowledge to shame - I had to stop from time to time and Google the terms & incidents. Keynesian vs. Austrian economics, etc. This book offers a broad review of global economic crises and government & central bank policies and solutions; and it asks some of the most important questions: how could this one single incident have this global repercussion, what we can really learn from them, etc. Paul Krugman discussed these This book re-ignited my interests in economics and put my college economics knowledge to shame - I had to stop from time to time and Google the terms & incidents. Keynesian vs. Austrian economics, etc. This book offers a broad review of global economic crises and government & central bank policies and solutions; and it asks some of the most important questions: how could this one single incident have this global repercussion, what we can really learn from them, etc. Paul Krugman discussed these supposedly boring and complicated phenomena in clear language and fun analogies ("Capitol Hill Baby Sitting Coop"!). I will definitely re-read the book again, and will research on the names & books mentioned are worth. A brilliant mind. I feel fortunate to be able to read this brain.

  19. 4 out of 5

    Mark Lawry

    Many people hate economics because economists tend to argue. This would be like listening to two doctors in the halls of a hospital debating treatment options and deciding that because doctors don't always agree on such things this means modern medicine is of no value. Surely this would be a very bad takeaway. I tend to be an ardent supply-side guy myself. Krugman is a demand-side guy and loves to mock guys like me. I get it. For this reasons many of my friends hate him and find him arrogant. Th Many people hate economics because economists tend to argue. This would be like listening to two doctors in the halls of a hospital debating treatment options and deciding that because doctors don't always agree on such things this means modern medicine is of no value. Surely this would be a very bad takeaway. I tend to be an ardent supply-side guy myself. Krugman is a demand-side guy and loves to mock guys like me. I get it. For this reasons many of my friends hate him and find him arrogant. That's ok, many people correctly think I'm arrogant. That being said, Krugman is a must read if you have any interest in economics or finance. One thing he points out in this book, he is not a socialist. Being a liberal does not make one a socialist. He mocks (as he does so many things) the very idea. He does not advocate the nationalization of industries. During the recent Iceland crisis banks were nationalized and then privatized as soon as possible. One of the ideas he argues in favor of here. From the perspective of the 2008 crisis. He stressed at the time of writing that any such solution should be temporary as in Iceland. If you were an investor during the last few generations and you want to know why you lost a lot of money in one crisis or another here's your book.

  20. 4 out of 5

    Peter

    Good book. A little light on specifics, but only because the scope was so big. Krugman is thinking about some of the collapses in several non-us economies during the 1980'0 and 1990's. He makes a case that serious turn downs are not a thing of the past and wonders why these down turns are handled without regard to what is known about economies suffering from lack of consumption. He makes it quite clear that the global financial economy (he is writing in 2000) is a difficult and complicated affai Good book. A little light on specifics, but only because the scope was so big. Krugman is thinking about some of the collapses in several non-us economies during the 1980'0 and 1990's. He makes a case that serious turn downs are not a thing of the past and wonders why these down turns are handled without regard to what is known about economies suffering from lack of consumption. He makes it quite clear that the global financial economy (he is writing in 2000) is a difficult and complicated affair to which crisis is and probably will be a regular visitor. He advocates trying lots of things and stepping away from too much orthodoxy. It all seems like good sense. I thought some of what he was saying about Japan was really quite interesting. I had never really understood how controlled inflation works to simulate spending in an economy hunkered down in a liquidity trap. I wonder if it would work? There were several things the book got me to thinking about: (i) I wonder when we will be more discriminating about the nature of the growth in an economic expansion. All growth is not the same. And (ii) How does one put into effect regulations that might restrict the incentives for investments for which moral hazard is an issue. Several thoughts occurred to me, all of which amount to cleaning out the investors involved, abandoning the usual notion of what it means to maintain conference in a market place and instead actually invest money equal to the loss at the top into the economy at the bottom. If investors, hedge funds and managers of our so called public companies were to be the big losers when a company fails, or when they try to manipulate markets that are not and probably cannot be protected by the law, and the workers in aggregate (which now means seems to refer to anyone earning less that 500,000 a year) would not be hurt, who knows what would happen? I certainly don't. But I am going to think about it some more.

  21. 4 out of 5

    mkk

    Readable, clarified a lot of doubts about many terms I’ve come across recently (especially on hedge funds and subprime housing loans. It’s coincidentally great timing since I have been binge-watching the show Billions and finally have an inkling of how Robert Axelrod is doing his thing lol. Also The Big Short because when I was watching that movie I was screeching “short?” “Subprime?” “AAA rating?” “CDOs???” Well now I know that too; that’s a bonus). Also 3 emphasised words: Keynesian monetary p Readable, clarified a lot of doubts about many terms I’ve come across recently (especially on hedge funds and subprime housing loans. It’s coincidentally great timing since I have been binge-watching the show Billions and finally have an inkling of how Robert Axelrod is doing his thing lol. Also The Big Short because when I was watching that movie I was screeching “short?” “Subprime?” “AAA rating?” “CDOs???” Well now I know that too; that’s a bonus). Also 3 emphasised words: Keynesian monetary policy. I see the frothing at the mouth, Mr.Paul..

  22. 5 out of 5

    Joe

    Krugman's rhetoric here is incisive; while many 'pop-economics' books resort to simply pointing out similarities between various situations and leaving the reader to form associations themselves (sometimes simply a result of superficial treatment - unfortunately more often a display of intellectual dishonesty), The Return of Depression Economics explains why various crises across the world happened, and illustrates how the same reasoning applies to the crisis that was then developing across the Krugman's rhetoric here is incisive; while many 'pop-economics' books resort to simply pointing out similarities between various situations and leaving the reader to form associations themselves (sometimes simply a result of superficial treatment - unfortunately more often a display of intellectual dishonesty), The Return of Depression Economics explains why various crises across the world happened, and illustrates how the same reasoning applies to the crisis that was then developing across the world (the 2008 financial crash and its global impact). Indeed, few other books targeted at the mainstream explain Keynesian ideas in a way which is so clear, and the active reader of this book will be able to at least have a crack at a mature critique of the fiscal conservativism adopted by many governments (and indeed, sometimes forced by the IMF) as a response to a collapse in demand. It must be said, however, that at times it's quite a dry read; although this is likely a necessary evil caused by trying to write in a way which is sufficiently explanatory, it does cause the eyes to gloss over from time to time. Indeed, being caught between the rock and a hard place of writing a bedtime story and a textbook, Krugman definitely exhibits more tendencies of the former, but at times, despite his stated goals of accessible economics (in The Accidental Theorist), those taking this as their first economics book will be sorely tempted to give up. However, perseverance is a virtue. This is really worth reading.

  23. 4 out of 5

    Riley

    This book seemed a little slapped together to capture the fame of Paul Krugman's 2008 Nobel Prize. Nonetheless, I think it offered a lot of insight. I was struck by the following passage, in which Krugman wrote about the decline of mainstream socialist thought. Though "socialism" remains the right's favorite bugbear, Krugman captures the reality in American life pretty succinctly, for better or for worse. "But who can now use the words of socialism with a straight face? As a member of the baby boo This book seemed a little slapped together to capture the fame of Paul Krugman's 2008 Nobel Prize. Nonetheless, I think it offered a lot of insight. I was struck by the following passage, in which Krugman wrote about the decline of mainstream socialist thought. Though "socialism" remains the right's favorite bugbear, Krugman captures the reality in American life pretty succinctly, for better or for worse. "But who can now use the words of socialism with a straight face? As a member of the baby boomer generation, I can remember when the idea of revolution, of brave men pushing history forward, had a certain glamour. Now it is a sick joke: after all the purges and gulags, Russia was as backward and corrupt as ever; after all the Great Leaps and Cultural Revolutions, China decided that making money is the highest good. There are still radical leftists out there, who stubbornly claim that true socialism has not yet been tried; and there are still moderate leftists, who claim with more justification that one can reject Marxist-Leninism without necessarily becoming a disciple of Milton Friedman. But the truth is that the heart has gone out of the opposition to capitalism."

  24. 5 out of 5

    Aviral

    Going by the title, I was hoping that this book would give an insight as to why the world is hit by recession and the cure to the financial mess that has been created in the name of free markets and capitalism. I was disappointed because this book is more of a history of the various recessions and depressions that have affected the world in the past 60 odd years. The author has explained their causes and how successful the measures to combat them were. But the book stops right there. What I found Going by the title, I was hoping that this book would give an insight as to why the world is hit by recession and the cure to the financial mess that has been created in the name of free markets and capitalism. I was disappointed because this book is more of a history of the various recessions and depressions that have affected the world in the past 60 odd years. The author has explained their causes and how successful the measures to combat them were. But the book stops right there. What I found missing was the deep analysis on how to address the issues that lead to economic destabilization. Also, he hardly talked numbers in the entire book. It's understandable that the book was intended to be a general read but without numbers and data, the story loses its edge and the argument fails to make an impact. I gave it 3 stars because I got to revise some of the macro economic concepts that I had learned in college. Also, I learned how precariously unstable the markets are. However, the solutions, even the long term ones were conspicuously absent. It's not that the book is bad, just that I was expecting better.

  25. 4 out of 5

    Nilesh

    The book is too superficial and almost without a coherent purpose. It spends a lot of time on long history but with too much description of event details and hardly any elaborate justification of the causes cited. Too many broad-brush reasons were given as if they were undisputed facts. Notwithstanding quite a few ridiculous errors, the efforts at drawing common elements in all crises were also woeful. As a result, the conclusions drawn were always likely to be faulty and they were. But much wor The book is too superficial and almost without a coherent purpose. It spends a lot of time on long history but with too much description of event details and hardly any elaborate justification of the causes cited. Too many broad-brush reasons were given as if they were undisputed facts. Notwithstanding quite a few ridiculous errors, the efforts at drawing common elements in all crises were also woeful. As a result, the conclusions drawn were always likely to be faulty and they were. But much worse, they were presented in the briefest possible bullet point forms and once again in the most general terms and again without almost any justifications, responses to likely criticisms or discussions of alternatives. In the end, this is a book written by a super-star. Perhaps in its aim to make it readable to general readers, the book ends up either treating its readers as too simpleton or "take it from me" prescriptive as a result of a very busy author.

  26. 5 out of 5

    Kim

    This is a tough book to "review" because it is downright painful to read yet necessary if you are trying to understand how liberals think. I don't mean it's painful because of the subject, but because it makes you want to bang your head against the wall. Krugman, the mouthpiece for liberal inflationary economics, is often touted for his "Nobel Prize" which is actually specific to international trade. What stands out when you read his books is that his "solutions" always include examples that didn This is a tough book to "review" because it is downright painful to read yet necessary if you are trying to understand how liberals think. I don't mean it's painful because of the subject, but because it makes you want to bang your head against the wall. Krugman, the mouthpiece for liberal inflationary economics, is often touted for his "Nobel Prize" which is actually specific to international trade. What stands out when you read his books is that his "solutions" always include examples that didn't quite work. Ya know, if a country or central bank followed his plan A, they forgot to follow up with plan B. If they followed A&B, they forgot C. What one realizes after a book or of Krugman's is that he is an academician who thinks you can mold and bend economic realities and never pay the price of falsehood. For some balance, be sure to read some good Austrians such as Rothbard or Schiff (not an economist but lays out economics in simple terms). And absolutely don't overlook some brilliant men of opposing positions: Thomas Sowell and Walter Williams.

  27. 5 out of 5

    يوسف زهدى

    A very nice read by a Nobel winner and skilled writer economist! The author takes readers through a hypothesis based analysis to reach a conclusion about return of depression economics, he analyze various economic crises around the world over the last half century, each crises with specific reasons and various outcomes - leading to the world's economic situation post 2008 financial crises, then delivering future outlook, its challenges as well as suggested methods to overcome predicted crises. The A very nice read by a Nobel winner and skilled writer economist! The author takes readers through a hypothesis based analysis to reach a conclusion about return of depression economics, he analyze various economic crises around the world over the last half century, each crises with specific reasons and various outcomes - leading to the world's economic situation post 2008 financial crises, then delivering future outlook, its challenges as well as suggested methods to overcome predicted crises. The best thing about the book is the mixture of the author knowledge and writing skills, this combination is rare in this field. he gave many examples which made the economic analysis simple for people with small economic background. The worst thing is that the author loves his country "USA" to the extent of blaming other countries - as institutions - for their mistakes which led to crises, while in USA he blames persons and not quit strongly, maybe cause he doesn't know names but he could had researched them.

  28. 5 out of 5

    Julier

    only 191 pages long. Economics explained in terms of a babysitting co-op makes this book an easier way to understand national economies. I finally made it through this book. I'm not used to concentrating so hard nowadays, and some of it was over my head.... I better understand how global economies are interrelated and how "....by the fall of 2008, the troubles of housing loans in places like Florida had destroyed the banking system of Iceland." The important role of "shadow banking"-- entities a only 191 pages long. Economics explained in terms of a babysitting co-op makes this book an easier way to understand national economies. I finally made it through this book. I'm not used to concentrating so hard nowadays, and some of it was over my head.... I better understand how global economies are interrelated and how "....by the fall of 2008, the troubles of housing loans in places like Florida had destroyed the banking system of Iceland." The important role of "shadow banking"-- entities acting likes banks but taking more risks without FDIC backing -- kind of ended up like a snake eating its own tail--it created the markets that it ruined that collapsed all over the world. I understand how what we should have done and should still be doing is increase government spending on building infrastructures (bridges, etc) thereby giving people more money to spend, bolstering the economy, as well as tangible, valuable results (ie, bridges). It is worth reading in 2015 even though it was written 15 years ago.

  29. 4 out of 5

    Jeff

    This is a good explanation for how a seemingly small number of mortgage failures turns into such a large crisis. The author describes several recessions and gives good explanations of the factors that lead to collapse of the system. My take on the authors message is that investors want better returns than they can get from regulated banks so they put money into other investments that have a history making very good returns. He describes the 'shadow bank' system very well. The author's conclusion This is a good explanation for how a seemingly small number of mortgage failures turns into such a large crisis. The author describes several recessions and gives good explanations of the factors that lead to collapse of the system. My take on the authors message is that investors want better returns than they can get from regulated banks so they put money into other investments that have a history making very good returns. He describes the 'shadow bank' system very well. The author's conclusion is that all systems that 'look like a bank' should be regulated. There is a lot of talk about systemic risk regulation and other oversight. I think it is dangerous to think that government can solve this problem. If history teaches us anything, it teaches us that some individuals will think they are smarter than the system and they will seek a way around the regulations that everyone else follows. The challenge is to make sure that when those people go down, they don't take the rest of us with them.

  30. 5 out of 5

    Eric

    Informative for the most part. I was somewhat put off by his repeated reference to the babysitting coop as a way to discuss debt, but I suppose it works. I kept waiting for him to excoriate Greenspan, but he never did - this seems short-sighted in light of how wrong Greenspan was for so long, and how right Krugman always claims himself to be. He never really, to my satisfaction, explained why the bundling of credit packages for the housing market had the impact that they did. Of course, this is Informative for the most part. I was somewhat put off by his repeated reference to the babysitting coop as a way to discuss debt, but I suppose it works. I kept waiting for him to excoriate Greenspan, but he never did - this seems short-sighted in light of how wrong Greenspan was for so long, and how right Krugman always claims himself to be. He never really, to my satisfaction, explained why the bundling of credit packages for the housing market had the impact that they did. Of course, this is probably why so many bankers and investors got snaggled up with them in the first place. It is not clear to me whether Krugman had much to do with titling the book - I suspect this is often the case with authors and their publishers. But with Krugman, you have to think that he would have been intimately involved with that decision - in which case I don't think his book quite made the case the title conveyed.

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