Free Textbooks Crisis Economics: A Crash Course in the Future of Finance By Nouriel Roubini –

In this myth busting book Nouriel Roubini shows that everything we think about economics is wrong Financial crises are not unpredictable black swans , but an inherent part of capitalism Only by remaking our financial systems to acknowledge this, can we get out of the mess we re in Will there be another recession, and if so what shape When will the next bubble occur What can we do about it Here Roubini gives the answers, and lists his commandments for the future

12 thoughts on “Crisis Economics: A Crash Course in the Future of Finance

  1. Diz Diz says:

    Roubini and Mihm s book is one of the best I have read on the current economic crisis Particularly lucid, comprehensive and insightful, it not only explains the causes and effects of the crisis, but also places it in an illuminating historical context The authors show that repeating crises are the normal state of affairs in capitalism and not the exceptional or black swan events that many pundits have suggested Subsequently, they go on to suggest ways in which the effects of these inevitable crises may be minimised before finally turning to consider the immediate future and the likelihood of their proposed mitigating measures actually being adopted.The book starts with an explanation of the current crisis and the events leading up to it The chapter is entitled The White Swan a deliberate reference to Nassim Nicholas Taleb s Black Swan hypothesis Far from being a one off black swan event, the current crisis mirrors those in years gone by Although, since the end of the Second World War, we may have been living through The Great Moderation , now we are actually seeing the return of business as usual the normal capitalist routine of boom slump and Crisis Economics.The next section looks at the Crisis Economists From John Stuart Mill, William Stanley Jevons and Karl Marx, the authors arrive at Keynes t he most important economist to emerge out of the Great Depression P47 In relation to Keynes, they then go on to briefly discuss Friedman and the Chicago School, Minsky, Schumpeter, Hayek and the Austrian School The authors believe that the best approach may be a synthesis of Keynes and Schumpeter Finally, they take a crucial point from Paul Samuelson A founder and codifier of the neoclassical school, he oversaw his profession s embrace of esoteric mathematical models as a way of describing timeless economic phenomena But when an interviewer innocently asked, What would you say to someone starting graduate studies in economics Samuelson gave an unexpected answer Well, he said, this is probably a change from what I would have said when I was younger Have a very healthy respect for the study of economic history, because that s the raw material out of which any of your conjectures or testings will come P59 In the following chapters, the authors present a detailed comparison of the development of the current situation with the slumps, recessions and depressions of the past It is absolutely clear from reading these that anyone who claims that the economy has reached a new form and the old rules no longer apply is seriously mistaken The only surprising thing is that anyone could have been taken in by such pronouncements I m reminded very much of Thomas Frank s excellent polemic One Market Under God Extreme Capitalism, Market Populism and the End of Economic Democracy.After the historical exposition, the authors go on to present a number of reforms or First Steps Chapter 8 They consider the bonus culture of Wall Street, the extremely obscure financial products that were concocted, the failure and moral ambiguities of the ratings agencies, the derivatives market and banking rules and the Basel agreements Within the terms of the system their proposals seem eminently sensible.From these immediate suggestions, they then move on to systemic radical remedies , looking at Enforcement and Coordination P215 , including taking control of the shadow banking industry , the reintroduction of some form of Glass Steagal Act introduced in the 1930s to keep commercial and investment banking separate but finally repealed in 1999 with the disastrous consequences that we have all seen , and a far active role for central banks in controlling and minimising the development of bubbles The authors are also very aware of the close links between some of those in the shadow banking industry and the US government we are by no means counseling sic a continuation of the high level revolving door that connected some of the biggest financial firms with the regulatory establishment in Washington Goldman Sachs is particularly infamous for this practice several CEOs of that firm have held senior positions in the U.S Government, while scores of other Goldman executives have held high level jobs too P221 Again, I m very much reminded of Thomas Frank this time of The Wrecking Crew.Moving out from these essentially national proposals, the authors consider the international ramifications of the crisis and the obvious need for supra national agreements to control the global economy, reform of the IMF and other global institutions But, at the same time, they note that even now, some are calling for a return to business as usual.Finally, they consider the outlook for both the immediate and longer term future It is not really a very happy picture The future really does depend on transnational cooperation and, quite frankly, that does not strike me as likely Whether the current slump is V, U or W shaped, whether Russia should be considered along with Brazil, India and China as a major developing country BIC BRIC BRICK P285 , the fate of the dollar as the world reserve currency, the possibility of countries defaulting on their debts the so called PI I GS Portugal, Italy Ireland , Greece and Spain , the predictable rise in the price of gold at the time of writing the book, it was at 1000 per ounce, at the time of writing this review, it stood at 1500 per ounce , whether inflation or deflation poses the greater risk these are all briefly considered Finally, in a nice reference toJoseph Stiglitz, they consider Globalization and Its Discontents P298 The current crisis is, they suggest, a huge opportunity for the introduction of changes that, although unlikely to eliminate the boom bust cycle, will significantly ameliorate its most destructive effects Whether this opportunity will be seized is a moot point.Overall then, this is a fascinating and highly readable account of the current economic crisis It is interesting to note that, although Roubini embraces an approach based on Keynes and Schumpeter, he is quoted and or referred to in books by Marxist writers likeChris HarmanandAlex Callinicos, as well as the former director of the LSE,Howard Davies Personally though, I believe that the Goldman Sachs Vampire Squid and the Kleptocracy have got far too firm a hold and we are likely to see the rise of a new form of feudalism We are so doomed.

  2. cspears cspears says:

    Brilliant book I took a couple of economics classes in university, and frankly found it like trying to read VCR programming directions This book, however said it all in a very readable format Short on jargon, long on descriptions of what happened to cause the mess Since he wrote the book that predicted the mess, and wasn t heeded, I doubt that his solutions will be heeded either Politicians love the funding from the money men too much, and won t do anything to jeopardise that What a shame.

  3. Alex Alex says:

    An excellent summary of the 2008 financial crisis, the government policy responses, and how this will affect economics and finance in the future Equally, the evidence of the volatility of capitalism is convincing, as well as the need to prepare for and mitigate crises My only criticism is that it does not relate this new doctrine of crisis economics to the renewal of Keynesian ideas in a definitive way, but a thrilling read none the less.

  4. RegularReader RegularReader says:

    Overall a very good book which outlines well the causes of the crisis and offers many compelling arguments for where the financial system should go from here including regulation, fiscal and, monetary policy My only slight grievance for the book is his clear dislike of bankers Not an unjustified dislike to hold but several sections are written in a subjective view rather than objective which I feel ruins how well written the book is overall.

  5. Customer Customer says:

    Great book.

  6. Tarek Tarek says:

    I really enjoyed reading this book I highly recommend it for anyone who wants to have a good understanding of the financial crisis.

  7. Customer Customer says:

    Great book.

  8. Mac McAleer Mac McAleer says:

    Crisis Economics This book could become a classicThis is an excellent book detailing the current economic crisis 2010 The combination of the authors journalistic and economic experience has produced a book which is both accessible and authoritative It tells a story that will make the reader in turn extremely interested, very angry and deeply depressed.The historical background on crises past is very useful This is a topic ignored during any boom and re discovered during any bust The small print of financial sales literature often states that Past performance is not a guide to future performance but over the long term financial history does seem to repeat itself.This book has three broad sections financial history, a description of the lead up to the recent bust and suggestions for a proper response to the crisis The mistakes of President Hoover at the start of the Great Depression have not been repeated but the current crisis is far from over In particular, the apparent containment of the current crisis may give a false sense of security, and the re regulation may be inadequate A new edition of this book will soon be required, with a section detailing how the current situation was handled.

  9. Kunde Kunde says:

    This book clearly explains how crisis are built A must read for people who want to understand what indicators should be looked at to perform an health check of economy.Written a few years back, its message is of highest relevance now that we are living in the longest expansionary cycle.It touches upon different economic theories, while describing how financial markets operate with their intrinsic strenght and weaknesses.

  10. Mark W. Mark W. says:

    Good read overall.Not too terribly insightful, a history lesson on the US crash and a warning for Canadians about the fore gone conclusion of a crashimminent crash

  11. Latour07 Latour07 says:

    Nouriel Roubini, professeur d conomie la New York University s Stern School, est l conomiste qui pr dit longtemps avant l implosion de la crise des subprimes L homme, de grande culture, est un esprit libre Associ pour la r daction de cet ouvrage avec Stephen Mihm, journaliste conomique, il s attache sensibiliser les citoyens d sireux de le lire, sur la n cessit d enteprendre des r formes politiques d ampleur inconnues encore.L histoire conomique nous a appris que les crises surviennent fr quemment Elle nous a r cemment d montr que la th orie du march autor gul tait un mensonge La finance, moins que tout, ne s autor gule pas Pire encore, depuis l intervention massive des banques centrales dans les pays occidentaux, pr teurs en dernier ressort, la finance oeuvre comme s il n y avait plus aucun risque pour elle Les Etats, en effet, ont d montr , par n cessit en injectant des capitaux dans l conomie, reprenant pour leurs comptes ceux des citoyens in fine grug s les dettes v rol es des CDO, CDS, et autres produits titris s avec malice, qu ils interviendraient toujours en dernier ressort.Nouriel Roubini d montre que les Etats ne sont plus aptes intervenir en dernier ressort devant les dettes qui les gangr nent Cela passe donc n cessairement par une r glementation internationale des syst mes bancaires, la promotion du Glass Steagall Act renforc s paration des activit s de la banque commerciale de celle dite d affaires , la r mun ration des traders cal e sur le long terme, imposant par exemple les produits m mes qu ils vendent, comme part de leurs bonus.Cette n cessaire r glementation doit tre globale, non seulement pour tout un pays, mais, tant donn e la globalisation, de tous les pays occidentaux.Inutile de pr ciser que nos gouvernements laissent faire la t n breuse politique du laisser faire , signe du n o lib ralisme de cette croyance fausse dans l autor gulation des march s , contribuant intensifier la prochaine crise qui viendra rapidement.Nous sommes en danger mortel de nos conomies, de nos valeurs de soci t , prenant aujourd hui d lib r ment la voie de la r gression sociale.Nouriel Roubini nous appelle la r sistance.Cet ouvrage est fondamental, d une rare densit , didactique, devant tre lu par tout citoyen d sireux de comprendre l importance du r le social qu il a jouer dans ce combat sans merci First it s essential for governments to adopt policies that reduce the frequency and virulence of asset booms and busts This will entail reforming the financial system and monetary system along the lines described earlier in this book But it will also require the construction of a much broader government safety net If workers have to be flexible enough to switch jobs and careers frequently, they will need government support to navigate the increasingly uncertain employment terrain This approach dubbed flexicurity will mean greater investments in education, job skills, and retraining a safety net of unemployment benefits and portable health care plans and pension benefits p 300 NB r f rence du livre traduit en fran aisEconomie de crise

  12. Michael Herms Michael Herms says:

    Dieses Buch ist das erste seiner Art Roubini beschreibt sehr bersichtlich ein paar Gr nde, warum Krisen entstehen War mal wieder ein Buch, das sich gelohnt hat zu lesen Allerdings nocht f r jeden Einsteiger gedacht.