epub Lords of Finance: 1929, The Great Depression, and the Bankers who Broke the World – Schematicwiringdiagram.co

Exclusive Liaquat Ahamed on the Economic ClimateIn December , the great economist Maynard Keynes published an article in which he described the world as living in the shadows of one of the greatest economic catastrophes in modern history The world was thenmonths into what would become the Great Depression The stock market was down about %, profits had fallen in half and unemployed had climbed from % to about % If you take our present situation,months into the current recession, we re about at the same place The stock market is downtopercent, profits are downpercent, unemployment is up from % to over % Over the nextmonths between Januaryand Julythe bottom fell out of the world economy It did so because the authorities applied the wrong medicine to what was a very sick economy They let the banking system go under, they tried to cut the budget deficit by curbing government expenditure and raising taxes, they refused to assist the European banking system, and they even raised interest rates It was no wonder the global economy crumbled Luckily with the benefit of those lessons, we now know what not to do This time the authorities are applying the right medicine they have cut interest rates to zero and are keeping them there, they have saved the banking system from collapse and they have introduced the largest stimulus package in history And yet I cannot help worrying that the world economy may yet spiral downwards There are two areas in particular that keep me up at night The first is the US banking system Back in the fall, the authorities managed to prevent a financial meltdown People are not pulling money out of banks anyin fact, they are putting money in The problem is that as a consequence of past bad loans, the banking system has lost a good part of its capital There is no way that the economy can recover unless the banking system is recapitalized While there are many technical issues about the best way to do this, most experts agree that it will not be done without a massive injection of public money, possibly as much astrillion from you and me, the taxpayer At the moment tax payers are so furious at the irresponsibility of the bankers who got us into this mess that they are in no mood to support yetmoney to bail out banks It is going to take an extraordinary act of political leadership to persuade the American public that unfortunatelymoney is necessary to solve this crisis The second area that keeps me up at night is Europe During the real estate bubble years, thecountries of Eastern Europe that were once part of the Soviet empire had their own bubble They now owe a gigantictrillion dollars, much of which they wont be able to pay The burden will have to fall on the tax payers of Western Europe, especially Germany and France In the US we at least have the national cohesion and the political machinery to get New Yorkers and Midwesterners to pay for the mistakes of Californian and Floridian homeowners or to bail out a bank based in North Carolina There is no such mechanism in Europe It is going to require political leadership of the highest order from the leaders of Germany and France to persuade their thrifty and prudent taxpayers to bail out foolhardy Austrian banks or Hungarian homeowners The Great Depression was largely caused by a failure of intellectual willthe men in charge simply did not understand how the economy worked The risk this time round is that a failure of political will leads us into an economic cataclysmAlmost all critics praised Lords of Finance for its command of economic history and engaging, lucid prose Ahamed, noted the New York Times, illuminates wise parallels between the misplaced confidence that spawned the global depression in the s and the illusory calculations of risk that led to the current financial crisis His compelling biographies also personalize economic history While critics disagreed about whether lay readers will, in a century s time, care about Norman, Moreau, and Schact, the only negative words came from the Wall Street Journal, which criticized Lords of Finance for an imprecise understanding of the gold standard Harrumphing about the gold standard, Mr Ahamed reminds me of the fellow who condemned painting because he had no use for Andy WarholCopyrightBookmarks Publishing LLC