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The Return of Depression Economics and the Crisis of 2008
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Sales rank 29,202
Customers rating (based on 110 reviews)
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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 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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| Publisher | W. W. Norton | | Release date | 12/2008 | | Availability | Usually ships in 24 hours | | Edition | Hardcover |
| | List price | $24.95 | | Our price | $16.47 (you save 33.99%) | | Used price | from $4.5 |
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A very worthwhile read for better understanding today's economy and how it got to be in its current state.
There is a lot of good history of economic thought in the recently rewritten book by Paul Krugman. As a part time professor of economics I highly recommend it.
Don't miss this one...
I have been a fan of Paul Krugman's articles for the New York Times for some time now, this is the first book of his that I have read. I wasn't disappointed.
Krugman's commentary on the events of the last 18 months made the book. While the explanations of Mexico, Asia, and Argentina were educational, his account of the failure of Bear, Lehman, AIG, Fannie and Freddie, and even (to some degree) the Bush administration read like thriller fiction. I came away smarter, and enjoyed the process to boot.
 What tells Krugman is always intersting.
Krugman talks about the opportunity for USA to superate cyclic crisis.
He asks himself if the economic question depends only by the law of supply and domand or something happens for the financial policy.
The auctor is one of better economists in the world and he prefers an idea to the other utilizing a big quantity of informations.
He is ready to tell us most important questions, from the international strategies to the housewife choices.
His capacity to read the minimal aspects in the market is equivalent to his influence in mass media.
 Sermonizing tone, lack of depth.
My main complaints are Krugan's sermonizing tone, overall lack of depth, and inconsistency in criticizing economics. It seems thrown together and unedited to be honest. His tone was that of an all-knowing economist who can't speak freely for the common man would not understand him, therefore he must dumb it down for us. As a result, I thought the book lacked depth and jumped around from topic to topic too much.
Also, the first paragraph of chapter 1, in my opinion, somewhat discredits economics and the prestigious Nobel prize in economics, which Krugman has attached to his name so frequently. He writes that in 2003 Robert Lucas, who won the Nobel Memorial Prize in Economics, gave a speech in which he declared it was time for macroeconomics to move on as the "central problem of depression-prevention has been solved, for all practical purposes." A page later he also says that Ben Bernanke (no Fed chairman) gave a speech in 2004 along similar lines. As two highly regarded economists at the top in their field, it's fair to assume they're probably representative of the majority of the field. As such, being so wrong is evidence that economists as a whole do not fully understand the limitations of their field and have not internalized historic events, despite any claims of expertise in that exact area (Bernanke claims to be an expert on the Great Depression), and lastly economists can get caught up in bubbles just as much as anyone else. Why should we listen now? That question wasn't answered and perhaps played an important role in my disliking of the book.
The last 1/8th of the book is actually about the recent crisis, which is more interesting. Overall, his tone coupled with my high expectations (after hearing Krigman many times of NPR) may have influenced my review more than anything else. Also, as is apparent from my review, the first few pages put me off as well. Krugman discredits top economists without differentiating himself from that group. Perhaps I would have liked it more if I had lesser or no expectations upon picking it up or if the first few pages were cut? For now, I've set the book aside and will return to it sometime in the future in hopes of seeing the book in a more positive light.
Down the Rabbit Hole
Although written initially in 1999, "The Return of Depression Economics" has been substantially re-written to take into account developments between 1999 and the new publication date ten years later. Much has changed in that decade.
Krugman describes his conclusion late in the book, which I have not read elsewhere but it makes perfect sense: the collapse of the credit markets in 2008 was almost entirely due to the catastrophic failure of the so-called "shadow banking system" -- the commercial paper market (the CDOs, the auction-rate and subprime mortgage-backed securities, etc.) -- and these instruments were not only largely unregulated but also not FDIC insured. That is why extraordinary efforts by the Fed to right the system -- unprecedentedly low Fed interbank rates, $700 billion in bailout funds, the closure or public takeover of many many banks -- has had so little effect. The failure stemmed from institutions outside the domain of the Federal Reserve, so the Fed has been essentially powerless to restart the system.
The solution seems clear to the reader, if not to Congress. Throughout this book Krugman describes the wild gyrations of boom-and-bust cycles, in the Latin American currency markets (1994-1996), in Asian foreign exchanges (1997-1998), the dot-com bubble (1998-2000), the housing bubble (2001-2008). What each of these roller coaster rides has in common is the multiplier effect, and consequent injection of instability, caused by unfettered speculators. Although Krugman does not come out and explicitly state this, it's evident that high-stakes gambling has turned world economic markets into unreliable, irrational, unpredictable and hugely-dangerous free-for-alls. Reinstatement of 1932's Glass-Steagall Act, and a brick wall between private speculators (commodity, currency and asset) and publicly-guaranteed financial instruments, must be the top priority to stabilize the financial markets.
Wall Street's playboys must be prevented from gaming the system for personal gain.
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