*The Leaderless Economy: Why the World Economic System Fell Apart and How to Fix It. Peter Temin (Prof Emeritus of Economics, MIT) and David Vines (Prof of Economics, U of Oxford). Princeton NJ: Princeton U Press, Feb 2013, 320p, $29.95. International financial cooperation is the only solution to today’s global economic crisis. Temin and Vines argue that our current economic crisis is rivaled only by the Great Depression, examine the history of both, explain what went wrong and why, and demonstrate why international leadership is needed to restore prosperity and prevent future crises. While the financial collapse of the 1930s was an “end-of-regime crisis” in which the economic leader of the 19th century, Great Britain, found itself unable to stem international panic as countries abandoned the gold standard, today the regime that led the world economy in the 20th century—that of the United States—is ending. Deregulation and a lax attitude toward international monetary flows left the U.S. incapable of reining in an overleveraged financial sector and powerless to contain the 2008 financial panic. Fixed exchange rates in Europe and Asia have exacerbated the problem. The authors calls for renewed international leadership to bring today’s industrial nations back into financial balance—domestically and between each other. (ECONOMIC CRISIS * WORLD ECONOMY: LEADERLESS)
*Austerity: The History of a Dangerous Idea. Mark Blyth (Prof of Intl Political Economy, Brown U). NY: Oxford U Press, April 2013, 304p, $24.95. Conservatives today in both Europe and the United States have succeeded in casting government spending as reckless wastefulness that has made the economy worse; in contrast, they have advanced a policy of draconian budget cuts to solve the financial crisis. Austerit doesn't work; arguments for it are tenuous and the evidence thin. While it makes sense for any one state to try and cut its way to growth, it simply cannot work when all states try it simultaneously. Austerity policies worsened the Great Depression and created the conditions for seizures of power by the forces responsible for the Second World War: the Nazis and the Japanese military establishment. Rather than expanding growth, repeated revival of this dead economic idea has almost always led to low growth, along with greater inequality of wealth and income. (ECONOMIC CRISIS * AUSTERITY QUESTIONED * ECONOMY)
*The Economists’ Voice 2.0: The Financial Crisis, Health Care Reform, and More. Edited by Aaron S. Edlin (Prof of Economics, U of California, Berkeley) and Joseph. E. Stiglitz (Prof of Economic, Columbia U; former Chief Economist and Senior VP, World Bank). NY: Columbia U Press, June 2012, 256p, $22.99 (e-book). Gathers together the strongest 32 essays published in The Economists’ Voice – a nonpartisan online journal, by academics, economists, consultants, and policy makers. Topics include the economics of healthcare reform, the future of the health insurance industry, the value of the health insurance subsidies, effects of financial regulatory reform, possibilities for ratings reform, and the issue of limiting bankers’ pay. Also considers investment banking regulation, alternative strategies for addressing the next financial crisis, stability of pension security bonds, the value of a carbon tax, the unforeseen consequences of government debt, and more. (ECONOMIC CRISIS * HEALTHCARE REFORM: ECONOMICS * ECONOMY)
*Economics after the Crisis: Objectives and Means. Adair Turner (Chairman, UK Financial Services Authority; Visiting Prof, LSE). Cambridge MA: MIT Press, April 2011, 128p, $24.95. The crisis of 2008-9 should prompt a wide set of challenges to economic and political assumptions and to economic theory. The faults of theory and policy that led to the crisis resulted from simplistic beliefs about the objectives and means of economic activity. “The dominant discourse cast economic growth was defined as objective, markets as the universally applicable means of achieving it, and inequality as inevitable and necessary.” On the contrary, Turner claims that more rapid growth should not be the overriding objective for rich developed countries, inequality should concern us, and the confidence in markets is profoundly misplaced. (ECONOMY * ECONOMIC CRISIS * INEQUALITY)
*Guardians of Finance: Making Regulators Work for Us. James R. Barth (Eminent Scholar in Finance, Auburn U), Gerard Caprio, Jr. (Prof of Economics, Williams College), and Ross Levine (Prof of Economics, Brown U). Cambridge MA: MIT Press, March 2012, 256p, $27.95. The financial meltdown of 2007 to 2009 was no accident: “it was negligent homicide.” Senior regulatory officers around the world knew (or should have known) that their policies were destabilizing the global financial system, had years to process the evidence that risks were rising, and had the authority to change their policies. The current system is not designed to make policy choices on behalf of the people; it is virtually impossible for the public and its elected officials to obtain informed and impartial assessment of financial regulation and to hold regulators accountable. To counter this systemic failure, the authors call for establishing a “Sentinel,” whose sole power would be to demand information and to evaluate it from the perspective of the public interest, not that of the financial industry or politicians. (ECONOMIC CRISIS * FINANCIAL REGULATORS * REGULATORS QUESTIONED)
* The Restructuring of Capitalism in Our Time. William K. Tabb (Prof Emeritus of Economics, CUNY-Queens College). NY: Columbia U Press, Jan 2012, 352p, $35. The shift from an American economy based primarily on the production of goods and nonfinancial services to one characterized by financialization contributed to the recent financial crisis; it also prevents implementation of an effective regulatory regime. Unsustainable debt and excessive risk damaged the financial system. Once the markets stabilized after the economic crisis, the US enacted regulatory reforms that left the basic structures of finance unchanged. Discusses the likelihood of future crises, world systems and globalization, and the willful blind spots of mainstream finance theory. Proposes a social structure of accumulation that values economic justice over profit and establishes the parameters of an inclusive, sustainable growth model.
(ECONOMIC CRISIS * CAPITALISM RESTRUCTURED * ECONOMY RESTRUCTURED)
* The Deepening Crisis: Governance Challenges after Neoliberalism (Vol II, Possible Futures Series). Edited by Craig Calhoun (University Prof of Social Sciences, NYU; President, Social Science Research Council) and Georgi Derluguian (Assoc Prof of Intl Studies, Northwestern U). NY: NYU Press and SSRC, July 2011, 256p, $19pb (also e-book). Response to financial meltdown is entangled with basic challenges to global governance and issues of environment, global security, ethnicity, and nationalism. Examines changes in the relationships between the world’s richer and poorer countries, efforts to strengthen global institutions, and difficulties facing states trying to create stability for their citizens. (ECONOMIC CRISIS * WORLD FUTURES * GOVERNANCE)
* Aftermath: A New Global Economic Order? (Vol III, Possible Futures Series). Edited by Craig Calhoun (University Prof of Social Sciences, NYU; President, Social Science Research Council) and Georgi Derluguian (Assoc Prof of Intl Studies, Northwestern U). NY: NYU Press and SSRC, July 2011, 240p, $19pb (also e-book). The global financial crisis showed deep problems with mainstream economic predictions, as well as the vulnerability of the world’s richest countries and the enormous potential of some poorer ones. Is the growth of China, India, Brazil and others due to conventional economic guidelines, or strong state leadership and some protectionism? These issues are basic to the question of which countries will grow in coming decades, as well as likely conflicts over global trade policy, currency standards, and economic cooperation. [Note: 3-volume set for $50pb.]
(ECONOMIC CRISIS * WORLD ECONOMY)
* Corporate Governance Failures: The Role of Institutional Investors in the Global Financial Crisis. Edited by James P. Hawley, Shyam J. Kamath, and Andrew T. Williams (Profs of Economics and Business, Saint Mary’s College of California). Philadelphia: U of Pennsylvania Press, April 2011, 368p, $69.95. While much blame for the financial crisis has been targeted at the compensation arrangements that rewarded extreme risk-taking but did not punish failure, the performance of institutional investors has been largely unexamined. Shareholding organizations such as pensions and mutual funds hold considerable sway over the financial industry and exposed themselves and their clientele to extremely complex financial instruments. Describes the misdeeds and lapses of institutional investors leading up to the crisis, including detrimental action and inaction such as tolerating the “pursuit of alpha” culture, failure to monitor volatile investments, and ignorance of well-established corporate governance principles and best practices. Finally, shows how to mitigate future financial pitfalls.
(ECONOMIC CRISIS * CORPORATE GOVERNANCE * INSTITUTIONAL INVESTORS)
* Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America. Matt Taibbi (Rolling Stone). NY: Spiegel & Grau (Random House), Nov 2010, 262p, $26 (paper edition Aug 2011, 288p, $16pb). The financial crisis that exploded in 2008 isn’t past, but prologue—the coming out party for the network of looters who sit at the nexus of US political and economic power. The grafter class—the largest players in the financial industry and the politicians who do their bidding—has been growing in power for a generation, transferring wealth upward through increasingly complex financial mechanisms and political maneuvers. Chapters describe the hidden commodities bubble that transferred billions of dollars to Wall Street while creating global food shortages, how the Tea Party is being expertly manipulated by a small group of plutocrats, Alan Greenspan as “the biggest asshole in the Universe,” the little-known story of AIG’s securities-lending operation, infrastructure privatization, the Obama health care reform bill as a craven capitulation to Big Insurance, the scandalous lack of federal regulation of health insurers, and Goldman Sachs as the “vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” [NOTE: The style of this investigative journalism may offend some, but Taibbi may well have uncovered ugly truths that polite academics can’t or won’t imagine.]
(ECONOMIC CRISIS * CRIME/JUSTICE * FINANCIAL INDUSTRY EXCORIATED)
* Who Are the Criminals? The Politics of Crime Policy from the Age of Roosevelt to the Age of Reagan. John Hagan (Prof of Sociology and Law, Northwestern U). Princeton NJ: Princeton U Press, Nov 2010, 280p, $29.95. The politicization of crime in the 20th century transformed and distorted crime policymaking and led Americans to fear street crime too much and corporate crime too little. The Age of Roosevelt (1933-1973) focused on rehabilitation, corporate regulation, and social roots of crime; it was reversed by the Age of Reagan (1974-2008) that pursued harsh treatment of street crime, especially drug offenses, which disproportionately affect minorities and the poor and resulted in wholesale imprisonment. At the same time, “massive deregulation of the business provided new opportunities, incentives, and reasons for white-collar crime--and helped cause the 2008 financial crisis.”
(CRIME * ECONOMIC CRISIS * WHITE-COLLAR CRIME)
* The Squam Lake Report: Fixing the Financial System. Kenneth R. French (Prof of Finance, Dartmouth College), Robert J. Shiller (Prof of Economics, Yale U) and 13 others. Princeton NJ: Princeton U Press, July 2010, 168p, $19.95. In the fall of 2008, fifteen of the world’s leading economists representing the broadest spectrum of economic opinion, gathered at New Hampshire’s Squam Lake to map out a long-term plan for financial regulatory reform. Their report provides a unified and coherent voice for fixing the financial markets and addresses the divide between financial institutions and society by “sound and transparent prescriptions.” Looks at the regulatory framework for handling complex financial institutions, retirement savings, and credit default swaps; offers ideas for new financial instruments designed to recapitalize banks without burdening taxpayers; and calls for higher capital requirements as well as a systemic regulator who is part of the central bank.
(FINANCIAL SYSTEM REFORM * ECONOMIC CRISIS)
* Zombie Economics: How Dead Ideas Still Walk among Us. John Quiggin (Prof of Economics, U of Queensland, Australia). Princeton NJ: Princeton U Press, Oct 2010, 216p, $24.95pb. The recent financial crisis laid bare many of the assumptions behind market liberalism – the theory that market-based solutions are always best, regardless of the problem. Despite the crisis, members of the public, commentators, politicians, economists and even those in charge with cleaning up the mess still hold on to them. Explains how dead ideas such as “trickle-down economics” still walk among us, and why we must find a way to kill them once and for all. Looks ahead at what could replace market capitalism, arguing that a simple return to traditional Keynesian economics and the politics of the welfare state will not be enough to prevent future crisis. (ECONOMIC CRISIS * ZOMBIE ECONOMICS)
* The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity. Richard Florida (Director, Martin Prosperity Institute, U of Toronto). NY: Harper, May 2010/240p/$26.99. Urbanist author of The Rise of the Creative Class (2002) argues that we view long economic downturns in terms of the pain they cause, but these great crises are also opportunities to remake our economy and society. Identifies patterns that will drive the next Great Reset and reshape virtually every aspect of our lives, spurring a fresh era of growth and prosperity and defining a new geography of progress. Describes new consumption patterns, new assumptions about “ownership” less centered around houses and cars, new forms of infrastructure to speed movement of people and goods, and a radically changed economic landscape organized around megaregions. (ECONOMY * ECONOMIC CRISIS)
*Economic Policy Reforms 2010: Going for Growth. Organisation for Economic Co-operation and Development. Paris: OECD Publishing, March 2010/249p. Examines structural policy measures taken by governments in response to the economic crisis, evaluates their impacts on long-term economic growth, and identifies the most imperative reforms needed to strengthen recovery. Also assesses policy reforms (in education, product market regulation, agriculture, tax and benefits, healthcare and labor market) implemented in OECD countries in the last five years to boost employment and labor productivity. Finds that reforms are more incremental than radical in nature, and seldom address the thorniest issues. Three analytical chapters consider intergenerational social mobility, prudential regulation and competition in banking, and key policy changes and long-term prospects in Brazil, China, India, Indonesia, and South Africa. (ECONOMY * ECONOMIC CRISIS)
** Aftershock: The Next Economy and America’s Future. Robert B. Reich (Chancellor’s Prof of Public Policy, U of California-Berkeley). NY: Alfred A. Knopf, Sept 2010/174p/$25. Former US Secretary of Labor argues that the main cause of the Great Recession was not Wall Street, but the structural problem of increasing concentration of income and wealth at the top, and a middle class that is going deeply into debt. The last time when US wealth was so highly concentrated was in 1928, just before the Great Depression. Obama’s success in forestalling economic collapse reduced the urgency of the larger challenge, thus the underlying trend of the past 30 years will continue (where median incomes remain flat or decline), and “we are almost certainly in store for many years of high unemployment.” Proposes a “New Deal for the Middle Class” based on wage supplements, a carbon tax, higher taxes on the rich, a reemployment system rather than unemployment, wage insurance, school vouchers based on family income, college loans linked to subsequent earnings, Medicare for all, and all political contributions going through blind trusts. [Note: A different analysis of the Great Recession, laying the foundation for an extensive (but unlikely) redistribution plan.]
(ECONOMIC CRISIS * INEQUALITY * NEW DEAL FOR MIDDLE CLASS)
** From Crisis to Recovery: The Causes, Course, and Consequences of the Great Recession. Brian Keeley and Patrick Love (both OECD). OECD Insights (General Economics and Future Studies). Paris: Organisation for Economic Co-operation and Development, Sept 2010/144p/$19 (free PDF at www.oecd-ilibrary.org). “The worst of the crisis now looks to be over, but a swift return to strong growth appears unlikely, and employment will take several years to get back to pre-crisis levels.” High levels of public and private debt mean cutbacks and saving are likely. “The impact of the recession will continue to be felt for years to come.” Chapter discuss the impact on jobs and pensions, the push for new rules and standards (in financial markets, tax evasion, and business and economic ethics), rethinking economics, and the future as a “green opportunity” to pursue the OECD Green Growth Strategy. [See longer abstract as GFB Book of the Month for Oct 2010.]
(ECONOMIC CRISIS * GREEN GROWTH STRATEGY: OECD)
*After the Crash: The Future of Finance. Edited by Yasuyuki Fuchita (director, Nomura Institute of Capital Markets Research, Tokyo), Richard J. Herring (Prof of Banking, Wharton School, U of PA), and Robert E. Litan (senior fellow, Brookings Inst; vice president, Kaufmann Foundation). Washington, DC: Brookings Institution Press, July 2010, 175p, $26.95pb. Insights for financial practitioners, analysts, and policy-makers on probable changes in the financial services industry. Discusses regulation of executive pay to control risk taking, how stepped-up regulation will affect key parts of the industry, and what lies ahead for investment banks and hedge funds in the US and Japan.
(FINANCIAL SERVICES INDUSTRY * ECONOMIC CRISIS)
* CIGI’09: Towards a Global New Deal. Report of a Conference October 2-4, 2009. Manmohan Agarwal (Senior Visiting Fellow, CIGI) and Agata Antkiewicz (CIGI). Waterloo, Ontario: Centre for International Governance Innovation, Jan 2010/12p (download free from www.cigionline.org). The conference addressed the factors that caused the global financial crisis and the consequences, with four keynotes: Roberto Mangabeira Unger (Harvard U), Paul Martin (former Canada PM), Jagdish Bhagwati (Columbia U) calling for pressing ahead with the Doha Round, and Paul Krugman (Princeton U) calling for improved regulation and greater macro-coordination. Elements of a Global New Deal: 1) more transparency and tighter international rules; 2) closer multilateral monitoring of all systemically important countries; 3) reinvigorating the stalled Doha Round as vital to global economic recovery; 4) finding a balance between homogenization of many aspects of the global economy (which has brought fragility) and diversity; 5) recognizing the transition from the G8 to the G20 as the premier forum for international cooperation. (GLOBAL ECONOMY; ECONOMIC CRISIS; GLOBAL NEW DEAL)
* Crisis Economics: A Crash Course in the Future of Finance. Nouriel Roubini (Prof of Economics, NYU) and Stephen Mihm (Assoc Prof of History, U of Georgia). NY: Penguin Press, May 2010/368p/$27.95 (e-book $14.99; audio $39.95). Financial cataclysms are as old as capitalism, and have occurred regularly in the US over the past two centuries. Proposals “to strengthen the levees that surround our financial system”: 1) overhaul securitization, with far greater transparency and standardization; 2) compensate traders and bankers in a way that aligns their interests with those of shareholders; 3) impose comprehensive reforms on derivatives; 4) change the business model of ratings agencies; 5) break up certain institutions considered too big to fail; 6) resurrect the Glass-Steagall banking legislation repealed a decade ago; 7) impose regulation for firms of all sizes, and consolidate in the hands of fewer regulators with more power; 8) compensate regulators in a manner befitting their key role; 9) use central bank monetary and credit policy to tame speculative bubbles. (ECONOMIC CRISIS * FINANCIAL SYSTEM REFORM)
** Freefall: America, Free Markets, and the Sinking of the World Economy. Joseph E. Stiglitz (Prof of Economics, Columbia U). NY: W. W. Norton, Jan 2010/320p/$27.95. Nobel Prize winner and former World Bank VP explains how the US exported bad economics, bad policies, and bad behavior to the rest of the world, then created a haphazard and ineffective response when the markets finally seized up; outlines a way to restore balance between markets and government, addressing the inequalities of the global financial system and demanding more good ideas and less ideology from economists. See longer review under the Book of the Month. (GLOBAL ECONOMY * ECONOMICS)
* A Failure of Capitalism: The Crisis of ’08 and the Descent into Depression. Richard A. Posner (judge, US Court of Appeals; senior lecturer, U of Chicago Law School). Cambridge: Harvard UP, May 2009/346p/$23.95. Views the biggest economic crisis since the Great Depression as more than a mere recession, and explores reasons for the “almost universal failure to anticipate the financial crisis” (e.g.: lack of foresight of many economists, the blindness of experts to warning signs, lack of a mechanism to aggregate warning information, lack of contingency plans, etc.) (ECONOMY * FORESIGHT)
* The Fall of the House of Credit: What Went Wrong in Banking and What can be Done to Repair the Damage? Alistair Milne (Cass Business School, City U, London). Cambridge U Press, Sept 2009/352p/$27.99. Explains the complex world of modern banking, how the banks misused their ability to securitize loans and exposed themselves to exceptional risks, and the imperative of restoring collective confidence by collective action involving asset purchases, guarantees, and recapitalization; failure will result in a crippling tax burden for generations to come.
(FINANCIAL CRISIS * BANKING REFORM)
* The Two Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash. Charles R. Morris. NY: Public Affairs, Feb 2009/224p/$13.95pb. Paperback update of The Trillion Dollar Meltdown (March 2008/194p/$22.95) by a lawyer, former banker, and author of 10 books on economics, who worried about the “avalanche of asset writedowns that will rattle through much of 2008” and called for restoring effective oversight of the finance industry as “the very first priority”. (FINANCIAL CRISIS)
* The Crash of 2008 and What It Means: The New Paradigm for Financial Markets. George Soros (Chair, Soros Fund Management). NY: Public Affairs, April 2009/258p/$14.95pb. An extension of The New Paradigm for Financial Markets: The Credit Crisis of 2008 (May 2008/162p), on the double boom-bust processes of the housing bubble and the “super-bubble” involving credit expansion, globalized financial markets, and removal of financial regulations. Adds four new chapters, including a confession that “I significantly underestimated the severity of the financial crisis” and a proposed economic recovery program. (FINANCIAL CRISIS)
* Lessons of the Financial Crisis. Benn Steil (Director of International Economics, CFR). Council on Foreign Relations Press, 2009/52p/$10pb (dist. by Brookings). We are seeing a classic bust of a credit boom created by policies that increased the demand for debt to unsustainable levels; policies are needed that can better recognize and curtail an incipient credit boom and ensure that systemically important financial institutions can withstand its unwinding. (ECONOMY * FINANCIAL CRISIS)
* Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism. George A. Akerlof (Distinguished Prof of Economics, UC-Berkeley; 2001 Nobel Prize winner) and Robert J. Shiller (Prof of Economics, Yale U). Princeton UP, March 2009/248p/$24.95. The global financial crisis has made it painfully clear that powerful psychological forces are driving financial events worldwide and imperiling the wealth of nations today; an active government role in economic policymaking is needed to manage these animal spirits, and the authors propose “a bold new vision that will transform economics and restore prosperity.”
(ECONOMY * GLOBAL ECONOMY * FINANCIAL CRISIS)
* This Time Is Different: Eight Centuries of Financial Folly. Carmen M. Reinhart (Prof of Economics, U of Maryland) and Kenneth Rogoff (Prof of Public Policy, Harvard U). Princeton UP, Nov 2009/400p/$29.95. Throughout history, rich and poor countries alike have been lending, borrowing, crashing, and recovering from a wide range of financial crises, and each time the experts say “this time is different”—that the old rules no longer apply; notes that financial fallouts occur in clusters and strike with surprisingly consistent frequency, duration, and ferocity; short memories make it easy for crises to recur. (ECONOMY * FINANCIAL CRISIS)