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Crisis Economics

A Crash Course in the Future of Finance

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1 of 1 copy available
1 of 1 copy available
This myth shattering book reveals the methods Nouriel Roubini used to foretell the current crisis before other economists saw it coming and shows how those methods can help us make sense of the present and prepare for the future.
Renowned economist Nouriel Roubini electrified his profession and the larger financial community by predicting the current crisis well in advance of anyone else. Unlike most in his profession who treat economic disasters as freakish once-in-­a-lifetime events without clear cause, Roubini, after decades of careful research around the world, realized that they were both probable and predictable. Armed with an unconventional blend of historical analysis and global economics, Roubini has forced politicians, policy makers, investors, and market watchers to face a long-neglected truth: financial systems are inherently fragile and prone to collapse.
Drawing on the parallels from many countries and centuries, Nouriel Roubini and Stephen Mihm, a professor of economic history and a New York Times Magazine writer, show that financial cataclysms are as old and as ubiquitous as capitalism itself. The last two decades alone have witnessed comparable crises in countries as diverse as Mexico, Thailand, Brazil, Pakistan, and Argentina. All of these crises-not to mention the more sweeping cataclysms such as the Great Depression-have much in common with the current downturn. Bringing lessons of earlier episodes to bear on our present predicament, Roubini and Mihm show how we can recognize and grapple with the inherent instability of the global financial system, understand its pressure points, learn from previous episodes of "irrational exuberance," pinpoint the course of global contagion, and plan for our immediate future. Perhaps most important, the authors-considering theories, statistics, and mathematical models with the skepticism that recent history warrants—explain how the world's economy can get out of the mess we're in, and stay out.
In Roubini's shadow, economists and investors are increasingly realizing that they can no longer afford to consider crises the black swans of financial history. A vital and timeless book, Crisis Economics proves calamities to be not only predictable but also preventable and, with the right medicine, curable.
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    • Publisher's Weekly

      June 21, 2010
      Roubini (Bailouts or Bail-ins), a professor of economics at NYU, was greeted with skepticism when he warned a 2006 meeting of the IMF that a deep recession was imminent. Along with economics historian Mihm, (A Nation of Counterfeiters) Roubini provides an in-depth analysis of the role of crises in capitalist economies from a historical perspective. With thumbnail sketches of nineteenth and twentieth century economic thought from Smith, Keynes, and others, they provide a context for understanding financial markets and the ways in which bankers and politicians relate to them. The authors also offer a theoretical context for understanding the current economic crisis and for using it as "an object lesson... , prevent them, weather them, and clean up after them." Dismissing the "quaint beliefs" that markets are "self-regulating," they take issue with the simplistic populist assumption that the present crisis was caused by greed or something "as inconsequential as subprime mortgages." They blame Alan Greenspan's refusal to use the power of the Fed to dampen unbridled speculation, choosing instead to pump "vast quantities of easy money into the economy and it there for too long." This will be a useful guide for readers attempting to get a handle on the present crisis.

    • Kirkus

      April 15, 2010
      Two professors explain how we got into the current economic mess and offer a prescription for the way out.

      Roubini (Economics/New York Univ.; co-author, New International Financial Architecture, 2006, etc.) and Mihm (History/Univ. of Georgia; A Nation of Counterfeiters: Capitalists, Con Men, and the Making of the United States, 2007, etc.) define crisis economics as"the study of how and why markets fail." The origins of the current upheaval, they contend, are deeply structural—far more severe than simply a housing bubble and the securitization of bad loans—and the storms will persist. They preface their proposed remedies with a whirlwind tour of past crises, a survey of economic thinkers who offer insights into why markets collapse, an analysis of how today's unstable moment compares with past market traumas and a look at the special dangers posed by our integrated global economy. Critiquing the unprecedented emergency measures taken recently to right the economic ship, they warn of the unintended consequences likely to flow from hasty decisions made under extreme pressure. We should use this moment of relative calm, they argue, to institute necessary changes. These range from the fundamental—reform of Wall Street's compensation system, the securitization process and private ratings agencies, and a crackdown on derivatives and bank supervision—to the radical—thoroughly rethinking the nature and composition of regulatory agencies, tackling the problem of financial institutions currently deemed"too big to fail" and using the government's tools to discourage predictable and disastrous economic bubbles. Notwithstanding their argument's scholarly scaffolding, Roubini and Mihm manage a smooth translation of the dismal science. Their challenging yet accessible narrative will reward general readers, many of whom are stunned by recent developments and suddenly seized with questions about how our economy works—and doesn't.

      An impressive, timely argument on behalf of transparency and stability for a financial system conspicuously lacking both.

      (COPYRIGHT (2010) KIRKUS REVIEWS/NIELSEN BUSINESS MEDIA, INC. ALL RIGHTS RESERVED.)

    • Library Journal

      July 1, 2010
      Roubini (economics, New York Univ.), who famously anticipated the 2007–09 financial crisis, has worked quickly to produce a textual autopsy, prelude, and discussion of the consequences. In collaboration with Mihm (history, Univ. of Georgia), Roubini explains the role of ratings agencies, shadow-banking institutions, legislators, regulators, and foreign and domestic investors leading up to the financial crisis. The authors illuminate the murky subject of derivatives, which helped bring the finance world to its knees, although at times their explanations seem long and redundant. The strength of the book is in depicting the crisis as not an anomaly but rather one of many historical financial crises sharing similar origins and resolutions. The authors are most lucid in the chapters discussing history and outlook, and Roubini's forecasting notoriety adds weight to the predictions and remedies proposed. VERDICTThose looking for a simple explanation of the financial crisis should pass on this book, but readers interested in details will learn a great deal about not only how the crisis formed but also how the financial system should be developed and global financial stability enhanced going forward.—Jekabs Bikis, Dallas Baptist Univ.

      Copyright 2010 Library Journal, LLC Used with permission.

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