The Return of Depression Economics (Penguin Business Library) - Hardcover

Krugman, Paul

Hardcover

ISBN 10: 0713993898 ISBN 13: 9780713993899

Publisher: Allen Lane, 1999

Synopsis

Surely the Great Depression couldn't happen again - or could it? One of the world's top economists gives us a sobering tour of the global economic crises of the last two years. Six Asian economies have experienced economic slumps; Russia, once military superpower, today economic midget, defaulted on its debt in 1998, driving Brazilian interest rates through the roof and terrifying the US bond market; and at Long-Term Capital Management, some of the world's brightest financiers thought they had the market licked only to find themselves in a jam with the makings of the over-leveraged positions that caused the 1929 crash. Paul Krugman recounts these events - pointing out that they raise questions for which economists may not have answers

About this title

Review:

What do baby-sitting co-ops and liquidity traps have in common? Lots if you're Paul Krugman. In The Return of Depression Economics, the MIT professor looks at the alarming string of recent financial crises that have plagued various economies around the globe, especially the ongoing Asian contagion, and sees an "eerie resemblance to the Great Depression." Instead of the "new world order" promised by the triumph of capitalism over socialism, "the world economy has turned out to be a much more dangerous place than we imagined."

With the help of the workings of a Washington D.C. babysitting co-op to explain the dynamics of recession and inflation, Krugman examines the remarkable emergence of Asia and the precursors to the current Asian mess--the Tequila crisis of the mid-90s that began in Mexico and Japan's fall in the early 90s into an extended economic malaise that continues even today. He then analyses the underlying reasons for the collapse of the Thai baht and other Asian currencies as well as the subsequent actions of the IMF and the murky role of hedge funds. In the end, Krugman sees the return of depression economics, which "means that for the first time in two generations, failures on the demand side of the economy--insufficient private spending to make use of the available productive capacity--have become the clear and present limitation on prosperity for a large part of the world." It's the same problem that was at the root of the 1930s depression. And while it took a world war to solve that problem, Krugman sees solutions that are far less dramatic but that do require a willingness to chuck obsolete doctrines and think about old problems in new ways.

Over the years Krugman has earned a well-deserved reputation for translating the econo-jargon that economists speak into something that anyone with an interest--not a PhD--can understand. The Return of Depression Economics is another timely testament to Krugman's ability to read and interpret the tea leaves of today's global economy. Highly recommended. --Harry C. Edwards, Amazon.com

Synopsis:

The ghosts of the 1930s are once again walking the earth. The 1931 crisis of Austria's largest bank, Credit Anstalt, which collapsed as a result of Capital Flight depleting its reserves, is all too familiar a scenario today. Brazil, Malaysia and Japan have all experienced similar crises, and the US and Europe are not immune. Economic policy reforms by western governments have taken us back to a regime with many of the virtues of pre-depression, free-market capitalism, but with some key vices, notably a vulnerability to instability and sustained economic slumps. As a result of these reforms, depression economics has now emerged as a real concern, and Krugman believes that sooner or later we will have to return to regulation of financial markets, limits on capital flows and a recognition that low inflation is less dangerous than price instability.

About this edition

• Publisher: Allen Lane
• Publication date: 1999
• ISBN 10: 0713993898
• ISBN 13: 9780713993899
• Binding: Hardcover
• Edition number: 1
• Number of pages: 192