The Escape from Balance Sheet Recession and the QE Trap: A Hazardous Road for the World Economy - Hardcover

Koo, Richard C.

Hardcover

ISBN 10: 1119028124 ISBN 13: 9781119028123

Publisher: Wiley, 2014

Synopsis

Compare global experiences during the balance sheet recession and find out what is needed for a full recovery

The Escape from Balance Sheet Recession and the QE Trap details the many hidden dangers remaining as the world slowly recovers from the balance sheet recession of 2008. Author and leading economist Richard Koo explains the unique political and economic pitfalls that stand in the way of recovery from this rare type of recession that was largely overlooked by economists. Koo anticipated the current predicament in the West long before others and issued warnings in his previous books: Balance Sheet Recession and The Holy Grail of Macroeconomics. This new book illustrates how history is repeating itself in Europe while the United States, which learnt from the Japanese experience, is doing better by avoiding the fiscal cliff. However, because of the liberal dosage of quantitative easing already implemented, the United States, the United Kingdom, and Japan may face a treacherous path to normalcy in what Koo calls the QE Trap. He argues that it is necessary to understand balance sheet recession in order to resolve the Eurozone crisis, particularly the competitiveness problems. Koo issues warnings against those who are too ready to argue for structural reforms when the problems are actually with balance sheets. He re-examines Japan's two decades of experiences with this rare recession and offers an insider view on the Abenomics. On China, readers will gain a very different historical perspective as Koo argues that western commentators have forgotten their own history when they talk about the re-balancing of the Chinese economy.

• Learn from Japan which experienced the same predicament afflicting the West fifteen years earlier
• Discover how unwinding of quantitative easing will affect the United States, the United Kingdom, Japan, as well as the emerging world
• Examine solutions to the Eurozone problems caused by two balance sheet recessions eight years apart
• Gain insight into China's problems from the West's own experiences with urbanisation

Koo, who developed the concept of balance sheet recession based on Japan's experience, took the revolution in macroeconomics started by John Maynard Keynes in 1936 to a new height. The Escape from Balance Sheet Recession and the QE Trap offers the world cure for balance sheet recession.

About this title

About the Author

RICHARD C. KOO is the Chief Economist of Nomura Research Institute, a research arm of Nomura Securities, the leading securities house in Japan. Best known for developing the concept of balance sheet recession, which is now used widely around the world, he has also advised successive prime ministers on how best to deal with Japan's economic and banking problems.

Consistently voted as one of the most reliable economists by Japanese market participants for over a decade, he was a Doctoral Fellow of the Board of Governors of the Federal Reserve System and an economist with the Federal Reserve Bank of New York prior to joining Nomura.

From the Back Cover

When noted economist Richard Koo's The Holy Grail of Macro-economics was published in 2008, it served as a wake-up call to Americans and Europeans about the impending balance sheet recessions. In his next-step resource, The Escape from Balance Sheet Recession and the QE Trap: A Hazardous Road for the World Economy, Koo issues a warning about the unique political and economic pitfalls that stand in the way of recovery from this rare type of recession.

The Escape examines the similarities between Japan in the past and the West today and presents the basic mechanics of balance sheet recessions. In this book, the author highlights the recent developments in the global economy and contends that the U.S. policy makers who understood the dangers of balance sheet recession steered the country away from the fiscal cliff, which is why it is doing better than Europe. However, the U.S., together with the U.K. and Japan could still face a major challenge in unwinding the quantitative easing (QE), the problematic policy byproduct of a balance sheet recession, in what Koo calls the "QE trap."

This book also examines the influence of "Abenomics" (the economic policy of the Abe administration in Japan). It offers a detailed explanation of why this policy has great potential, and if properly leveraged Japan should be able to put the long balance sheet recession and its after-effects behind it for good. The Escape also contends that the European policy makers remain unaware of the balance sheet recession concept and its dire implications. As a result, they are repeating every mistake Japan made during the last two decades including conflating balance sheet problems with structural problems. To remedy this ominous situation, Koo outlines a practical solution to the Euro problem.

On China, readers will gain a different historical perspective as Koo argues that western commentators have forgotten their own history when they talk about rebalancing of the Chinese economy.

Richard Koo's warnings about the balance sheet recession were prescient in forecasting the 2008 economic collapse and the slow recovery thereafter. Now, The Escape offers Western nations an opportunity to develop a clear understanding of the economic problems they face today and details a solution for overcoming their predicament in order to return to economic normalcy.

From the Inside Flap

When noted economist Richard Koo's The Holy Grail of Macro-economics was published in 2008, it served as a wake-up call to Americans and Europeans about the impending balance sheet recessions. In his next-step resource, The Escape from Balance Sheet Recession and the QE Trap: A Hazardous Road for the World Economy, Koo issues a warning about the unique political and economic pitfalls that stand in the way of recovery from this rare type of recession.

The Escape examines the similarities between Japan in the past and the West today and presents the basic mechanics of balance sheet recessions. In this book, the author highlights the recent developments in the global economy and contends that the U.S. policy makers who understood the dangers of balance sheet recession steered the country away from the fiscal cliff, which is why it is doing better than Europe. However, the U.S., together with the U.K. and Japan could still face a major challenge in unwinding the quantitative easing (QE), the problematic policy byproduct of a balance sheet recession, in what Koo calls the "QE trap."

This book also examines the influence of "Abenomics" (the economic policy of the Abe administration in Japan). It offers a detailed explanation of why this policy has great potential, and if properly leveraged Japan should be able to put the long balance sheet recession and its after-effects behind it for good. The Escape also contends that the European policy makers remain unaware of the balance sheet recession concept and its dire implications. As a result, they are repeating every mistake Japan made during the last two decades including conflating balance sheet problems with structural problems. To remedy this ominous situation, Koo outlines a practical solution to the Euro problem.

On China, readers will gain a different historical perspective as Koo argues that western commentators have forgotten their own history when they talk about rebalancing of the Chinese economy.

Richard Koo's warnings about the balance sheet recession were prescient in forecasting the 2008 economic collapse and the slow recovery thereafter. Now, The Escape offers Western nations an opportunity to develop a clear understanding of the economic problems they face today and details a solution for overcoming their predicament in order to return to economic normalcy.

Edition details

• Publisher: Wiley
• Publication date: 2014
• Language: English
• ISBN 10: 1119028124
• ISBN 13: 9781119028123
• Binding: Hardcover
• Edition number: 1
• Number of pages: 320