Anybody read the book "This Time Is Different?" Yesterday on PBS news they were talking about it.

[raccoon]

This Time Is Different: Eight Centuries of Financial Folly

by Carmen M. Reinhart and Kenneth Rogoff

Hardcover: 512 pages
Publisher: Princeton University Press;
1St Edition edition (September 11, 2009)
ISBN-10: 0691142165

(This is the part of the book I'd really be interested in.)

"This Time Is Different" doesn't simply explain what went wrong in our most recent crisis. The book also provides a roadmap of how things are likely to pan out in the years to come. Real-estate bubbles invariably give way to banking crises. Losses in the financial sector are followed by the sharp deterioration in government finances amid bailouts and decreased tax revenue. The decline in economic output that follows the bust is sharp, but the recovery tends to be slow and protracted. The situation is especially dire when the crisis is geographically widespread. "

http://online.wsj.com/article/SB10001424052748703298004574459001609215112.html


From a reader's review:

"Reinhart and Rogoff's book provides a quantitative history of financial crises derived from over 600 years and 66 nations. The basic message from all their data is that there are remarkable similarities in today's financial crises with experience from other countries and nations. The common theme is that excessive debt accumulation by government, banks, corporations, or consumers often brings great risk. It makes government look like it is providing greater growth than it is, inflates housing and stock prices beyond sustainable levels, and makes banks seem more stable and profitable than they really are. Large-scale debt buildups make an economy vulnerable to crises of confidence - especially when the debt is short-term and needs to be refinanced (the usual case).

Reinhart and Rogoff go on to conclude that most of these booms end badly. Outcomes include sovereign defaults (government fails to meet payments on its debt), banking crises (heavy investment losses, banking panics), exchange rate crises (Asia, Europe, Latin America in the 1990s), high inflation (a de facto default), and combinations of the preceding (1930s, today).

What did the authors learn from their data digging? Severe financial crises share three characteristics: 1)Declines in real housing prices average 35%, stretched out over six years, while equity prices fall an average 56% over 3.5 years. 2)The unemployment rate rises an average of 7 percentage points during the down phase (average length = four years). Output falls more than 9% over a two-year period. 3)Government debt tends to explode, an average 86% in real terms. The biggest driver of this debt explosion is the collapse in tax revenues; counter-cyclical fiscal policy efforts also contribute, as well as spiking interest rates. "

http://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691142165

[SheilaT]

1. Thanks for reminding me.

I just went to my local library's website and put it on reserve. There are three people ahead of me for that book.

[proudlib8134]

2. same here