|
Freefall: Free Markets and the Sinking of the Global Economy |  | Author: Joseph Stiglitz
Publisher: Penguin
List Price: £9.99
Buy New: £6.99
as of 10/9/2010 05:52 BST details
You Save: £3.00 (30%)
Rating:  10 reviews
Media: Paperback
Pages: 480
ISBN: 0141045124
EAN: 9780141045122
Publication Date: October 7, 2010 (In 27 Days)
Shipping: Eligible for FREE Super Saver Shipping
Availability: Not yet published
| | |
| Customer Reviews:
Showing reviews 1-5 of 10
 how the house of cards crashed September 7, 2010
Bernd Kotz (Essen, Germany)
Stiglitz call it the Great Recession. His aim is to give us some advices about the context of the aftermath of the recession in the world economy. The new constitution of our economy and the changes those are unbearable for the growth that lies ahead. He sees a new relationship between the market economy and the regulatory state. It is a mixture with nonmarket and nongovernmental institutions. His tradition is John Maynard Keynes. The core problem of the current crises is the risk taking behaviour in the banking world. Most of the time a CDO/CDS was the better investment than to lend a credit to a small to medium-sized businesses. In the first year after the great downturn the bank bonuses turn back to normal. Nothing had changed in the behaviour of the managers. I think the separation of money based businesses and economic based businesses leads us to the basic of the crises.
He fixes the problem right. It begins with the housing market. Low interest rates and a lax regulation fed the bubble. Mortgages increased and risky products got a triple a rating. The banks and security markets had failed in allocating capital in the highest and productive level. They fed a short term profit run which ends in a disaster. The separation from ownership and control leads to a principle agent problem. The short term focus and the securitization of assets lead to imperfect information in the markets. If you buy these products you can't see the assets that are backed behind it. The externalities from the banking sector spread around the world and comes to an end as the investors wants their money back. The real economy is in the focus. What will take us back to prosperity and global growth? He describes the step that takes us out of the recession. It is a flawed respond to his introduction. He described the past to long. The new allocating measures are to short discussed. Half of the book is about a brief history of the mortgage scam, the banking and incentive problems. We all have seen this in the books of the last two years. There is nothing new on the theme. In the second part of the book he responds to the economic order.
The heart of the Keynesian economics is the government spending programs and the labour market. He focuses on the Bush/Obama spending programs. The short sighted programs are a muddling through. In his view the government had spent to less to stimulate the economy and makes them strong for future growth. His reforming economics describes the change in the economic literature. Some hints are about the role of the state, the change in the leading role of the American economy and the uprising of the Asian economies. I think he had write more about these sections and how Keynesian economics can be applied in the current situation.
 Freefall September 7, 2010
D. M. Laing
If you are at all interested in how we got into this mess, then this book is well worth a read. Joseph Stiglitz puts his views in a clear and concise way. RecommendedFreefall: Free Markets and the Sinking of the Global Economy
Recommended July 30, 2010
Magellan
0 out of 1 found this review helpful
Well written, entertaining and very readable. Covers a wide range of issues, not in quite enough depth in some places to be fully convincing, but is always thought provoking.
 The Great Free Market Failure July 27, 2010
S Wood (Scotland)
1 out of 1 found this review helpful
Joseph Stiglitz has made the transition from being at the centre of one of the main institutions of the Washington Consensus, to a principled opponent of these very same institutions, and the current "free" market orthodoxy which still tenaciously holds it grip on economic thinking at the global and national level. In "Freefall" he looks at the current economic debacle, how it happened, its origins, the inadequate response, as well as speculating on what might get us out of this awful mess. His focus is almost wholly on the US experience with only occasional sideway glances at events in Europe and across the globe.
The narrative of the events, and processes, that led to the credit crunch are put before the reader in a concise and comprehensive manner, including the variety of complex financial innovations that contributed to the crash. Stiglitz then looks at the Bush and the Obama administrations, he is fairly scathing about the latter, in particular regarding his economic team, almost all of them have played a part in getting the US economy into its current state. Unsurprisingly he finds their responses to be inadequate, and primarily focused at preserving financial institutions that have failed, and a policy environment that has failed, at the expense of the majority of the US population (he calls the bank rescue program "The Great American Robbery"). Stiglitz appears to favour some sort of bankruptcy proceeding for banks, as well as legislating for a return to the separation of commercial banks from investment banks, amongst other measures.
Next Stiglitz looks at the mortgage industry, particularly the sub-prime segment of it. The details of the practice of this industry in the US (and even in the UK where 42% of mortgages applications are apparently still self-certified) is enough to make the jaw drop of even the most cynical of readers. This is followed with a more general appraisal of Americas position with rising public debt, it's relationship with China, and a still dysfunctional financial sector.
One of the more interesting chapters is Stiglitz look at the rise and failure of the free-market economics: one still awaits its fall or it being reduced to its proper place. Issues highlighted include persistent failure to deal with reality as opposed to the asinine assumptions it makes regarding it, the poor record it has regarding growth, and its failure to improve the circumstances of the American population (US GDP grew by 10% between 2000 and 2008, median household income fell by 4%!). The final chapter "Towards a New Society" steps back from the crisis and looks at how we can begin to move towards a society that works for the majority of the population, rather than one run in the interests of the few.
A stimulating read, that packs a surprising amount of narrative, analysis and thinking into 300 pages. One shortcoming is that despite being fully referenced the book omits an index. I assume this will be rectified when "Freefall" is published in paperback? A book that I would have no problems recommending to anyone interested in how the economic crisis came about, the resulting response, it's roots, as well as some more fundamental thinking on the whole debacle.
Excellent study of capitalism's crisis June 8, 2010
William Podmore (London United Kingdom)
In this brilliant book, the noted American economist Joseph Stiglitz explores why the crisis happened. Across the world, the crisis destroyed 50 million jobs and thrust 200 million people down into extreme poverty. From December 2007 to October 2009 the US economy lost 8 million jobs and unemployment rose to 10.2 per cent. Only 58.5 per cent of the working age population was in work. 2.3 million Americans lost their homes in 2008 alone. Bank executives' contracts were sacred; workers' wage contracts were negotiable - down.
Stiglitz has a chapter called The Great American Robbery. The top 50 hedge and private equity fund managers got an average $588 million each in 2007. Nine US banks, which made record losses of $100 billion, got $175 billion public money, and promptly paid out a record $33 billion in bonuses. As the Chair of one of the House of Representatives' Committees said, "the banks run the place ... they give three times more money than the next biggest group." Stiglitz notes that the UK's partial privatisation of pensions shifted 40 per cent of their value out of the pensions and into financiers' fees.
The US government, like the British, has lent money to the banks at very low interest rates. Stiglitz asks, "Why not use the government's ability to borrow at a low interest rate to provide less expensive credit to homeowners under stress?" Banks that are `too big to fail' gain from this access to cheaper capital because lenders know that taxpayers will pick up the losses. So these banks grow at the expense of their smaller rivals.
Public money went to the big banks, which didn't lend to small and medium businesses, but kept the money for themselves, in bonuses and dividends. Early in 2009, Hank Paulson, Secretary of the Treasury, ex-Goldman Sachs, gave AIG $180 billion, which then gave Goldman Sachs $13 billion. By contrast, US aid to Africa in 2008 was $6.5 billion.
In the USA, financial firms back the student loans programme, a Public-Private Partnership in which the taxpayer bears the risk and private firms get the gains. The US government issues the loans, so there is no risk of non-payment, but the lenders still charge interest rates as if there were such a risk. Thus the US government gave the private sector $80 billion of taxpayers' money over the last ten years, because using private firms cost that much more than if the government had lent the money itself.
Stiglitz shows that markets are not efficient and self-correcting; they do not allocate resources efficiently, especially not to innovation; and they redistribute wealth (from the poor to the rich), they do not create it. He points out that "Tax cuts encourage consumption, when the government should be promoting investment."
The US government has embraced finance capital, so there is "a predictable outcome - future crises; undue risk-taking at the public expense, no matter what the promise of a new regulatory regime; and greater inefficiency."
Showing reviews 1-5 of 10
|
|
|
CERTAIN CONTENT THAT APPEARS ON THIS SITE COMES FROM AMAZON EU S.à.r.l. THIS CONTENT IS PROVIDED ‘AS IS’ AND IS SUBJECT TO CHANGE OR REMOVAL AT ANY TIME. Telford Web Design | |
