Synopses & Reviews
Welcome to Argentina: by 2008 the United States had become the biggest international borrower in world history, with almost half of its 6.4 trillion dollar federal debt in foreign hands. The proportion of foreign loans to the size of the economy put the United States in league with Mexico, Pakistan, and other third-world debtor nations. The massive inflow of foreign funds financed the booms in housing prices and consumer spending that fueled the economy until the collapse of late 2008. The authors explore the political and economic roots of this crisis as well as its long-term effects. They explain the political strategies behind the Bush administration's policy of funding massive deficits with the foreign borrowing that fed the crisis. They see the continuing impact of our huge debt in a slow recovery ahead. Their clear, insightful, and comprehensive account will long be regarded as the standard on the crisis.
"In this important book, which deserves to be widely read and debated, political economists Chinn (The Economic Integration of Greater China) and Frieden (Global Capitalism) argue that the 2007-2009 world financial crisis was made in America, because the U.S. ignored advice about indebtedness that it had given to other countries over the years. The time has now come for Americans to accept the implications of this situation and discuss it with other governments. In Chinn and Frieden's view, it is not debt per se, but what the debt is used for, that is key. They provide historical evidence to support their claim that if debt is invested by the government and private industry to raise profitability, then it is not problematic. This has not been the case in the recent past. Instead debt was used to create a speculative bubble, which led to what the authors call the bankruptcy of the financial system. They make the powerful case that the trillion bail-out of the busted banks has been wasted. Absent a multi-trillion employment and investment program, there are very tough times ahead. (Sept.)" Publishers Weekly Copyright PWxyz, LLC. All rights reserved.
"Through pointed historical and comparative illustration, the authors show how financiers, politicians, and ideologues ushered in the crisis, and highlight the challenges we must overcome to avoid another lost decade." Nouriel Roubini, Stern School of Business, NYU
"An integrated and compelling account of where our debts came from - and why they won't go away any time soon. Chinn and Frieden combine the smartest kind of economics with the toughest kind of political science. Read this book for a somewhat disheartening but completely enlightening education - and then send 10 copies to the White House and Capitol Hill." Simon Johnson, MIT, co-author of 13 Bankers
"This wonderful book by two leading political economists identifies the roots of the recent financial crisis and the deep recession that followed, but more important, tells us what awaits us if we do not fix the underlying problems. It is political economy as it was meant to be - accessible and concise, even while deeply troubling." Raghuram G. Rajan, Booth School of Business, University of Chicago
"You will not read a better political-economic synthesis of America's financial crisis than this book." Dani Rodrik, author of The Globalization Paradox
"An intelligent, vivid, and accessible account of the first great crisis of the 21st century. Drawing on comparisons that will bother recalcitrant believers in American economic exceptionalism, the authors depict a gloomy panorama for the years to come unless policy makers get serious about fiscal reform. This is a must-read for the expert and the layman alike." Ernesto Zedillo, Director of the Yale Center for the Study of Globalization Former President of Mexico
Two acclaimed political economists explore the origins and long-term effects of the financial crisis in historical and comparative perspective.
About the Author
Menzie D. Chinn teaches at the University of Wisconsin, Madison, and coauthors the influential blog Econbrowser.Jeffry A. Frieden is Professor of Government at Harvard University. He specializes in the politics of international monetary and financial relations. Frieden is the author of Currency Politics: The Political Economy of Exchange Rate Politics and (with Menzie Chinn) of Lost Decades: The Making of America's Debt Crisis and the Long Recovery. His previous books include Global Capitalism: Its Fall and Rise in the Twentieth Century; Debt, Development, and Democracy: Modern Political Economy and Latin America, 1965-1985; and Banking on the World: The Politics of American International Finance. He is also the co-author or co-editor of many other books on related topics. His articles on the politics of international economic issues have appeared in a wide variety of scholarly and general interest publications.