Sunday, February 21, 2010

REVIEW: Freefall

Freefall: America, Free Markets, And The Sinking Of The World Economy
Joseph Stiglitz
Allen Lane
Rs 499
Pp 400

The current global financial crisis carries a "made-in-America" label. In this forthright and incisive book, Nobel Laureate Joseph Stiglitz explains how America exported bad economics, bad policies, and bad behaviour to the rest of the world, only to cobble together a haphazard and ineffective response when the markets finally seized up. Drawing on his academic expertise, his years spent shaping policy in the Clinton administration and at the World Bank, and his more recent role as head of a UN commission charged with reforming the global financial system, Stiglitz outlines a way forward building on ideas that he has championed his entire career: restoring the balance between markets and government, addressing the inequalities of the global financial system, and demanding more good ideas (and less ideology) from economists. Freefall is an instant classic, combining an enthralling whodunit account of the current crisis with a bracing discussion of the broader economic issues at stake

A bland menu Financial Express
The three events of the past 20 years in the economic history of this globe are the rise of China to a $4.3-trillion economy, the halving of poverty in India changing the aggregate well being of a quarter of the world population and the meltdown of the year 2008, which brought USA to its knees, the richest nation the world has ever seen. While there have been others like the Asian crisis, the dotcom bubble and others, none have shaped global economic forces as big as these three have. Of these, the first two were clearly the product of the philosophy of economic liberalisation. The two countries in their own ways let a thousand flowers bloom and are still pretty much pushing ahead in the same direction.

The last one could have developed even in a relatively more closed economy, as it did in the savings and loan crisis of the 1980s in the USA, which is why the rest of the world did not notice it then. The difference this time was the open and massive global financial system that transmitted the virus, much like the Sars or the swine flu across the globe, and with far more vicious results.

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