Fixing Global Finance - Softcover

Martin Wolf

Softcover

ISBN 10: 0300163932 ISBN 13: 9780300163933

Publisher: Yale University Press, 2010

Synopsis

The globalisation of finance should have brought substantial benefits. In practice it brought a series of devastating currency and banking crises in the 1980 and 1990s, particularly in the developing world. The failure of advanced countries and of the IMF to rescue the damaged economies of Asia, Russia or Brazil taught those countries, and the emerging Chinese giant, an overwhelming lesson: never again. Emerging economies ceased importing capital, but by keeping their exchange rates down, running huge current account surpluses, recycling capital inflows and accumulating enormous foreign currency reserves, they began to export it on a vast scale. Since several advanced countries also ran large current account surpluses, to which the oil exporters added their own massive contributions, the US emerged as the spender and borrower of last resort. But as its external deficit exploded, so did the domestic borrowing of US households, stimulated by rising house prices. The result was the subprime mortage crisis of 2007. In this expanded paperback edition. Martin Wolf includes a substantial new chapter on the global banking crisis of 2008-9 which has seen the argument of this book becoming the conventional wisdom among G20 policymakers. Only by tackling imbalances in the international financial system is there a chance of global financial stability.

About this title

About the Author:

Martin Wolf is a leading economic and financial journalist. Since 1996 he has been chief economics commentator of the Financial Times, having been chief economics leader writer from 1987-96. He is the author of the bestselling Why Globalization Works (2004), also published by Yale University Press.

From Publishers Weekly:

In his latest, author and economics journalist Wolf (Why Globalization Works) pronounces the current, "nearly inevitable" global economic crisis the product of a "perfect storm" of global macroeconomic imbalances: the scale of net borrowing by the U.S. and the lack of corporate demand for outside funding, exacerbated by aggressive monetary easing, consequent financial excess, and the housing bubble. Wolf's writing is hardly popular economics, requiring some work to understand and absorb, but it bridges a gap in economic understanding not yet addressed by Congressional subcommittees or the media, whose only suspects thus far have been Republican free market policy and Wall Street greed. The primary problem, argues Wolf, is global reliance on the United States as the borrower of last resort. Whether Wolf is correct is another question-determining that would require putting his suggested policies into action. Domestic financial housecleaning aside, Wolf's plan includes countries like China finding domestic uses for their enormous account surpluses and emerging countries creating first-world financial systems that complement but don't depend upon global financial markets, goals requiring significant international cooperation. Heavy but rewarding, Wolf's analysis fills in a lot of blanks for those seeking to understand the new U.S. recession in a global context.
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About this edition

• Publisher: Yale University Press
• Publication date: 2010
• ISBN 10: 0300163932
• ISBN 13: 9780300163933
• Binding: Paperback
• Number of pages: 248