Recommended
Book
Non-fiction
Read Entirely
Read one time
Language
Italiano
Publishing house
Il Saggiatore
Position in the list
38
The Review
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"What you need to know about financial crises"
Finance is as much important as little known by the average citizen. It is also little known by the largest part of the establishment. This book is a milestone in the process of better understanding how financial crises look like. The key message is of course the one in the title: many financial situations that are unsustainable are actually considered sustainable for a long time before they collapse because involved decision makers believe that for any possible reason "this time is different". While it is not so different. From this work, we also learn that unsustainable financial situations are not so rare, neither in the developed world, like we got used to think before the 2008 "Second Great Contraction" (the first being in 1929). More precisely, it seems that the developed world was somehow able to avoid public debt crises (that in the rest of the world are frequent and create self-perpetuating loops that are very tough for a country to exit) while it has not found a solution to other crises (like bank-crises). Among the rest, it is quite striking how bad a State default can be (we even learn that in the Thirties Terranova lost indepedence because of a default) and how crises tend to be the result of mutiple equilibria situations, where very small events can determine or not the collapse. With a relevant and often original data collection, quite technical yet readable also for the amateur.
Finance is as much important as little known by the average citizen. It is also little known by the largest part of the establishment. This book is a milestone in the process of better understanding how financial crises look like. The key message is of course the one in the title: many financial situations that are unsustainable are actually considered sustainable for a long time before they collapse because involved decision makers believe that for any possible reason "this time is different". While it is not so different. From this work, we also learn that unsustainable financial situations are not so rare, neither in the developed world, like we got used to think before the 2008 "Second Great Contraction" (the first being in 1929). More precisely, it seems that the developed world was somehow able to avoid public debt crises (that in the rest of the world are frequent and create self-perpetuating loops that are very tough for a country to exit) while it has not found a solution to other crises (like bank-crises). Among the rest, it is quite striking how bad a State default can be (we even learn that in the Thirties Terranova lost indepedence because of a default) and how crises tend to be the result of mutiple equilibria situations, where very small events can determine or not the collapse. With a relevant and often original data collection, quite technical yet readable also for the amateur.
