Freefall Nobel Prize Winner Joseph E Stiglitz Explains The Current Financial Crisis And The Coming Global Economic Order The Current Global Financial Crisis Carries A Made In America Label In This Forthright And Incisive Book, Nobel Laureate Joseph E Stiglitz Explains How America Exported Bad Economics, Bad Policies, And Bad Behavior 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 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 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

Joseph Eugene Stiglitz, ForMemRS, FBA, is an American economist and a professor at Columbia University He is a recipient of the Nobel Memorial Prize in Economic Sciences 2001 and the John Bates Clark Medal 1979 He is also the former Senior Vice President and Chief Economist of the World Bank He is known for his critical view of the management of globalization, free market economists whom h

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  • Hardcover
  • 361 pages
  • Freefall
  • Joseph E. Stiglitz
  • English
  • 22 April 2019
  • 9780393075960

10 thoughts on “Freefall

  1. says:

    This is an important book and perhaps the best I ve read on the current crisis its causes, the reasons for those causes, possible solutions and the moral implications of our obsession and blind faith in free market economics a theology of greed whose time has surely past.In a decade in which per capital GDP in the US increased by ten percent while average wages decreased by 4 percent we have learnt that some rising tides only lift the biggest of boats The increasing inequity of the US is but reflective of the increasing inequity in the rest of the world But inequity has social, moral and even economic costs.One thing that clearly got under Joseph s skin was that after bringing the world economy to the brink of total collapse due to their failing in the basic requirements of their jobs, after only being saved by what may well prove to be a terribly flawed policy of pouring nearly a trillion dollars into the financial system to keep it afloat, the guys who got us into this mess gave themselves huge bonuses The breathtaking audacity of such an action ought to have caused some kind of revolution instead we effectively said, Oh those guys, will they never learn Of course, even bankers couldn t justify talking performance bonuses at such at time and so they called these dump trucks full of money things like retention fees What is also clear is that, despite his clear warnings that we need regulation, effective government intervention in the economy, a closer alignment of incentives toward social needs nothing is likely to change And why My own theory is that the US public is so enamoured with the idea that they live in the best of all possible worlds that too much of their effort is spent trying to find ways to justify the unjustifiable to which the most unjustifiable is the extreme and increasing inequity that is central to economic, foreign policy, environmental degradation and elsewhere that there is no strength left to look at how we might actually make the world a better place Anyway, if this is already the best of all possible worlds Markets are efficient, self interest brings social good, the blind hand of the market fixes all, big government is bad government all of these are myths carefully and clearly explained and deconstructed in this book He also gives a fascinating explanation of the work he did in winning the Nobel Prize around how information asymmetries even seemingly minor ones destroy the possibility of market efficiency And all this in clear and easily understood prose.He points to the normative role neoliberal economics plays saying that the time people spend in business school and economics classes the selfish and let s not be cute repulsive they become It really is time to worry about the consequences of breeding generations of greedy bastards whose sole reason for being is to pillage and to gorge This is a lucid book, it is a book that challenges the existing assumptions particularly neoliberal economic assumptions and presents a way forward for a stable, ecologically sustainable and just society It is written by a winner of the Nobel Prize for Economics not that that is anything worth boasting about they even gave one of those to Milton Friedman and a chief economist with the World Bank This is a guy from the centre of the establishment when people like him start telling us things have got to change, well, who knows, perhaps it is time to start paying attention.But I ve been reading too many articles lately in the business pages of the paper saying things like, remember when people where talking about the end of free market economics in all of the excitement caused by the GFC when in fact what we need is a bigger dose of less regulation Those are the bastards likely to win As we have seen, No Drama Obama is no salvation we are allowing the audacity of greed to trump the audacity of hope, it seems But perhaps, if we can at least learn and remember what these bastards have done by reading books like this, to remember what they have gotten away with, perhaps then we can move from empty hope to positive action.

  2. says:

    I am mostly conservative and very much into holding on tight to my faith That puts me somewhere on the right maybe far right, although I am no radical But I absolutely looovvved reading this book Economist Stiglitz worked for former President Clinton and he maintains that Sarbanes and Oxley didn t go far enough in regulating, especially, the big banks that without Chase Steagall since 1995 have been virtually guaranteed huge incentives for risky financial innovation CDOs that have all but destroyed our economy Maybe it is time for a global currency Read this book It s a best seller and if you are like me you won t want to put it down.Oh, How did such a liberal idea government regulation become so agreeable to me How did I find myself in the liberal camp cheering Stiglitz on The truth is simply the truth Markets may not be self correcting trust in the institution might be now all but gone so, law must replace common sense and moral principle.

  3. says:

    It s probably unfair to call Stiglitz a subpar storyteller, since he s not really trying to tell a story here I will anyway, though Reading through a bunch of books on the financial crisis, you can t help make comparisons among them though they may be apples and oranges Freefall lacks both the verve and masterfully absorbing narrative of All the Devils Are Here The Hidden History of the Financial Crisis the latter, written by two business journalists, wasn t trying to be an economic treatise But Freefall also falls short in terms of concision and organization Raghuram Rajan s Fault Lines How Hidden Fractures Still Threaten the World Economy succeeds on those measures.Stiglitz, a 2001 Nobel prize winner, says many valuable and important things here But it feels like he s stating and restating those things seven times If this book were an animal, it would be an octopus, with numerous long, virtually identical parts Its 300 pages of text seem like 500 and the endnotes are interminable, 62 pages worth The hardcover edition lacks an index His suggestions for reforming the financial sector, the economy, and actually all of society are vast, wide, deep, and most of them are so frankly aspirational as to be hopeless None of this will ever come to pass, because the forces arrayed against change are too powerful This went to press before the financial reform law, Dodd Frank, was passed, but Dodd Frank is pretty weak tea compared to what Stiglitz and other progressive economists would like to have happen Too big to fail is still with us the financial sector is still awash, drowning, in moral hazard There is still little penalty for risk taking, because the government will still deem it necessary to bail out systemically important organizations But there will be no bailouts for the little people Cheers.

  4. says:

    THE GREAT FREE MARKET FAILURE 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 general appraisal of Americas position with rising public debt, it s relationship with China, and a still dysfunctional financial sector.One of the 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 fundamental thinking on the whole debacle.

  5. says:

    Very lucid and insightful explanation of the recent financial crisis, and what is to be done to recover from it.

  6. says:

    Now that I ve read this book I have the dangerous idea that I understand economics I learned about this book from this review by Travis Therefore, blame him for my new know it all melancholy demeanor caused by exposure to the dismal science The author makes many suggestions on how to change world economics to better serve human interests The suggestions offered seem to be good ideas to me But I m convinced none of the author s suggestions will be enacted because the moneyed interests of the world, in addition to being too big to fail, are too politically influential to allow changes that may diminish their incomes Welcome to the new corporate welfare state.Financially stressful times are opportunities to make improvements Many improvements were made to the banking system during the 1930s depression, but the author indicates that s not what has happened during the current crisis With the banking system at the brink of collapse in the fall of 2008, lending dried up and the government stepped in to bail out the banks This was the perfect time to start thinking about developing a truly efficient financial system that directs capital to where it is needed and where it is most productive in an efficient way, one that helps households and corporations alike to manage risk and that provides the basis of a fast and low cost payment system Instead, two separate presidential administrations undertook a series of measures to help the financial system, with little thought of the kind of financial system the country should have when if finally emerges from the crisis An irony that arises from the aggressive steps taken to prevent total financial collapse into a severe depression is that, by avoiding it, the public perception is lulled into thinking that things weren t so bad after all And so now the members of congress who voted for TARP are now under attack for wasting so much money.Another variation on this are those who say the whole mess could have been avoided if the collapse of Lehman Brothers would have been prevented Maybe so, but there s a political side to the question to consider The following quotation sums it up A third view holds that Lehman s collapse actually saved the entire financial system without it, it would have been difficult to galvanize the political support required to bail out the banks It was hard enough to do so after its collapse In other words, sometimes a bit of hardship is required to concentrate the mind.The author of this book offers a lot of criticism on how things were done and suggests better approaches to the problems He suggests that it would have been better to target small banks instead of big banks and home owners over bankers He also says it would have been better to have oversight on how the banks used money given to them by the government I m sure the author is correct, but I m not convinced that his suggestions would have been administratively practical Varied targeting and increased oversight would have required time and increased government bureaucracy And we all know how popular government bureaucracy is Further, the bankers and big investors would have complained so much that it would have become politically untenable I think if both sides of the actions taken could be fully discussed and explored, I suspect what the Bush and Obama administrations did is about all that was possible The author refers to it as muddling through Democracy and making sausage have a lot in common It hurts me to say the things in the above paragraph I would have loved forcing all investment bankers to have their salaries reduced to minimum wage until all government money was paid back The concept of paying big bonuses for losing money drives me crazy The author provided the following comparison of CEOs in various countries In Japanese society, a CEO who was responsible for destroying his firm, forcing thousands of workers to be laid off, might commit harikari In the United Kingdom, CEOs resigned when their firms failed In the United States, they are fighting over the size of their bonuses The author doesn t seem to have much respect for the conservative politicians who believe that tax cuts can fix all problems Unfortunately, especially in the United States, many shibboleths have inhibited figuring out the right role of the state One common aphorism, a crib from Thomas Paine, asserts, The government that governs best is the government that governs least Conventional wisdom on the Republican campaign trail is that tax cuts can cure any economic ill the lower the tax rate, the higher the growth rate Yet Sweden has one of the highest per capita incomes, and in broader measures of well being it outranks the United States by a considerable margin We may be witnessing the end of American triumphalism The fall of the Berlin Wall in 1989 marked the end of communism as a viable idea historians will mark the twenty years since 1989 as the short period of American triumphalism September 15, 2008, the date that Lehman Brothers collapsed, may be to market fundamentalism the notion that unfettered markets, all by themselves, can ensure economic prosperity and growth what the fall of the Berlin Wall was to communism

  7. says:

    We need books that make forceful motions for change that push us past the malaise and stagnation that often envelopes our society.Stiglitz s searing critique of the financial sector, and its responsibility for the cycle of recessions that have become characteristic of the US economy, is much needed Needed because recession is a word that may spark fear or morbid fascination, given the myriad economic articles with titles like 75% of economists predict this is when the next recession hits , making recession predicting akin to dentists recommending toothpaste largely because it s causes are not so understood I was in this camp who did not understand, too, and it s forgivable to be, given the huge effort by financial institutions aided by the Republican and Democratic presidencies during the 2008 recession to mask their responsibility It even got a bit literary don t call it corporate welfare , for instance, when banks are bailed outcall it, stimulus , something positive To many liberals, the name Obama may come as a surprise in its inclusion, but, as Steglitz points out, Obama, for all the hope and change he talked about, largely left the recovery efforts in the hands of the same people who presided over it, merely rearranging the deck chairs The result was a near absolute catering to the financial institutions that caused the crisis, and a hypocritical austerity applied to home owners who were taken advantage of by these institutions predatory lending practices.This is refreshing, particularly as the narrative of individualism drove the narrative that foreclosures represented personal failings on the part of those who experienced them It s not radical to think that that financial institutions have a moral obligation to society, but it does seem a foreign concept faith in free markets was eroding, Stiglitz points out, and in our current time, we still see its effects It doesn t take a huge leap to conclude that lack of faith in institutions during the recession, the witnessing of huge amounts of money going to financial firms and little to citizens, could be the seed for being disenchanted with political systems writ large, fueling a desire for something or someone who proclaimed to be outside the system.That is the wrong lesson, according the Stiglitz instead of abandoning the idea of market capitalism, we should be looking for ways to intermix socialist ideas He makes the wise case that if we can somehow manage corporate welfare, we can manage social welfare, and the latter will give us innovation, allow people to take risks, and improve the economy .In many ways, this book is about than the 2008 recession it is about a way to define a future society Economics drives so much of what a society it, what it values and to really prevent recessions is really about redefining what we value, to use moments of crisis to redefine society in an age of automation, climate change, and globalization This book is required reading to be a fully informed citizen it is a counter narrative than what many financial institutions want out there, which means it is doing the work a good book should, being a bit dangerous in an effort to change the world.A

  8. says:

    What we got here is a nonfiction book by the winner of the Nobel Prize in Economics This book explains step by step why our economy is in the shithouse and why I fucking lost half of my IRA fund Next to pissing me off like the way Saving and Loan scandals pissed me off in high school, it is one of the reason I mostly vote Democrat even though I sometimes laughed at the funniest of the racist jokes that had been told to me Dear black, Asians, Jewish, gays, and hispanic people, I was wrong to laugh, no excuse, and am really sorry about that This is what happen when corporate goes on welfare AFTER ponificating on free markets, incentatives, free enterprises and other things that self proclaimed capitalist priests claim to believe in They are DEFINETELY the capitalist priests, the bad kinds whom the cutest altar boys end up testifying against in courtrooms The blame lies on the bank owners, loan agencies, investment firms, Wall Street firms who misdeeds overlaps each other, causing a bubble in which billions of dollars are bet on how long will that bubble last before it burst And I think the current adminstration is too buried in health care to regulate the financial firms You can call me a commie pinko but at least the communists like China are able to manage the damages, and the Japan had a great idea of having a CEO commit hari kari each time he or she fucked up in a job with a terrific salary and benefits It would have been the last mistake he or she ever would make Here, it seems accountability is unAmerican from the way the corporate pigs snuffle in the welfare trough meant for poor people in dire need of decent housings, food, and health benefits Hey, how bout throwing some money our way instead of taking them all for yourselves I wish Obama can slam regulations on top of all the free money that he took from the taxpayers and just HANDED over to the very same people who gambled away our future and took over homes and hopes from everyday American who just want to have a job, house, food, and medical services and some left over for retirement Yeah, Mr President, the next time I see a skinny twerp choke on his own tie in rage in public, I would be sure to back off, going, Whoa, he s pissed Let s get out of here and not laugh at that guy Although it would be a bitter kind of laughter I would vote for the president who would have AT THE VERY LEAST do the the Karate Kid s crane jump knee up and then trick kick each wealthy banker right in the balls for even coming in the Oval Office and asking to be bailed out of their predatory loan practices and gambling mistakes China is beating the shit out of us when it comes to helping poor Africans Third World countries and winning them over in using economic rights over the so called free capitalism and democracy by building roads and supplies routes back and forth And fixing the damages that us big bad Americans had caused If the investment bankers actually believe in free capitalism then they should have not go on welfare and figure out a way to actually use their so called skills in wise investments like in biotech and artisan jobs like the Germans are doing.

  9. says:

    First, a confession I find economics to be an incredibly boring subject and my eyes usually glaze over whenever I have to read about it So that may be a factor in my rating.For the most part, the book is a fairly readable review of the 2008 economic meltdown and the factors that led to it Much of the same ground was covered, in a much entertaining way, in the movie, The Big Short Stiglitz has a definite point of view favoring greater governmental regulation and oversight of the financial industry and he makes a good case for his viewpoint He also recommends various reforms, including reforms of the field of economics itself There are a lot of warnings in the book, such as the fact that the US and its citizens are living beyond their means and that such a situation can t last forever, and there is pain to be had down the road He also ridicules correctly, in my opinion the notion that economic conclusions can be drawn while assigning no weight whatever to the environmental consequences of certain choices, such as the continued reliance upon fossil fuels.The book became less interesting as I progressed through it and there were a couple of chapters that I skimmed than read One of the problems was that I was reading a book in 2016 that was published in 2010 about a crisis that occurred in 2008 I think that the book would have been better if he d waited longer to write it and saw how things played out rather than anticipating how things would play out He was correct in some of his predictions, however, particularly that politicians would be too weak and beholden to corporate interests to enact real reforms or hold high level executives accountable.The viewpoint was refreshingly progressive and he also talks about things like trust and ethics and the fact that the market isn t the answer to all problems So that was all good.So, not bad, not great Now I can move on to something interesting.

  10. says:

    This is an excellent account in simple language about what caused the financial crises of 2007 8 and contains welcome suggestions about corrections to the financial system that need to be made in order to avoid a repeat in the future.Stiglitz is a Keynesian CANE zee un , a person who believes that government regulation and intervention in the market is a necessity, who worked with the International Monetary Fund and has seen his share of financial panic in countries other than the United States, so he brings expertise to this subject He makes a strong point when he talks of how the IMF made demands on other countries in trouble that the U.S government spectacularly ignored when it came to addressing the same irresponsibility in America His writing could not be clearer and his suggestions are well argued.He argues that the free market model was irresponsible, not because bankers are particularly greedy, but because they were protected by the government standing by to bail them out even as they claimed to be regulating themselves conscientiously This moral hazard allowed the banks to take foolish risks, investing in a huge overstock of housing that has crashed, while useful, needed investments were neglected.He is not impressed with the half measures that have been taken so far and feels that the financial industry is out to talk the crisis to death while strenuously resisting regulation until the demand for it wanes.The huge, unprecedented bailout strained even the world s strongest economy to the limit Another such cannot be supported as the Fed and other central banks have played out all their cards and sit with a zero or even negative interest rate that all are terrified to raise.Not a long or difficult read, I would highly recommend Freefall to anyone who wants a clear account and insight on the series of events that have financially devastated many Americans.

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