The Shift and the Shocks Y Martin Wolf Review

• Home
• My Books

Open Preview

See a Problem?

We'd love your help. Let us know what's incorrect with this preview of The Shifts and the Shocks by Martin Wolf.

Thank you for telling us about the problem.

Friend Reviews

To encounter what your friends thought of this book, delight sign upwards.

Community Reviews

 · 477 ratings  · threescore reviews

Commencement your review of The Shifts and the Shocks: How the Financial Crisis Has Changed Our Future

Jul 21, 2014 Kristen rated information technology actually liked it

In The shifts and Shocks: How the Financial Crisis Has Inverse Our Future Martin Wolf, Chief Economics commentator at the Financial Times, expands on his FT commentaries in book form. He divided the book into iii parts: Shocks, Shifts, and Solutions. The first office looks at how the fiscal crises that hit the world afterwards 2007 made the globe what information technology is today. The second office looks at the changes to the earth economy and fiscal systems that led to the crises and their backwash. The tertiary p In The shifts and Shocks: How the Financial Crisis Has Changed Our Time to come Martin Wolf, Chief Economics commentator at the Financial Times, expands on his FT commentaries in book course. He divided the book into three parts: Shocks, Shifts, and Solutions. The first office looks at how the fiscal crises that hit the world later on 2007 made the world what it is today. The second part looks at the changes to the world economy and fiscal systems that led to the crises and their aftermath. The 3rd part looks at how to attain a better financial system and economy.

Each section addresses the "high income" countries, emerging countries and Eurozone countries. Wolf's view is that the underlying cause of the the interlinked global and Eurozone crises was what he calls a "global savings glut" driven by global merchandise and uppercase imbalances. Communist china and the other emerging Asian countries, the oil exporting countries, Japan and Germany congenital upwards huge trade surpluses at the expense of the Usa and "peripheral Europe." In the US, this was partially a result of a dollar that was stronger than it ought to take been due to currency interventions against it by the exporters, and partially the result of Federal Reserve actions meant to equalize the imbalances and all the same maintain maximum employment. In "peripheral Europe" information technology was the result of existence able to finance large current-account deficits at very depression involvement rates made possible past having the Euro equally a mutual currency with the electric current-account surplus country of Frg. These imbalances were the outcome of long-term trends of increasing liberalization (freer markets), globalization,innovation, leverage and incentives toward greater take chances taking within companies.

Wolf is skeptical that the voluminous reams of of newly adopted and proposed regulation will prevent some other fiscal crisis. He points out the the most important legislation in response to the Great Depression was the Drinking glass-Stegall Human action of 1933 which ran 37 pages in it's entirety. The response to the 2007 crunch was the Dodd-Frank Human action of 2010 which ran 848 pages BUT which requires nearly 400 pieces of detailed regulatory rules which have added an additional 8,843 pages to date and it'south just 1/3 finished! He besides points to thousands of pages of regulations currently being written in Europe and points out the inconceivability that something so circuitous can be understood and really work. He instead calls for larger upper-case letter reserves and "macroprudential supervision" which means attempting to regulate the stability of the financial system as a whole. He acknowledges that this volition not exist easy and might not even be work, but thinks it needs to exist tried.

He is also rather pessimistic about the survival of the Euro which he likens to a bad marriage. He proposes a banking union in which eurobonds would stand for some percentage of the Gross domestic product of all the fellow member countries with each individual country responsible for financing their debt to a higher place that level. Those eurobonds would then be very liquid and provide "safe" avails to back the system instead of relying on the bonds of Germany. He holds Germany culpable for the way they've handled the Eurozone and acknowledges that they are not willing today to take the reforms that he proposes, but he thinks something must be done for the Euro to survive.

Wolf also doesn't believe that the current move toward government thrift was wise. He thinks there should have been more fiscal stimulus in order to keep the earth's economy growing while the healing takes place.

The book is not an easy read since it deals with heavy subject matter and a lot of inter-related economic concepts. I have had to re-read some sections of it and feel I gained a better understanding of the cloth the second fourth dimension around. The book is a take on the financial crises of the by few years that is unlike from anything else I've read. I remember anyone with a strong interest in economics and markets will enjoy it.

Total disclosure: I received a free ARC of an uncorrected proof via a Goodreads Start Reads giveaway.

...more

Oct 20, 2014 Maru Kun rated it really liked it

These days near economists are fantasists. Like nerdy teenagers they hide rubber backside the doors of their academic bedrooms dreaming of bizarre means to model the workings of the world, then giving their fantasies sensible sounding but ultimately meaningless names: "rational expectations","expansionary austerity"and the rest.

And so, while the storms that they helped summon upwardly of nugget bubbles, global financial crises and mass unemployment, rage outside their window these stake individuals pull thursday

These days well-nigh economists are fantasists. Like nerdy teenagers they hide safe behind the doors of their academic bedrooms dreaming of bizarre ways to model the workings of the earth, then giving their fantasies sensible sounding but ultimately meaningless names: "rational expectations","expansionary thrift"and the rest.

And then, while the storms that they helped summon up of asset bubbling, global financial crises and mass unemployment, rage exterior their window these pale individuals pull the sleeping room curtains more than firmly closed, dim the lights and carry on playing with their meaningless models as if goose egg was happening.

Sadly, although almost economists are fantasists some economists are as well liars.

Some of these same nerdy teenagers have crept out of their academic hiding places to search for plutocratic uncles who will requite them grants, conferences, highly paid jobs in think tanks and other rich men'south presents on the simple status that they surrender any idealistic notions of "integrity" or "scientific objectivity" (non that they had much of that anyway) and instead peddle "gratis-market economic science", "apartment taxes", "the Laffer curve" and other ideologies that warm a billionaires heart to politicians who have whose agreement of economics is limited to knowing where their next campaign donation will come up from.

That leaves us with a handful of honest economists who have some thought of how the world really works: Ha Joon Chang, Robert Schiller, Joseph Stiglitz and foremost among these Martin Woolf.

Martin Woolf stands out in this pocket-size lodge of honest economists by addressing global macro-economic bug rather than specialising in evolution economics similar Ha Joon Chang or real manor and nugget bubbles similar Robert Schiller. He is more like Stiglitz with a European focus.

So we are fortunate that Martin Woolf has put the time in to write a book telling the states eloquently and honestly where we stand with the world economy. Unfortunately the news is pretty much all bad, although things might get a little better around 2028.

Its all about the imbalances

There is a lot to learn from this book, starting with the importance of macroeconomic imbalances every bit a key driver of the "Global Financial Crisis" (GFC).

The environment of out-of-control finance, inequality and political expediency all helped these imbalances go out of control and propel us to an economic disaster which, as Martin Woolf reminds us more than once, is larger in terms of lost product than either of the terminal two earth wars.

A root crusade of the GFC was imbalances betwixt creditor and debtor countries. Information technology worked something like this:

Factories in creditor countries - mainly China and Germany - would piece of work flat out producing "Stuff". They fabricated more Stuff than their citizens could ever pay for, or at to the lowest degree not with their exploitative wages (relatively exploitative in the example of Deutschland).

And so what to do with all this Stuff?

In China'due south example the Stuff would be loaded onto ships sailing mainly to the USA, in a big part no doubt to end up on shelves in Wal-Mart.

Wal-Mart or other purveyors of inexpensive Chinese trash would ship greenbacks back to the Chinese factory owner which he would trot circular to the local branch of his Chinese banking company in render for a squeamish handful of renminbi, allowing him to promptly gloat with a banquet, party with his mistresses and even pass on some token amount of cash to his exploited workforce merely mostly to stick back in the very aforementioned banking company helping pay for China's fabulous investment driven economic growth.

It become's complicated

From here on the fate of those greenbacks, now in the hands of the Chinese banking company, gets a piffling fleck more murky for non-economists. It seems to work something similar this:

The local chinese banking concern would take a bigger bagful of greenbacks deposited by the nearby factories it serves off to China'due south central depository financial institution to bandy for renminbi. The Chinese central bank would merely "render to sender", using them to pay for an enormous quantity US treasury bills - more than than ever in history.

In theory the U.s.a. government or United states of america banks would now be in a position to use these greenbacks raised from the sweat of the Chinese or German workers forehead to invest in the U.s.a. economic system.

What the Chinese probably never guessed was that these greenback would end upwardly in the hands of some of the greediest, about deluded bankers that deregulation and regulatory capture had e'er given birth to. Bankers who would, over the years up to 2007/2008 specially, help the United states of america participate very efficiently in its own financial devastation.

It starts to go horribly incorrect

And so the Chinese central bank gave up its hard earned cash for US treasuries.

This left the sellers of those US treasuries - banks, insurance companies, alimony funds - with loads of cash on their hands that had to exist used one fashion or another. The US government also issued US treasuries to cover government spending, but that spending ended up in the pockets of individuals and companies, who would and so have put the cash in the banks with the same end issue: Loads of greenbacks in the bank having to exist invested somewhere useful.

And so what did the banks do with all this extra cash? They made loans to help Build A Ameliorate America of form. Loans to aid pay for aging The states infrastructure, support US research and development, build schools, modernise Usa manufacturing manufacture and the rest of it.

Only joking of class. Equally you can well understand, the Usa banks did no such matter.

What they did was lend this spare greenbacks to anyone with a pulse every bit long as the loan was backed by real estate, considering real manor never goes down in value, right?

And then was invented the "NINJA Loan" (for people with no income, no task) and the "Liar Loan" (for people who tell lies). Money flowed for leveraged buyouts, hedge fund speculation and all the balance of the socially useless activeness finance has spent the last few decades perfecting to loftier art.

Of class the financiers needed impenetrable complexity, near fraud and actual fraud to keep this show in the road for every bit long as they did. Their reckless lending needed to disguise itself as AAA lending and spread itself effectually every corner of the globe to make certain maximum harm was done.

Luckily for the bankers, regulators like Alan Greenspan were too busy pulling it to old pictures of Ayn Rand to ever recollect anything bad was going on.

It goes horribly wrong

The political basis was ripe for this blazon of craziness: De-regulation played a part, only inequality played its role in the shadows. The great majority of the US population accept seen their existent wages decline for decades while the rich creamed off all the productivity gains,

Some of the United states middle or working class were trying and keep up with the Joneses, borrowing a few drops from the ocean of practically free cash that the banks were creating secured against the every increasing value of their houses.

When the world finally woke upward to the fact that the illegal Mexican immigrants who could barely speak English were unlikely to be able to repay their USD750,000 mortgage out of their salary as tomato pickers things started to really go wrong. In fact the world before long realised that it wasn't just Mexican immigrants merely that virtually of the US middle class couldn't repay their mortgages/student loans/car loans either, and so house prices slumped, defaults rose and the whole fragile financial structure fell apace apart as the GFC kicked off.

Moralising near macroeconomics - the special case of the Eurozone and Germany

Germany and the Eurozone pretty much replayed the People's republic of china vs United states scenario, with Germany (and a few small hangers on like holland) playing the role of People's republic of china while the rest of the Eurozone played the role of the The states.

The central divergence seems to exist that the Germans have to pretend to care, paying lip service to ideas of European unity. In contrast the Chinese can instead just chuckle quietly to themselves at how pathetically the U.s. has managed to damage its economy, undermine its brownie and otherwise severely harm its standing in the earth with only a little help from China.

But its just tough love from Germany. The whole macroeconomic debate in Europe is colored by spurious moralising about thrifty Germans and spendthrift latins, ignoring the truth that...

For every reckless borrower there is a reckless lender

What this volume makes abundantly clear is that in the financial world for every asset at that place is a liability, for every credit there is a debit and for every trade surplus there is a trade deficit.

When Germany shifts the backlog Stuff it has manufactured to the rest of Europe - those nice BMWs and Mercedes, those Bosch dishwashers - the Stuff has to be paid for.

And how is Stuff paid for? Ultimately by German savers lending to the Eurozone periphery countries through purchases of their sovereign or corporate debt or through cantankerous edge loans from creditor state banks.

Germany just doesn't want to acknowledge that information technology is the biggest casher of the Euro through the benefits accruing to its export manufacture.

Germany too doesn't want to admit that its reckless lending is as much to blame for the position the Eurozone finds itself in every bit is the reckless borrowing of Greece, Ireland, Spain and the rest. Rather Germany would adopt to moralise nigh spendthrift and lazy latins than think almost its own role in the crisis.

Frg wants to force on to the periphery countries the whole burden of unemployment, deflation and general social misery required for structural adjustment while refusing to pay any cost itself. This is a recipe for an unhappy and increasingly politically divisive Europe with piddling hope for resolution.

Improve by 2028, if you lot're lucky

Long sections of Martin Woolf's volume address how to assist solve some of the imbalances that continue to plague the global financial system and his suggestions sound very apparent.

Unfortunately, as Martin Woolf himself admits at more than one bespeak in the book, the political will to make any real changes without the spur of at to the lowest degree another and probably even bigger financial crises just isn't at that place. Instead, muddling along while preserving an already fragile and failed organization seems to proceed to exist the order of the day.

To sum up, prospects for the Eurozone continue to await very bleak and we can wait further financial crises and political turmoil. The position in Greece is far from resolved with the Eurozone at permanent risk of more economical turmoil when citizens in any of half a dozen European countries finally go sick of austerity and vote whichever particular party of bums is in power in their country out.

All in all, things are non going to finish well.

...more than

A Keynesian economist prescribing a Keynesian solution to a Keynesian crisis. Mr. Wolf gives the best clarification of the crunch and tries to explicate the nuances of it in a very grad-school economics professor way. He tries to explain some of the terms and concepts, just information technology comes off as explaining a complex concept of economics to someone who has a solid, but not extensive, knowledge of economics. Non a good book to read if you have no thought what happened or have any clue near economic science. Nevertheless, A Keynesian economist prescribing a Keynesian solution to a Keynesian crisis. Mr. Wolf gives the best description of the crisis and tries to explicate the nuances of it in a very grad-schoolhouse economics professor fashion. He tries to explicate some of the terms and concepts, but it comes off as explaining a complex concept of economics to someone who has a solid, but not all-encompassing, knowledge of economic science. Not a good book to read if you lot have no idea what happened or have any inkling about economics. Still, he does propose books to read if you do non which tin can be helpful to some.

Overall, a very economic science-forrard await at the two financial crises. While Mr. Wolf is confronting thrift and has a more Keynesian style of looking at the crisis, he also has new ideas that may not exist 100% Keynes or 100% Austrian Economic science. Solid read if you know what they are talking well-nigh.

...more than

Aug 04, 2014 Joseph rated information technology liked it

I received this equally a First Reads giveaway and can recommend it as a sweeping global overview of the fiscal crisis and its aftermath. I accept ever respected Wolf's writing because he is a pragmatic economist willing to solve bug practically than ideologically. In fact, he establishes his credibility from the introduction when he admits that he didn't meet the severity of the crisis lurking from over leveraged banks and indebted consumers. He goes on to site Hyman Minsky'southward observation that I received this as a Offset Reads giveaway and can recommend information technology as a sweeping global overview of the financial crisis and its backwash. I take always respected Wolf's writing because he is a businesslike economist willing to solve problems practically than ideologically. In fact, he establishes his credibility from the introduction when he admits that he didn't come across the severity of the crisis lurking from over leveraged banks and indebted consumers. He goes on to site Hyman Minsky'south ascertainment that we often fail to see these catastrophic events considering of our failure to imagine. Wolf goes on to highlight how emerging economies were relatively spared from the global recession considering of their net current business relationship surplus (amend to be a lender than a debtor), but doesn't accept much optimism of Frg'south management of the Euro. In fact, he is downright dour on its future unless Europe starts acting like a political union rather than a budgetary wedlock. He goes on to indicate out a rather remarkable statistic that there were less than 100 Triple AAA rated companies across the globe but thousands upon thousands of securitized debt instruments were given a AAA rating due to the securitization orgy that took place leading up to the crisis. Although not dismissive of regulation, he is less sure that anything that is coming out of the US or Switzerland volition make finance an inherently safer system. Another interesting factoid is the 10s of thousands of pages of regulation that are being created to put in place some of these safety nets and I tin only see more fines due to regulatory not-compliance only who is going to remember all these regulations cantankerous borders. In the end in that location is some room from pragmatism, to be able to adjourn animal spirits and some Former Attestation justice when needed but it seems based on Wolf's analysis the need for independent bankers who tin push back against political ideology may be what keeps us from the next crisis until a truly safer banking organization gets adult ...more

Oct 22, 2014 Ron Davison rated it it was amazing

Martin Wolf writes about global finance. I don't know of anyone who takes a more than systemic arroyo to explaining how the financial markets in i state bear on those in another, or how economies and financial markets interact. We're well past the point of any one economic system operating in isolation and while this may seem obvious at some level, the implications for policy still aren't fully understood and certainly haven't been fully acted on. Martin Wolf writes about global finance. I don't know of anyone who takes a more systemic approach to explaining how the financial markets in one country affect those in another, or how economies and financial markets interact. We're well by the point of any one economy operating in isolation and while this may seem obvious at some level, the implications for policy still aren't fully understood and certainly oasis't been fully acted on. ...more than

Dec 05, 2014 Jay rated it it was ok

I have been defeated.

Wolf makes sense as far every bit I tin can follow, merely I call back you have to live this stuff (work in finance or teach economics) to be able to plough through this i.

Mar 22, 2020 Matt Bucklin rated information technology really liked information technology

A very well documented, written, and argued investigation into the 2008 financial crunch. Martin Wolf explains why it happened to crusade the great recession, and what needs to exist washed to avoid another i, which he seems every bit vitally important for the connected progress of globalization and integration of the world economies.

A few adept takeaways. One, most economic crises outset with a financial crisis, caused by irresponsible beliefs in the financial sector. Lenders need to take merely as much respo

A very well documented, written, and argued investigation into the 2008 financial crisis. Martin Wolf explains why it happened to cause the great recession, and what needs to be done to avoid some other one, which he seems as vitally of import for the continued progress of globalization and integration of the world economies.

A few good takeaways. Ane, most economic crises start with a financial crunch, acquired by irresponsible behavior in the financial sector. Lenders need to take simply every bit much responsibility for making bad debts and borrowers. Two, the flow of global majuscule went in the wrong direction for over a decade, from the developing earth to the developed world, acquired past the 1997 Asian financial crisis. And three, the European union is a disaster, but breaking it upwardly would be even worse, the only selection is to improve the Eu and monetary union.

...more

Jan 04, 2016 Luke rated it actually liked it

Mr. Wolf is a smart guy. This is not for the coincidental reader, merely at that place is some good stuff in here for guys with a bit of finance background/ a lot of persistence.

The flaws
The first part of the volume is really dull and could have been ripped from a Krugman or Stiglitz book, namely the Euro is a marriage fabricated in hell, a Cosmic hell where divorce is non permissible (I think this is obvious to all) and offer the usual reheated Keynesian arguments almost the treatment of the crisis. These are as fol

Mr. Wolf is a smart guy. This is not for the casual reader, simply there is some good stuff in here for guys with a chip of finance background/ a lot of persistence.

The flaws
The first part of the volume is really dull and could have been ripped from a Krugman or Stiglitz book, namely the Euro is a marriage made in hell, a Catholic hell where divorce is not permissible (I recall this is obvious to all) and offering the usual reheated Keynesian arguments virtually the handling of the crunch. These are as follows-

i. The global economy was starting to recover after the initial stimulus and austerity was a disaster
ii. Germany is bad for suppressing need
iii. We have a global demand arrears/ savings glut

i. is predicated on ii assumptions, neither of which I concur with-

a. continued government spending will eventually pb to a sustained recovery.

I have always establish this a poor assumption not backed up by fact- in many cases increased regime money is allocated to products or sectors which are not in demand by the individual sector afterwards the end of the stimulus (oft to win short-term votes)- therefore indefinite deficit spending is needed which leads to strange bond holders losing confidence. In the few cases where massive gov't spending took place and made the economy recover i.e. WWII, the spending needs to be seen against the guiding hand of the state of war which led to new technologies developed to fuel it i.e. jet engines, advances in telecommunications and education investment i.e. GI bill. Whether fiscal stimulus lonely would ever result in such bold innovations is unlikely, too most of the low hanging R&D fruit have now been plucked.

b. strange bail holders volition back up a government running such a deficit for a prolonged period and not sell their bonds.

In reality if we look at United kingdom of great britain and northern ireland in 1976 this simply is not a apparent argument in an indefinite stimulus scenario equally the pound is no longer the global reserve currency (and for all of the world other than the US).

ii. Re German surplus- Although he does expect at both sides of this statement later in the book, he is very anti-German. While nigh of the Eurozone creditor-debtor imbalances are internal, net I think it's running a modest deficit so even if German wages were allowed to rise the situation not keep indefinitely.

iii. Re-global demand arrears- He states the U.s.a. corporate sector post-crash was in surplus, simply doesn't really become in-depth equally to why this is and so (perhaps increased off-shoring of greenbacks due to United states of america taxes on cash repatriated to the US might requite him an reply).

Overall I think there are two key problems underlying his analysis in the early on part of the book. The first is a trend for non criticizing the fact the Keynesian assay is based on a (largely) closed system- Wolf is keen to point out internal debtors and creditors must cyberspace off to nil if foreign debtors and creditors are ignored (at least twice in the volume). Nevertheless, this is a fatuous annotate, it is absurd to ignore foreign debtors and creditors in the globally connected world nosotros live in- some weight is given to China merely very trivial to the oil producing countries.

The second is that it focuses well-nigh exclusively on conventional banking. There is little sustained analysis of the applied effects of the shadow banking system, or on how taxation impacts corporate behaviour.

The triumphs
These issues aside, the book picks upwards and its later parts are in general very fine. At that place are some very interesting points brought out. In particular, 5 points I liked were-

-the idea of Usa existence reserve currency limiting Usa Fed's room for fiscal manoeuvre. He cleverly links the 98 Asian crisis and Dotcom bubble, arguing as a result of 98, foreign creditors bought US dollars making export difficult. Consequently in the wake of the bursting of the dot com bubble and unemployment fears, the Fed was forced to stimulate the internal economy at all costs leading to the housing bubble.
-banks are reluctant to have a lower gearing ratio i.due east. more than equity due to fact equity would but go to other creditors on current of air upwards. Outside of the tax advantage in that location is not reason to non accept more equity (I think Wolf underplays this advantage, in the Us you could be looking at a xl% corp taxation rate and it explains quite a lot of the pref for debt).
-as increasingly banks are large listed entities, the shareholders are forcing banks to take increasingly risky moves to keep upwards with competition as they can simply obtain high returns while being highly leveraged
-Fanny Mae and Freddy Mac (The states govt mortgage lenders) really had lower size of lending and lower default rate than other subprime lenders and then were not largely responsible for the crunch (contrary to what some right-wing commentators argued).
- The obsession of central bankers in the UK and US with the metric of keeping inflation at a given rate (2% in the Britain) actually made the system more fragile.

In that location is no silver bullet on offer equally a solution, but some of these ideas do make you think. Definitely worth a read.

...more

Sometimes I think being completely ignorant of economic science would ease by peace of mind. Seriously. During the financial crisis of 2007-8, I never had the impression that people effectually me had any thought that we were dancing on the ridge of the volcano, and that just one additional mistake on the top of all the others would accept been sufficient to throw u.s. right into the core.
I take "celebrated" the ten-yr anniversary of the crisis with this fantabulous history by Martin Wolf of the Financial Times. OK Sometimes I recall beingness completely ignorant of economics would ease by peace of mind. Seriously. During the financial crisis of 2007-8, I never had the impression that people around me had any idea that nosotros were dancing on the ridge of the volcano, and that just one additional mistake on the acme of all the others would have been sufficient to throw us right into the core.
I have "celebrated" the 10-twelvemonth anniversary of the crunch with this splendid history past Martin Wolf of the Financial Times. OK, the volume is already 4 years former, and the globe has moved on, but the volume remains highly topical. Wolf discusses the origins and the consequences of the crisis, and possible solutions.
The volume is not like shooting fish in a barrel reading, but Wolf has fabricated information technology as accessible as possible to a not-economist who is interested in the topic (and is willing to lose his peace of mind). ...more

May xiv, 2016 Robert Morris rated it it was amazing

This is a fantastic book, but I remember it'due south worth remembering that it's an illusion too. I'm a fairly well versed layman, did ok in Econ 101, got boozer and screwed up the last in Econ 102, but I've got an OK grip on the basics. Since college I've followed economic news with varying degrees of involvement, and similar all of united states with much more interest since 2008. This book has added to my understanding immeasurably.

Wolf is fantastic at collecting the details of and the arguments nearly the fiscal cr

This is a fantastic book, merely I recollect it's worth remembering that it'due south an illusion besides. I'one thousand a fairly well versed layman, did ok in Econ 101, got drunk and screwed upwards the concluding in Econ 102, but I've got an OK grip on the basics. Since college I've followed economic news with varying degrees of interest, and like all of us with much more involvement since 2008. This volume has added to my understanding immeasurably.

Wolf is fantastic at collecting the details of and the arguments nigh the financial crisis in ane place. He also presents a very coherent world view that leaves virtually no ane unscathed. This includes himself. I appreciated the way he reviewed his own failure to run into the true extent of the issues in the run upward to 2008. He does a not bad chore of pointing out the pure insanity of what we were upwardly to, and even more than important, pointing out how little has changed.

The book deals with the details of finance and macroeconomics with ease. I had to re-read some passages, but in that location were very few instances where a re-read did not yield agreement. This book superlatively illustrates a simple point: Nobody really has any fucking idea what they're talking about when they talk about the economy. What nosotros have is a sea of guesses. We've learned some things from experience. Equally flawed as the response to 2008 was, it DID succeed in averting another Great Low. But now that the immediate crises have passed we've all reverted to our former explanations. The motion-picture show of general cluelessness is very compelling and extremely valuable.

A lot of people were absolutely convinced they knew how the world worked and about all of them were wrong. The book is a instance for humility on a grand scale. And information technology gets 5 stars on the footing of this alone. I'd give it ten if that were possible. I go with Wolf all the way here.

Only it'southward also a case for action. And I go with Wolf most of the fashion on this as well. His diagnosis of the ills of the Euro expanse is compelling. The insistence on punishing the people or fifty-fifty the governments of countries like Hellenic republic or Spain for this crisis, when those countries are non truly sovereign is wrong, and fifty-fifty amoral. The unproblematic fact remains that these countries have no control over their currency or their central bank. The Euro should not accept happened, and everyone was guilty of its creation, peculiarly the Germans. As unsympathetic equally the Greeks tin can seem, the fact remains that they have gotten and proceed to go a very raw deal. This was a bit of a revelation to me.

I'thousand also completely with Wolf in his condemnation of the banking industry. Its manifold lunacies are what brought u.s.a. the 2008 crisis. We've changed nothing essential. If it goes unreformed information technology will bring united states another crisis. This needs to exist shouted from the roof-tops, and Wolf does exactly that.

Wolf is admittedly right that more and more creative activity is needed. His estimation is compelling, and some of the things he suggests absolutely must be tried. But I likewise institute the volume a bit agonizing. His confidence in his view of things is a flake also high. This book is a fantastic case for humility. A lot of people were absolutely convinced of things that simply weren't true. Just Martin Wolf is absolutely convinced of many things as well. His give-and-take of things like current account deficits and surpluses in particular, and their accented relations to each other seemed a bit glib.

"It's just basic math!" "If yous don't see things this way, you're an idiot". He of course puts these sentiments in much cleverer ways, and with much more grace than I do, simply that's the message. When he writes these things information technology just seems like common sense. But the Efficient Markets Hypothesis that brought us the crisis seemed to be common sense also. I lack the economic science knowledge necessary to truly counter any of his arguments, simply I recollect the chief lesson of the crunch is that we should view all economic knowledge and expertise with more suspicion. Including Wolf'due south. This is not to say that his prescriptions shouldn't exist taken seriously. Just that his faith in the value of figures like Gdp and current accounts needs to exist looked at more advisedly.

There's a metaphor I often utilize to describe the study of economics. It'south the study of medicine circa 1700 or so. Back then (very few) people were offset to realize that the old Greek model of bleeding people to release the bad humors wasn't all that useful. That'due south where the study of economics is right at present. Nosotros don't even have the accurate tools necessary to truly measure out economic activity. How can we say annihilation with certainty? This is not to say medicine in 1700 was useless. They knew how to set a broken arm, and that a sick person needed rest. Consistently non-lethal surgery was but getting started. I think that's nigh the country of the modernistic noesis of economics.

Anybody in 2016 who tells y'all that he has the correct and true answers to economic questions is a serpent oil salesman. That includes Martin Wolf.

That's too harsh. Martin Wolf is more of a LaMarckian or a Classical Physicist. He's very convinced that he knows what'south right. His view of the world is probably much more accurate than the "More Bleeding Is the Respond!" folks running the central banks in 2016. But he'south incorrect likewise. We demand more than people like Wolf, who are capable of advancing the conversation. Simply we shouldn't believe they have all the answers.

...more

Sep 12, 2016 Andrew rated information technology it was amazing

The Shifts and the Shock: How the Financial Crisis Has Changed Our Hereafter by Martin Wolf, is a fantastic book on post-crisis economic and financial theory. Wolf is a an author from the United Kingdom, and so the scope of the book is much broader than many United states of america publications, as information technology covers the United States, Europe and emerging economies. The book starts off with a brief overview of the fiscal crunch, how it formed pre-crisis, the impact of shadow banking institutions, United states mortgage backed securities, a The Shifts and the Stupor: How the Financial Crisis Has Inverse Our Future by Martin Wolf, is a fantastic book on post-crisis economical and financial theory. Wolf is a an writer from the United kingdom of great britain and northern ireland, and then the scope of the book is much broader than many US publications, as it covers the United states of america, Europe and emerging economies. The book starts off with a brief overview of the financial crisis, how it formed pre-crunch, the touch on of shadow banking institutions, U.s. mortgage backed securities, and a poor adventure management framework. The book besides details the post-obit Eurozone crisis, with the near default of Greece and the subsequent weakening of the Irish, Castilian, Italian and Cypriot economies in the Eu, and the massive crisis in Iceland'southward banking organization. This is all pretty standard stuff, and Wolf does a good task keeping it cursory and relevant to his later points.

The book gets interesting when information technology begins to offer critique both of pre-crisis and post-crisis macro-prudential policy, fiscal policy, macroeconomic theory, and so on. Wolf chronicles the different schools of economic thought, Austrian, Chicago, Keynesian, Chartalist/New Monetarism to offering a critiques. Some great ideas emerge from these differing schools, including 100% reserve banking, where all assets held by commercial banks are 100% backed up in Central Bank reserves. This would ensure a steady supply of coin to the federal governments, reduce taxation, and let governments to print coin based on need - subsequent to a pre-determined growth rate which would demand to exist politically and socially acceptable (ie. how much should we fund certain welfare programs, how much should minimum wage be, what is an acceptable unemployment rate?).

Wolf examines the causes of instability equally well. He goes into depth on the demand for stronger macroprudential regulation, including structural reforms with banks relationships to hedge funds and other non-financial intermediaries reformation of international regulatory agencies that determine credit rating and the need to restructure cyberbanking reformation. He besides posits changes to the way banks do business organisation, by increasing the amount of equity banks concord in regards to debt, thus reducing the instability of banks with a loftier debt-equity ratio.

Wolf argues for a higher capital supply in the economic system every bit well, with societies driving how much risk they are willing to tummy, and subsequently how much we are willing to pay up when crisis hits. He also argues for the elimination of debt overhang as a financial incentive to shareholders. These overhangs, he argues, are skilful only for commercial banks, and have a negative event on both shareholders and societies.

Wolf too argues against fiscal thrift, which he posits has actually slowed down the postal service-crisis recovery past reducing investment opportunities and missing the marker on the set up supply of construction equipment and avails that was available as the crisis began to wound downwards, due to a the obvious massive downswing in the housing markets of many loftier income countries. He argues for global rebalancing of surplus/deficit relationships between emerging and established economies also.

Suffice to say, Wolf's book is complex and covers in detail much of what happened before, during and afterwards the crisis, and how these bug can exist fixed to prepare for a new crunch. As you lot will observe, Wolf argues that crisis and business cycles are intrinsic parts of the marketplace-capitalist system, and as such regulators and legislators should not exist defenseless with their heads in the clouds of exceptionalism, as happened during the pre-crisis boom. Wolf also seems to be in favour of radical heterodox changes to the economy, and wonderfully and eloquently describes Chicago economics and Chartalism in great particular. His noesis of the schools of economics is intense, and his enthusiasm for explaining and describing their potential positive and negative impacts on an economy is fascinating.

Give-and-take of warning. Wolf does not often finish to catch you up. A bones understanding of economic science and finance, too as political theory and current events in the global economy is required to get this volume. I struggled especially with his sections on "fixing finance" which is highly theoretical and focuses on credit and savings gluts, something I struggle to empathize. Withal, this is only a motivation to learn more, as Wolf'due south infectious exuberance for the field of study takes hold.

All in all, this was a wonderful and in depth examination of post-crisis economic and financial theory. It may be difficult to empathize in certain places, only this should not terminate someone who is willing and interested in learning more on the subjects of macroeconomic and financial theory, specially its impact on politics and societies globally. This is a one thousand book, large in telescopic, and definitely a joy to read if you are into the bailiwick matter. This one is highly recommended.

...more

For anyone tryiing to understand the basis of the financial crisis and its lingering backwash, yous're non probable to exercise improve than this book by "Financial Times" Writer Martin Wolf. A give-and-take of warning, withal: This is non for the easy-reading oversupply. The book is complex, even difficult in places. It's loaded with charts and economic jargon. There are sections that read like a paper, and sections that read like a economics textbook, which can actually slow things down.

The reward for the reading

For anyone tryiing to understand the basis of the financial crisis and its lingering backwash, you're not probable to exercise better than this book by "Financial Times" Writer Martin Wolf. A word of warning, however: This is not for the like shooting fish in a barrel-reading crowd. The book is circuitous, even hard in places. It's loaded with charts and economic jargon. There are sections that read similar a paper, and sections that read similar a economics textbook, which can really slow things downwardly.

The reward for the reading struggle, even so, are insights and then incredible I institute myself underlining entire passages of the book while reading, something I haven't done since college. If you really want to dig into the story of world economic forces and gain a solid prognosis for the economic future (dicey, at best), this volume volition illuminate in a way few can.

This was solidly researched (the Reference section is 29 pages lonely), with solid footnotes for every citation. Even without those, the book tin be challenging and take time to assimilate. The end issue, however, is a solid footing of the mistakes made, the solutions sought, and the likely economic landscape of the future for the developed nations of the Eurozone, U.k., and US. Don't miss "The Shifts and the Shocks" if you want to empathize what lies alee for us all.

...more

I am a great fan or Martin Wolf and then was keen to read his book and he didn't let me downwardly.
The Shifts and the shocks is a well-constructed and concise summary of what really caused the GFC and takes the world'southward central bankers and financiers to task for their appalling lack of skill and judgement.

In doing so it besides highlights how not much has changed since the GFC and how the world's financial system is extraordinarily delicate.

I got to the end and promptly re-read it. There'due south and then much to accept in and

I am a great fan or Martin Wolf so was nifty to read his book and he didn't let me down.
The Shifts and the shocks is a well-constructed and concise summary of what actually caused the GFC and takes the world's central bankers and financiers to task for their bloodcurdling lack of skill and sentence.

In doing so information technology too highlights how not much has changed since the GFC and how the world's financial system is extraordinarily fragile.

I got to the end and promptly re-read it. There's so much to have in and nosotros'll be living with the consequences for decades to come up. Low growth, stagnant/declining wages, dangerously high public and private debt, increasing disparity betwixt the wealthy and poor. . . and and so it goes.

...more

Oct 04, 2014 Jason Furman rated information technology information technology was amazing

An excellent business relationship of the crisis, the deeper changes that gave root to it, and the consequences going forward. Occasionally repetitive as a number of sections were conspicuously compiled from previously written columns, it is still a forceful and original accept that is worth reading.

Dec 14, 2014 Dean rated it liked it  · review of another edition

Recommends information technology for: Finance and Cyberbanking professionals

If you are a finance or banking professional a must read. And so a must read for me. I would accept rated it four stars if the prose was non so dense and as a result the narrative had a difficult flow. If not a professional the several hours of reading probably better spent elsewhere.

Mar 01, 2018 Adrian rated it it was amazing

Rather than being but some other examination of the Crash of 2008, Martin Wolf provides analysis of important transformations inside the global economic system that led to the crash of 2008, and what we have to do to adapt from the catastrophe.
The shifts of the championship are substantially the global transformations, and the shocks are the tipping points when the unsustainable paths eventually came to a caput.
Comparing Wolf to other economic veterans writing on contempo transformations, Wolf is past far more readabl Rather than being only another examination of the Crash of 2008, Martin Wolf provides assay of important transformations within the global economy that led to the crash of 2008, and what we have to do to adjust from the catastrophe.
The shifts of the championship are substantially the global transformations, and the shocks are the tipping points when the unsustainable paths eventually came to a head.
Comparing Wolf to other economic veterans writing on recent transformations, Wolf is by far more readable than many contemporaries, but by no means any less insightful or profound in his analysis. For the fiscal lay person, one may occasionally demand to refer to the lexicon or wikipedia, but this is no more than and then than in whatever other volume, nor an issue of The Economist or FT (for which Wolf is a regular columnist).
In short, one of the virtually laudable books on contempo economic affairs, and worthy of a read, regardless of 1'due south familiarity with finance or economics. ...more

On a 3rd or fourth read, in hard copy, I suspect that I would be ready to pull a gun on the next banker I were to meet. As it is, from a single mind, I have to think that in that location really aren't very many smart people minding the fiscal shop in the more developed countries. And in one sense that could be a skilful thing, because were we to give the really smart people all the levers needed they would likely nevertheless screw things up while they made the "actually smart people" into the next form of v On a third or fourth read, in hard copy, I suspect that I would be ready to pull a gun on the next broker I were to meet. As it is, from a single listen, I have to recollect that at that place really aren't very many smart people minding the financial shop in the more developed countries. And in one sense that could be a good affair, because were we to requite the really smart people all the levers needed they would likely still screw things up while they fabricated the "really smart people" into the adjacent class of very rich criminals. As it is, with regular sinful folks, the regular cyberbanking (crooks?) have managed to lift whole nations out of poverty. It is quite a deal with the devil we know. ...more

Jul 13, 2019 Jim Parker rated information technology really liked information technology

This book was written a little over 5 years after the global financial crunch. While it is now some other five years on, its warnings seem just equally relevant and even more scary than when they were written.

For ane, Wolf's warnings about the consequences of the failure of elites to rein in an out-of-control globalised fiscal sector in the threat of a extremist, populist insurgency have proved uncannily authentic.

For some other, his condemnation of an over-reliance of loose monetary policy at the exp

This book was written a little over five years after the global fiscal crisis. While it is now another 5 years on, its warnings seem simply as relevant and even more scary than when they were written.

For one, Wolf's warnings about the consequences of the failure of elites to rein in an out-of-control globalised financial sector in the threat of a extremist, populist insurgency take proved uncannily accurate.

For another, his condemnation of an over-reliance of loose monetary policy at the expense of fiscal stimulus carries even greater weight now.

The new orthodoxy looks very much like the former orthodoxy.

...more

This is a comprehensive analysis of the economic crises betwixt 2007-2013 with a heavy focus on the GFC and the Eurozone crisis. Wolf as well provides skilful coverage of the academic and technical background which underpins the relevant schools of idea. An important read for anybody with an interest in financial regulation and economic policy, nonetheless it might be a tough read if you approach it dark-green on the topics covered. The recommendations for reform are probably the most valuable aspect, prima This is a comprehensive analysis of the economic crises betwixt 2007-2013 with a heavy focus on the GFC and the Eurozone crisis. Wolf also provides good coverage of the bookish and technical background which underpins the relevant schools of thought. An important read for anybody with an involvement in financial regulation and economic policy, still it might exist a tough read if you approach it green on the topics covered. The recommendations for reform are probably the nearly valuable aspect, primarily due to the pragmatism in suggesting a alloy of policy improvements. I'm really glad I read this, even if it'due south a little dour and technical in parts. ...more

Nov 26, 2017 Bo rated information technology information technology was ok

Finished the volume. It was written earlier Brexit, only information technology would accept been interesting to meet what the Brexit upshot has on the Euro. I enjoy reading and learning about the Financial Crises, but this was pretty thick to take in.

My thoughts are like to Jay:

Wolf makes sense as far as I tin follow, but I think you have to live this stuff (work in finance or teach economics) to be able to plow through this one.

Good book worth reading.

Looks at the history of the global economy and the financial crisis in the terminal 10 years in detail.

Covers both the aspects in a comprehensive manner.

a) the macroeconomic changes that have hit the world for the terminal 10 years due east.g a combination of deficit and surplus countries leading to global trade imbalances.

b) how did the missteps of the financial industry led to the 2008 crisis and what the world did to effort and come out of it.

This is perhaps the most consummate work that I have read on the Great Recession, and one of few that I have institute bachelor in the US that selves into Europe'southward role in the crisis. The author proves his economic chops through consummate, frequently dense descriptions of the shocks to the world economy. This will not be on anyone'south piece of cake reading listing, just it was full of good information even if many of the policy recommendations he gives are not well developed.

Martin Wolf writes for the Fiscal Times and always has interesting views in his editorials for the FT. So much has been written since his book that I call up for most readers are exposed to the general business media they will have grasped most of his points past now.

Mar 13, 2020 Viktor O. rated it information technology was astonishing

Sometimes the crisis ways the opportunity!!! Why don't nosotros want to understand this unproblematic fact??? Wealth Direction Time book by Viktor O. Ledenyov and Dimitri O. Ledenyov explains everything in details!!! Sometimes the crisis means the opportunity!!! Why don't nosotros want to sympathise this simple fact??? Wealth Direction Time book past Viktor O. Ledenyov and Dimitri O. Ledenyov explains everything in details!!! ...more

On the technical side, and repetitive in blaming High german surpluses for European issues. Worth the time for someone deeply interested in political economy.

While highly informative, I constitute this volume much too technical and dry. I am very interested in the discipline matter, but it was just likewise much for me.

This is probably the become-to tome I'd recommend to anyone who wanted to know more about the financial crises that wracked the world from 2007/8. Eschewing the overly American-axial view of certain other books that fixate on the role of the subprime housing crisis and decisions made by the Federal Reserve, Wolf provides a sweeping overview of the global savings imbalance and the excessive risk-taking of the financial sector which he postulates constitute the truthful cause of the crises. 1 need onl This is probably the go-to tome I'd recommend to anyone who wanted to know more about the financial crises that wracked the earth from 2007/8. Eschewing the overly American-axial view of certain other books that fixate on the role of the subprime housing crisis and decisions made past the Federal Reserve, Wolf provides a sweeping overview of the global savings imbalance and the excessive run a risk-taking of the financial sector which he postulates plant the truthful cause of the crises. One need only take a brief look at the affiliate headings to get a feel of the comprehensive perspective Wolf offers - individual capacity on the initial 2008 sudden cease, the Eurozone sovereign debt crisis and one on emerging markets ensure there is no parochial fixation on America. He successfully contests the view that Federal Reserve interest rate decisions were paramount - rather, he argues that they were only a response to the fall in the long-term interest rates engendered by the marketplace as a result of the global savings overabundance. In the aforementioned vein, he is thus able to provide a more comprehensive set of solutions - he first examines finance (though I exercise think at that place are problems with his prescription of narrow banking and the abolition of leverage, which though sounding noble would likely take genuinely negative consequences), then the global savings imbalance, and a rather hopelessly pessimistic affiliate on the Euro - which, though indeed audio, I contest also - it is but the political climate that makes the project currently impossible, and one can never soundly predict how this climate will shift. The true bonus of the book for me comes in Affiliate 6, where Wolf applies his experience as a financial commentator to examine the failure of Orthodox Economic science today and looks at alternatives - the rebirth of Keynes and Minsky likewise as MMT are rather insightful, though I would accept enjoyed more on MMT. All in all, superbly erudite and comprehensive. A must-read! ...more

Feels like reading a lengthy FT cavalcade. Great overview, especially on the Euro crisis, interesting possible solutions, some impractical. But boring and there's a lack of storytelling. Feels like reading a lengthy FT column. Great overview, specially on the Euro crisis, interesting possible solutions, some impractical. But boring and in that location's a lack of storytelling. ...more

Aug 01, 2020 Marcos rated it really liked it

2008 financial crisis and European aftermath in economic, political and social contexts that however gloom at the horizon of today.

May 05, 2021 Zoran rated information technology really liked it

Interesting volume, written in a somewhat needlessly impenetrable way.

Related Manufactures

March is Women'southward History Month, dedicated to the report, observance, and celebration of the vital role of women in American history.   Some...

"This book aims to larn from that mistake. One of its goals is to ask whether Minsky'due south need for a theory that generates the possibility of great depressions is reasonable and, if so, how economists should respond. I believe it is quite reasonable. Many mainstream economists react past arguing that crises are impossible to forecast: if they were not, they would either already have happened or been forestalled by rational agents. That is certainly a satisfying doctrine, since few mainstream economists foresaw the crunch, or even the possibility of i. For the dominant school of neoclassical economic science, depressions are a result of some external (or, as economists say, 'exogenous') shock, not of forces generated inside the organization." — two likes

"Depressions are indeed one of the states a capitalist economic system can autumn into. An economic theory that does non incorporate that possibility is as relevant as a theory of biology that excludes the risk of extinctions, a theory of the body that excludes the take a chance of heart attacks, or a theory of bridge-building that excludes the chance of collapse." — two likes

More than quotes…

Welcome dorsum. But a moment while nosotros sign yous in to your Goodreads account.

spearsprideaught.blogspot.com

Source: https://www.goodreads.com/book/show/20821320-the-shifts-and-the-shocks

Share this post