This Time Is Different: Eight Centuries of Financial Folly

The book is significant and substantial. The data collated by the authors from other sources or emanating from their own research is impressive. But the book is not simply the product of hard working and meticulous authors but also of intelligent ones. The authors are insightful and incisive. The wealth of data render tables and graphs illustrate the points made in the text with crystalline clarity. The authors certainly do not lack wit but their aim is not to entertain and create pyrotechnics but to inform, provide substance and in this way fulfill the reader in his/her gaining insight into the nature, severity, indicators and sequencing of a wide array of financial crises. The authors are meticulous and explain with professional integrity to the reader the methodologies they employ and the merits but also limitations of these methodologies;they are considerate to the reader to the point of advising which parts to skip without losing continuity. It is true that the book is rigorous and scholarly but accessible to the intelligent layman with elementary knowledge in Statistics and modest exposure to Economics vocabulary. The authors dispel compellingly and conclusively the "this-time-is-different" syndrome. The syndrome simply stated is that the old rules of valuation no longer apply and that the current boom, unlike the many that preceded catastrophic collapses in the past, is built on sound fundamentals, structural reforms, technological innovation, and good policy. The book in detailing crises that have arisen over the past eight centuries exposes this myth and shows that boom-bust cycles recur with relentless regularity, a trend that is likely to continue in the future. But the preceding serves simply as a point of departure and the focus of the book is on the crises themselves while systematic data and Macroeconomic Time Series cover the period 1800-2008. The book examines a wide array of financial crises such as sovereign defaults (foreign and domestic), banking crises, exchange rate crises, hyperinflation while it observes that crises often occur in clusters. The penultimate chapter examines situations such as the Great Depression of the 1930s and the latest world wide financial crisis which it labels the "Second Great Contraction"- in which crises occur in clusters and on a global scale. The book shows that advanced countries and economies may have "graduated" from serial default on sovereign debt and recurrent episodes of very high inflation as the cases of Austria, France, Spain and others illustrate. But History tells us that "graduation" from recurrent banking financial crises is much more elusive and that advanced economies are as vulnerable to them as emerging economies. The literature suggests that markedly rising asset prices, slowing real economic activity, large current account deficits, and sustained debt built ups (whether public, private, or both) are important precursors to financial crisis;also sustained capital inflows are particularly strong markers for financial crises. The preceding were very prevalent and pronounced preceding the subprime crisis in the United States which evolved into a major global financial crisis parallel only to the Great Depression of the 1930s. The aftermath of severe financial crises particularly global are characterized by asset market collapses which are deep and prolonged, profound collapses in output and employment, and government debt that explodes not only due to bail outs but also due to collapse in revenues and soaring interest rates on debt. Serious global financial crises are painful and protracted events extending over several years. In concluding, I cannot recommend the book strongly enough to the serious reader but at the same time I caution that the book is not suited to the casual reader and the faint-hearted.

This is a good book full of robust analyses, a clear structure, nice examples and conclusions. It covers all the major types of market & state financial failures. However, the writting style is sometimes repetitive and cumbersome or too academic/boring.

This book investigates datasets connecting financial measures such as debt or real estate price changes to financial turmoil. Its a huge work, and I guess academics could not previously have conducted this without the computational tools which are now available. In the same way we now have software to decode DNA, we can apply similar computational tricks to financial data. The book analyses domestic debt; data that has apparently been unavailable previously, as governments are not that willing to reveal how much they have borrowed historically. Indeed, the authors make it clear that there is obfuscation going on here, as with modern technology, this data should be readily available. Nevertheless, they have tacked bits of domestic internal debt data together in order to aid the analysis. Future generations will look back at our present financial easing and wonder what the hell we were thinking, trying to dig ourselves out of a financial crisis (bought on by real estate lending), by trying to further stimulate the real estate market. All the more so given analysis which is now readily available, such as in this book. One extension which I would like to see would be to include implicit debt, such as historic promises of state benefits, in order to draw further conclusions about our current financial situation. In the UK, we have the NHS and public sector pensions to finance. In the US, there is the medicare bill. It would be interesting to have seen the impact of these implicit debts being quantified in This Time is Different.

Es un recorrido bastante academico por las diferentes crisis que han llevado a la sociedad predominantemente occidental a situaciones de crisis, depresion o recesión en repetidas ocasiones. Como los seres humanos tienen solo un poquito mas de memoria que un pez y repiten sus errores las crisis se suceden y los ilusos al salir piensan dos minutos antes de la siguiente crisis que ya no habra mas. Lo de dos veces en la misma piedra varía con este libro, son mas bien una veintena de veces las que repetimos. Y las que vendran. La escasez de memoria y las pasiones humanas como describe el libro, la codicia y el afan de enriquecerse nos llevan una y otra vez a recorrer los mismos caminos. El paisaje diferente hace pensar a muchos que el final sera distinto. Nunca lo es. Pero con lo facil que es, nadie le pone remedio. Aparte de eso, hay una parte del libro llena de tablas y comparativas que es super tocha. Pero esta bien que esté hay de consulta. El libro se ha puesto de moda y muchos hablan de el sin haber leido mas que la sinopsis. El trabajo de ambos escritores profesores de busqueda de datos y acumulacion de tablas es impresionante. Será, bueno ya lo es, uno de los clásicos de la crisis. Si politicos y economistas hubieran de aprenderse por ley un resumen de este libro antes de ejercer, igual a las generaciones venideras les lucía el pelo de otro modo. De un modo mejor.

A great reference for anyone interested in debt crises and banking crises that have occurred in world history. The “box” references add an enjoyable and rich dimension to the book. A lot of material for the novice. Highly recommended.

Awesome book

Well, reading this book has been a pretty great experience. The style is easy to follow, and the content is thorough. In a nutshell: if you want to understand the depth of the financial system and crises, along with a long series of data, this book is for you. So, enjoy!

Really azppreciate the book and research. For five stars, I would have preferred a more objective perspective and unifying theme. Plus would be interesting to see the post GFC update.