Book list (expanded, non-exhaustive)

This is a non-exhaustive list of books on financial and economic crisis that you might choose to read and write about for Week 7.  

Ahamed, Liaquat.  Lords of Finance: The Bankers who Broke the World.

Akerlof, George & Robert Shiller.  Animal Spirits.

Bernanke, Ben.  Essays on the Great Depression. 

Cooper, George.  The Origin of Financial Crises.

Fox, Justin.  The Myth of the Rational Market 

Friedman, Milton.  The Great Contraction, 1929-1933.

Galbraith, John Kenneth.  The Great Crash of 1929.

James, Harold.  The Creation and Destruction of Value: The Globalization Cycle

James, Harold.  The End of Globalization: Lessons from the Great Depression.

Keynes, John Maynard.  The General Theory of Employment, Interest, and Money.

Kindleberger, Charles.  Manias, Panics, and Crashes: A History of Financial Crises.

Kindleberger, Charles.  The World in Depression, 1929-1939. 

Krugman, Paul.  The Return of Depression Economics and the Crisis of 2008.

Lewis, Michael.  Panic: The Story of Modern Financial Insanity.

Minsky, Hyman.  Can 'It' Happen Again? Essays on Instability and Finance 

Minsky, Hyman.  Stabilizing an Unstable Economy.

Morris, Charles.  The Two Trillion Dollar Meltdown.

Reinhart, Carmen and Kenneth Rogoff.  This Time is Different: Eight Centuries of Financial Folly.

Shiller, Robert.  The Subprime Solution.

Wessel, David.  In Fed We Trust: Ben Bernanke's War on the Great Panic.

Wolf, Martin.  Fixing Global Finance.

Zandi, Mark.  Financial Shock.

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Another book option... [list being updated...]

Richard Posner on John Maynard Keynes' General Theory of Employment, Interest, and Money. Feel free to choose Keynes as your supplemental book, if you wish.

Prize systems

In a conversation with a former IPE student the other (by the name of Dane Davis -- some of you may know him), the issue came up of whether health reform will curtail innovation in the health industry (leading to fewer new drugs, etc.). Interestingly, we soon found ourselves discussing the "prize system" mentioned by Stiglitz (and in another context by Thomas Pogge, for those of you who have taken certain courses in the Poverty program).

I have suggested for a couple of years that I expect this whole "prize" idea will soon be going "mainstream" as a way to attack complex social conundrums, ranging from infectious disease prevention to malnutrition to educational attainment, etc. As a recent example, you may recall SpaceShipOne (beware more corny music). There are other examples.

In some ways, this would seem to be more efficient than having governments and foundations provide grants, and then have the grantees report on the findings. Instead, the prize system promotes innovation by paying for demonstrated achievement. In economic terms, I suppose, for an output rather than for inputs.

Of course, there are many arguments against these, as well. Prizes would not be a perfect substitute for government action in some areas, because government is of a scope and scale that is far greater than any single corporation, making very large-scale investment at least feasible -- setting aside whether one things it is desirable. But it remains something to think about... and, I would argue, to watch for...

Future of Global Finance

By Liaquat Ahamed, who wrote Lords of Finance: The Bankers Who Broke the World. Includes references to Martin Wolf, discussion of trade deficits, how this affects currencies, and the like. We will talk about trade today, and about currencies and the international monetary system soon.

Football and the World

Don't get me started about football (i.e., soccer) players and global migration. Trust me.

Ok, you didn't start it maybe, but... see, back in 1995, there was something called the Bosman ruling. And suffice it so say -- I'm restraining myself here -- I have a crackpot theory about France winning the World Cup in 1998 that is all about Bosman (who himself was Belgian, which may seem like the first crack in the pot of the theory, but anyway...)

Now I hear the English Premiership, the top professional league in British soccer, has put in place new rules on "home-grown talent". This is to ensure more Brits make it onto the rosters of the top clubs, since the Premier League has seen ever-increasing proportions of players coming from soccer's "growth countries" in West Africa and South America, as well as some of the Old Countries on the continent (including France, the Netherlands, Belgium, and the like)

So it's basically protectionism for youth players from Jolly Ol' England (and Wales, it seems). In the interest of full disclosure, I spent much of my 20s playing pick-up soccer in West Africa... and now my family is mostly Brazilian. Three guesses how I feel about this.

Actually, I'll tell you, in three words: I feel conflicted. Though more for Brazilians than for Africans, for reasons that I can elaborate upon... upon request.

I tell you: don't get me started.

Federal Reserve Bank publications

Increasingly, I am convinced that some of the most overlooked sites for research on the political economy (whether the domestic political economy of the U.S. or the international political economy) are the 12 sites of the branches of the Federal Reserve Bank. (There is a permanent link on the right-hand side to a page that will show the districts and allow you to navigate to the sites of any of the branches. I will reproduce the link here.)

Each of the 12 banks (Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, New York, Philadelphia, Richmond, St. Louis, and San Francisco) has its own research and publications department, staffed by its own in-house economists. The offerings include "working papers", full-on journals, data sources, and other reports. One important niche this fills is that the works are often "serious" and sophisticated, but are not always purely designed for economists. Some of them have equations and a high degree of technical knowledge required, but in many cases you can still get the essence of an article by skimming this a bit. As importantly, these are very timely. Academic journal articles may take several years in the writing, peer review, revision, editing, and eventual publication. The Fed branches seem to be able to produce good material on a shorter time cycle, as their scholars have internal access to tons of data, and probably more ease in moving from writing to publication.

An example of a posting that will make you think about on issue - the subprime mortgage phenomenon and the economic crisis - would be this posting by a researcher at the Cleveland Fed: Ten Myths about Subprime Mortgages. I am not recommending this post for its specific content, with which I partly agree and partly do not, but rather as part of a general observation: for contemporary treatments of the political economy of 2007-2009, consider these a likely source for up-to-date material -- probably moreso than JStor, Project Muse, and the like.

Have some patience, look at the different sites, find the publications section for each, and do some searches when the time comes to write your papers. You will likely find something useful.

Giving the Prez a Flat Tire (or, Tyre?)

Barack Obama was endorsed by the magazine last year, but when you take on free trade, The Economist no likee.

(This issue was previously noted by John Weber. Amazing what a tiny sector of the economy can mean to the big debates...)

Economics Focus

For weekly articles that are thought-provoking and academic in content, you can generally find free access to The Economist Economics Focus. Available articles from recent weeks are on China's trade surplus, central banks targeting inflation, and whether the Crisis of 2008 was a product of the financial collapse of individual investment banks (or was economically inevitable).

Himitsu wo shiri tai (sp?)

In honor of last evening's Japan forum, I thought it worth noting that when I was growing up, we witnessed many of the concerns about America losing its economic preeminence that are present today. Except the concern was not about China, but rather its Pacific neighbor.

Being about 9 years old at the time, I will always remember it this way. (Listen carefully.)

Options for Reading on Crisis

For those of you looking for readings about the financial-economic crisis/meltdown of 2008-2009, there are many options available. I will begin a list here, and will update periodically, perhaps reposting this entry to keep the list current. Feel free to offer suggestions or to ask questions in the comments.

Some initial ideas for good selections:

Akerlof, George & Robert Shiller. Animal Spirits
Cooper, George. The Origin of Financial Crises
Fox, Justin. The Myth of the Rational Market
Krugman, Paul. The Return of Depression Economics and the Crisis of 2008.
Lewis, Michael. Panic: The Story of Modern Financial Insanity.
Morris, Charles. The Two Trillion Dollar Meltdown
Shiller, Robert. The Subprime Solution
Wessel, David. In Fed We Trust: Ben Bernanke's War on the Great Panic
Zandi, Mark. Financial Shock

Just to note from the outset, I would want you to read books that have some discussion of the macroeconomy, and not those that focus on one brokerage or investment house. Unless you can determine from previews that the book will relate the collapse of an individual investment house to the broader questions of crisis in the larger economy. Thus, the following book might be of interest:

Muolo, Paul & Mathew Padilla. Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis

But not so much the following:

Cohan, William. House of Cards: a Tale of Hubris and Wretched Excess on Wall Street

Kelly, Kate. Street Fighters: the Last 72 Hours of Bear Stearns, the Toughest Firm on Wall Street

Macdonald, Lawrence & Patrick Robinson. A Colossal Failure of Common Sense: the Inside Story of the Collapse of Lehman Brothers

Some fall in the middle, and we can discuss individually:

Tett, Gillian. Fool's Gold: How the Dream of a Small Tribe at JP Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe.

More to come. Please let me know if you are looking for books.

What is Incoherent?

I was struck by rereading Wolf over the weekend that one of the main critiques of the antiglobalization protest movement (which is broadly categorized as being on the "left", though Wolf notes Pat Buchanan is also an honorary member) is the sheer range of issues the protestors bring to the table: environment, women's rights, outsourcing and the decline of American manufacturing, labor practices in the developing world, child labor, poverty, health care, greed in finance, and the like. For Wolf, this makes for incoherence, especially since he would say the concerns are wrongly directed at globalization.

The reason I was struck is because of the protests this weekend in Washington by the "9/12" movement, led in part by Glenn Beck. One of the criticisms of that movement has been... you guessed it, incoherence. The concerns of the 9/12 protestors range from corruption in Washington, to the financial bailout, to Obama's birthplace, to health care and the imminent advent of American Socialism, all wrapped up together in a protest movement that would broadly be seen as on "the right" (though there would undoubtedly be honorary members from the left as well). They may broadly be grouped together under "What is Obama doing to the U.S.A.!?!?!", but a question would for clarification be -- just like Wolf would ask of the antiglobalization types -- what is the ideology or belief system that underpins all of this?

Just to wrap it back around, from a Google search on incoherence in the antiglobalization movement, I come across the following quote about the 1999 protests in Seattle (or more specifically the puppets at Seattle), on FoxNews.com:

It reflects the utter incoherence of the protesters' world views...just like those political metaphors you hear so much about these days.

There is much to muse about here, but it may simply be worth mentioning these for the moment, for you to juxtapose and interpret yourselves. What is incoherent, and what issues are linked together?

Toliy Khomenko v. Martin Wolf Cage Match (Film at 11)

Short version of Toliy Khomenko post: "Let's cut down the 'global jungle'".

Martin Wolf, Making Globalization Work, p 12: "[Former French Prime Minister] Edouard Balladur was wrong. The market is not a jungle, but among the most sophisticated products of civilization."

Oh NO YOU DIDN'T!

Fight! Fight!

(Or maybe not? Maybe Toliy will agree with Wolf...?)

The Falling Dollar

Some of you may be interested in the article here. (Washington Post may require sign-in.) For some of you, this may be an article to breeze through, but probably not for most. Let me offer a couple of quick selections from it, and we will discuss as time permits:

Many economists think the global recession is winding down or is already over, which has encouraged investors to dump dollars to buy stocks and other higher-yielding assets. "As we have stepped away from the abyss people have a healthier appetite for risk," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

The Federal Reserve's strategy of keeping a key interest rate near zero to help get the economy back on track has given investors further incentive to search for alternative investments that pay a higher yield. They have poured money into emerging markets, which are expected to rebound quickly. ...

Gold has become attractive as another aspect of the Fed's strategy to jump-start the economy -- creating billions of dollars in new money to buy government debt and mortgage-related securities, also known as quantitative easing -- as well as doubts about the government's ability to get spending under control have stoked fears of inflation down the road.

Again, we will have a few weeks to sort out all the reasons and implications here. For the moment, ask yourself this: what are the advantages and disadvantages of a strong dollar? Would you rather have a relatively "strong" dollar with a great deal of purchasing power, or a relatively "weak" dollar with less purchasing power? Why?

We'll have plenty of chances to discuss.

Welcome to your life in the International Political Economy

Greetings to all of you in Politics 381.

Today, we will begin some preliminary discussions of I.P.E., but much of the heavy lifting will wait until next week, after you have had a chance to do readings. Three items of interest today.

1. All of you should be creating your own blogs in the next few days. When you do so, I will place links to your blogs along the right-hand side of this page, replacing the links to blogs from previous iterations of the course.

You may create your own blog at the site of your choosing, so long as it is publicly/openly available without requiring registration or sign-in. Two easy options are:
Blogger (which hosts this blog), and
WordPress

2. You must write a short (approx. 500 word) essay in no more than one hour by Monday morning. Please submit the essay via email to me and post your response to your blog. The question and template can be found here.

3. Please check in on this blog regularly for any updates, issues, and questions. You are encouraged to add your own links to your blog, and links to this page and your classmates' pages are logical choices.

I will leave my own commentary on I.P.E. until after you have submitted your responses, so we can initiate a discussion using your blogs (as well as this one) as a point of departure.

- jtd