Crisis Economics and The Road from Ruin

Review by Gillian Tett

To read the entire article, go to ft.com

Published: May 15 2010 00:20 | Last updated: May 15 2010 00:20

Crisis Economics: A Crash Course in The Future of Finance, by Nouriel Roubini and Stephen Mihm, Penguin £25, 368 pages, FT Bookshop price: £20

The Road from Ruin: How to Revive Capitalism and Put America Back on Top, by Matthew Bishop and Michael Green, Crown Business $27, 384 pages

During the past three years Nouriel Roubini, the Italian-American economist, has become famously – or infamously – known as “Dr Doom”. After all, back in the middle of the last decade, when most economists were championing the credit bubble, Roubini boldly predicted it would end in tears.

That won him few friends at the time; hence the name. But these days Roubini is looking so vindicated by recent events that numerous traders, politicians and regulators now hang on his words. Indeed, he is now so popular he is even considered something of a heart-throb on the New York celebrity circuit.

Given that, you might have thought that a book he has just co-authored with Stephen Mihm on the banking collapse, Crisis Economics, would be pretty racy and melodramatic too. But think again. Instead, what Roubini and Mihm offer is a sober and sensible analysis of what has gone so badly wrong in finance in the past few years, coupled with a list of proposals about what could now be done to fix these woes.

Many of their ideas might have sounded radical five years ago. But it is a sign of the magnitude of the recent crisis – and the intellectual journey that western governments have been forced to make in response to it – that Roubini’s ideas now sound almost mainstream. Or as he and Mihm write: “Financial crises have a funny way of making radical reforms seem reasonable. Much of what we’ve described [in terms of bank reforms] would have seemed radical and unnecessary in advance of the crisis that hit in 2008. That’s no longer the case.”

To read the entire article, go to ft.com


Gillian Tett is the FT’s US managing editor and the author of ‘Fool’s Gold’

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