Chronicle of a financial crisis foretold

The sub-prime crisis has impacted more people worldwide than any other crisis since the Great Depression. Flawed Government policies and unscrupulous corporate behaviour in the US created this financial meltdown, which was exported across the globe with devastating consequences.

The crisis has sparked an essential debate about America’s economic missteps, the soundness of its economy, and even the appropriate shape of the capitalist system.

Many books have been written on this subject and the book, OECD Insights: From Crisis to Recovery , is just another one on this episode. It traces the causes, course and consequences of the Great Recession of 2008.

Authors Brian Keeley and Patrick Love describe how a global build up of liquidity, coupled with poor regulation, created a financial crisis that quickly began to make itself felt in the real economy, destroying businesses and raising unemployment to its highest levels in decades.

The book starts with how we got into the crisis, what were the responses and its impact on jobs and pensions. Then it moves on to some of the themes that have emerged in reform and regulation as a fallout of the crisis such as financial market regulation, tackling tax evasion and creating a “global standard” for ethical behaviour.

The authors argue that, “just as the great depression defined the lives of a generation and reshaped the world’s economic and political contours, the recession we’ve lived through will have long-term consequences. Some of these will be economic, some social, and some may not become fully apparent for years to come.”

Green growth strategy

The book suggests a “Green Growth Strategy” as one of the solutions to guide national and international policies. The authors recommend that Governments should take a stronger lead in fostering greener production, procurement and consumption patterns by devising clearer frameworks. They also suggest that Governments should drop some costly habits, notably subsidising fossil fuels, which would help fight climate change and save money.

The language used is simple and lucid. Links to the OECD Web site are provided with all the tables and graphs so that readers can download the data and carry out further analysis, if interested. It can also be read online from the OECD’s Web site.

That said the book has nothing new or insightful to offer. If someone went to sleep in early 2007 and woke up now, this book will help him/her understand what he/she has missed. But others could find this book disappointing.

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