Book description
In the spirit of John Kenneth Galbraith and Paul Krugman, Roger
Bootle challenges readers to look at the deep causes of the current
financial crisis in his trenchant, topical and thought-provoking
exploration of both our economic future and the future of the market
system itself. The Trouble with Markets sets the crisis in an
historical context, with fascinating material on the Great Depression
and other periods of economic downturn. Although fiercely critical of
bankers and regulators for their roles, Bootle blames the crisis not
on them, but on the idea that financial markets can be left alone.
Written in his distinctive, highly readable style, the book examines a
host of critical questions, including what investors should do with
their money in turbulent times, and calls for a contraction of the
overfed financial services sector. Provocative, radical and thoroughly
international in scope, The Trouble with Markets is sure to appeal to
financial types and general readers alike.
There were many causes of the crisis--greedy bankers and naïve
borrowers, mistaken central banks and inept regulators, insatiable
Western consumers and over-thrifty Chinese savers. But underlying all
these was a single super-cause--the idea that the markets are always
right and, consequently, that they can be left alone. Belief in this
idea not only explains the extreme risks that both banks and borrowers
took, but also the passivity and carelessness of central banks and
regulators in allowing it to continue.
Indeed, the "Great Implosion" has revealed not only
the markets' excessive risk-taking and how fragile the financial
system is, but also how bloated the financial sector has become. It
has demonstrated a failure of the market with regard to the setting of
executive compensation in general, and pay in the financial sector in particular.
The result has been the revelation of a financial sector
hell-bent on pursuing its own profit, imperiling instead of promoting
the public good, and a system of corporate governance in which
managers pursue either their own interests or the short-term
performance of the share price--often one in the same.
Bootle, one of London's best-known economists, not only offers a
serious critique of the free-market mindset, but also a plan for
radical reform of the system and a way out of the economic mess.
Despite some signs of recovery, the economic outlook in the real
economy is for an extended period of weakness amounting to a
depression. And while so many people worry about a resurgence of
inflation, the greatest threat is the emergence of sustained deflation.
It will only be possible to get back to full employment and
stability if China leads the super-saving countries by changing course
to a policy of increased domestic demand. In order to persuade her to
do this, China needs to be offered both a seat at the top table and a
change in the international position of the dollar. Ironically, the
excesses of cowboy capitalism could lead to the evolution of a global
money and to the beginnings of global governance.
With his trademark clarity and acerbic wit, Roger Bootle's new
book lays out the pathway for saving capitalism from itself.
