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Freefall: America, Free Markets, and the Sinking of the World Economy (Englisch) Gebundene Ausgabe – 19. Januar 2010

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"Stiglitz is the world's leading scholarly expert on market failure, and this crisis vindicates his life's work. There have been other broad-spectrum books on the genesis and dynamics of the collapse, but Freefall is the most comprehensive to date, grounded in both theory and factual detail... the definitive critique to date of how the Summers-Geithner strategy fails, both as economics and as politics... The tone of this book is good-humored and public-minded." -- Robert Kuttner "Asks some basic and provocative questions... Freefall is a must-read for anyone seeking to understand the roots of the financial crisis. Stiglitz brilliantly analyzes the economic reasons behind the banking collapse, but he goes much further, digging down to the wrongheaded national faith in the power of free markets to regulate themselves and provide wealth for all." -- Chuck Leddy "Mr. Stiglitz uses his experience teaching to give the lay reader a lucid account of how overleveraged banks, a shoddy mortgage industry, predatory lending and unregulated trading contributed to the meltdown, and how, in his opinion, ill-conceived rescue efforts may have halted the freefall but have failed to grapple with more fundamental problems... His prescience lends credibility to his trenchant analysis of the causes of the fiscal meltdown." -- Michiko Kakutani "As a Nobel Prize winner, member of the cabinet under former President Bill Clinton and chairman of his Council of Economic Advisers, Joseph E. Stiglitz has some practical ideas on how to ease the pain of the Great Recession and maybe help prevent the next one." -- Carl Hartman "Freefall is a spirited attack on Wall Street, the free market and the Washington consensus." -- David Smith "Stiglitz offers a powerful account of the financial meltdown and criticizes the Obama Administration for 'muddling through' rather than pushing aggressively for change... An excellent overview from a Nobel prize-winning economist of what caused the crisis and what reforms should be enacted... I can only hope Obama makes room for it on his nightstand." -- James Pressley "[W]hat brings this book to life is his formidable grasp of economic policy and strong sense of conviction about the blunders that have been made, especially with respect to the bank bailouts." -- Jim Zarroli, NPR business reporter "What We're Reading"

Über den Autor und weitere Mitwirkende

Joseph E. Stiglitz received his PhD from MIT in 1967, became a full professor at Yale in 1970, and was awarded the John Bates Clark Award in 1979, which is given biennially by the American Economic Association to an economist under 40 who has made the most significant contribution to the field. He has taught at Princeton, Stanford, and MIT, and was the Drummond Professor and a fellow of All Souls College, Oxford. He is now a professor at Columbia University and co-chair of Columbia University's Committee on Global Thought. He is also the co-founder and co-president of the Initiative for Policy Dialogue at Columbia. In 2001, he was awarded the Nobel Prize in economics for his analyses of markets with asymmetric information, and was a lead author of the 1995 Report of the Intergovernmental Panel on Climate Change, which shared the 2007 Nobel Peace Prize. In 2011, Time named Professor Stiglitz one of the 100 most influential people in the world. Professor Stiglitz was a member of the Council of Economic Advisers from 1993-95, during the Clinton administration, and served as its chairman from 1995-97. He then became chief economist and senior vice president of the World Bank from 1997-2000. In 2008, he was asked by the French President Nicolas Sarkozy to chair the Commission on the Measurement of Economic Performance and Social Progress, which released its final report in September 2009. In 2009, he was appointed by the President of the United Nations General Assembly as chair of the Commission of Experts on Reform of the International Financial and Monetary System, which also released its report in September 2009. Professor Stiglitz helped create a new branch of economics-The Economics of Information-exploring the consequences of information asymmetries and pioneering such pivotal concepts as adverse selection and moral hazard, which have now become standard tools not only for theorists but also for policy analysts. He has made major contributions to the theories of welfare economics and of income and wealth distribution, and his work has helped explain the circumstances in which markets do not work well and how selective government intervention can improve market performance. Recognized around the world as a leading economic educator, Professor Stiglitz has written books that have been translated into more than a dozen languages. He also founded one of the leading economics journals, The Journal of Economic Perspectives. His book, Globalization and Its Discontents (Norton, 2001), has been translated into 35 languages and has sold more than a million copies worldwide. Other recent books include The Roaring Nineties (Norton); Towards a New Paradigm in Monetary Economics (Cambridge University Press), with Bruce Greenwald; Fair Trade for All (Oxford University Press), with Andrew Charlton; Making Globalization Work (Norton and Penguin/ Allen Lane, 2006); The Three Trillion Dollar War: The True Cost of the Iraq Conflict (Norton and Penguin/ Allen Lane, 2008), with Linda Bilmes at Harvard University; Freefall: America, Free Markets, and the Sinking of the World Economy (Norton and Penguin/ Allen Lane, 2010); and The Price of Inequality: How Today's Divided Society Endangers Our Future (Norton and Penguin/ Allen Lane, 2012).

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5 von 5 Kunden fanden die folgende Rezension hilfreich Von Dr. Hartmut Heuermann am 29. September 2011
Format: Taschenbuch Verifizierter Kauf
Joe Stiglitz speaks out again - eloqently, forcefully, convincingly. He is, in the words of Paul Krugman (New York Times), "an insanely great economist". His new book is nothing less than an intellectual settling of accounts with Wall Street, America's money-grabbing elites, and with Washington, the country's hotbed for corrupt politicians who deem themselves economic experts. Siglitz relentlessly takes them to task, blaming them for the disaster that has befallen the finanical world and exposing their professional incompetence in times of turmoil. The bubble has popped, but, as the author makes clear, it is not the capitalist system per se that has failed - the system is sufficiently flexible and has proved adaptable to serious challenges more than once -, nor are the monetary institutions of the Federal Reserve or the World Bank malfunctioning. It is the misconduct of chief executives and central bankers whose selfishness is about to ruin the country, dragging other countries into the abyss. In the spectacular crashes of Enron, World Com, and Lehman Brothers or in the blatant manipulations of Bernie Maduff, this conduct has been nothing short of criminal. What, in Stiglitz's view, conduces to unethical practices and aggravates the crisis is, more than anthing else, the "madness" of excessive deregulation.Under the guise of liberalism deregulation has caused the laissez-faire policy (ushered in by Maggie Thatcher and Ronald Reagan in the 1960s) which is now coming to fateful fruition. Carried to extremes, it has fostered a set of popular expectations to the effect that in a free market economy everybody expects everything to be up for grabs - commodities as well as consumer goods, public space as well as natural resources.Lesen Sie weiter... ›
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4 von 6 Kunden fanden die folgende Rezension hilfreich Von M. Schweiger am 4. Februar 2011
Format: Taschenbuch Verifizierter Kauf
Spannend aufbereitet und sehr Zeitkritisch. Wie der Untertitel erkennen lässt aber bedauerlicherweise weitgehend inhaltlich auf die USA ausgerichtet - schadet der Lektüre meines Erachtens aber keineswegs.

Daumen hoch!
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0 von 11 Kunden fanden die folgende Rezension hilfreich Von daxriders am 27. Juni 2012
Format: Kindle Edition
Ich muss vorerst sagen, dass ich das Buch noch nicht gelesen habe aber erwerben möchte.
Zu meiner Überraschung ist die Kindle-Version des Buches um 1,39€ teuer als die Taschenbuch-Version. Wie kann man das überhaupt erklären?
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Excellent and Credible Insights! 5. Januar 2010
Von George Bush - Veröffentlicht auf
Format: Gebundene Ausgabe
Stiglitz believes that markets lie at the heart of every successful economy, but do not work well without government regulation. In "Freefall" he explains how flawed perspectives and incentives lead to the 'Great Recession' of 2008, and brought mistakes that will prolong the downturn.

Between 1996-2006, Americans used over $2 trillion in home equity (HELOC) to pay for home improvements, cars, medical bills, etc., largely because real income had been stagnant since the early 1990s. Economic recovery requires that we repay the remainder of these amounts, overcome stock market losses (10% between 2000-2009), the loss of some 10 million jobs, and reductions in credit card balances, and find an equivalent amount to the former home-equity sourced financing ($975 billion in 2006 alone - about 7% of GDP) to finance another consumer-driven GDP upturn - without the prior boom in housing and commercial building. Stiglitz also points out that the Great Depression coincided with the decline of U.S. agriculture (crop prices were falling before the 1929 crash), and economic growth resumed only after the New Deal and WWII. Similarly, today's recovery from the Great Recession is also hampered by the concomitant shift from manufacturing to services, continued automation and globalization, taxes that have become less progressive (shifting money from those who would spend to those who haven't), and new accounting regulations that discourage mortgage renegotiation.

Stiglitz is particularly critical of the U.S. finance industry - its size (41% of corporate profits in 2007), avarice (maximizing revenues through repeated high fees generated by over-eager and over-sold homeowners needing to refinance adjustable-rate mortgages that repeatedly reset), and 'sophisticated ignorance' (using complex computer models to evaluate risk that failed to account for high correlation within and between housing markets; 'eliminating risk' through buying credit default swaps from AIG - blind to the likelihood AIG could not make good in a housing downturn), and excessive risk (banks leveraged up to 40:1 with increasingly risky mortgage assets - 'liar's loans,' 2nd mortgages, ARMs, no-down-payments; taking advantage of the 'too-big-to-fail' and 'Greenspan/Bernanke put' phenomena). Much of this behavior was driven by lopsided personal financial incentives (bonuses) - if bankers win, they walk off with the proceeds, and if they lose, taxpayers pick up the tab. However, to be fair, any firm that failed to take advantage of every opportunity to boost its earnings and stock price faced the threat of a hostile takeover.

The impact of mortgage defaults is greater than one would otherwise expect because financial wizards found that the highest tranches of securitized mortgages would still earn a AAA rating if some income was provided to the lowest tranches in the 'highly unlikely' event of eg. a 50% overall default, thus boosting the ratings and saleability of lower tranches. (Fortunately for the U.S., many of these mortgages ended up overseas, spreading the disaster.) Another problem is that mortgage speculators make more profit from foreclosure than partial settlements. Meanwhile, investors worried that mortgage servicers might be too soft on borrowers required restrictions that make renegotiation more difficult and lead to more foreclosures. Similarly, those with 2nd-mortgages often found that those holding the second were unwilling to accept a principal write-down as their share of assets would be wiped out. Finally, new government regulations aimed at making banks seem healthier than otherwise allowed changing from 'mark-to-market' valuation of mortgages to long-term 'mark-to-hope' valuation - thus, writing down assets in a renegotiation would generate the very mortgage write-downs the new regulations avoided, and thus increased bank reluctance to do so.

"Freefall" also does an excellent job refuting many of the simple explanations, alibis, and remedies for the 2008 Great Recession. For example, Greenspan's 'nothing he could do' alibi is countered by Stiglitz's 'require higher down payments or margin requirements' (or increase interest rates). To those blaming Community Reinvestment Act requirements for increased mortgages to those with low incomes, Stiglitz says the default rates on those loans was less than in other areas; as for Fannie and Freddie being responsible, they came late into the sub-prime game. Responding to claims that increased regulation would stifle innovation and its role in economic growth, Stiglitz asserts that it is impossible to trace any sustained economic growth to those 'innovative' mortgages. (A 'real' contribution could have been made by less profitable innovative mortgages that helped homeowners stay in their homes.) On the other hand, he also admits that just giving more regulatory power to the Federal Reserve is not a solution - the Federal Reserve didn't use what it did have prior to late 2008; similarly, the SEC boosted leverage limits from 12:1 to 30:1 and higher in 2004 - exactly the wrong move. Banks suggest banning short sales in the future as a preventive measure - Stiglitz, however, points out that the incentive provided short-sellers to discover fraud and reckless lending may actually play a more important role in curbing bad bank behavior than government regulators have.

Other factors, especially government actions, also receive attention from the author. Overall, global supply exceeds demand - thus, the recovery focus needs to be on boosting demand. Stiglitz points out that growing inequality shifts money from those who would have spent it to those who didn't - weakening overall consumer demand. High oil prices have also impacted most those with low incomes, and probably encouraged Greenspan to hold down interest rates to counteract the negative impact. On a broader level, Stiglitz contends that IMF encouragement of national self-discipline and 'rainy-day' funds also weaken consumer demand. As for recommendations for more tax cuts and rebates, Stiglitz says these won't have much impact on consumers saddled with debt and anxiety, and as long as there's excess capacity, businesses will be reluctant to invest (Laffer's supply-curve tax-curve is an irrelevant theory, at best). Stiglitz even suggests elsewhere that the failure of Bush's 2001 tax cuts to stimulate the economy may have also influenced Greenspan to hold down interest rates for too long.

AIG, once bailed out, paid off billions to Goldman Sachs at 100% (Secretary Paulson's former firm), while defunct credit-default-swaps elsewhere were settled at only 13 cents on the dollar, says Stiglitz. Overall, he is very negative on the financial-sector bailout (TARP), believing that the money would much better have been used to capitalize new banks at 12:1 leverage, or not spent at all. The resulting bank subsidies were unfair to taxpayers (Treasury put up most of the money and got short-changed on potential benefits), and implementation was inconsistent - some institutions and stockholders were bailed out, others were not. (The reason lending 'froze up' is that banks didn't know whether they or their peers ere underwater.) The stimulus package, on the other hand, was too small (aimed at 3.6 million jobs, vs. 10 million lost plus 1.5 million new workers/year needing jobs), and was delegated to Congress without clear guidance. The result was a failure to provide mortgage insurance for those losing jobs, while instead creating the 'cash-for-clunkers' (mostly just moved sales from one period to another - [...] estimated only 18% were added sales, costing taxpayers $24,000 apiece; eight of the top ten purchases came from Asian manufacturers), ineffectual tax cuts, putting money into a failing auto industry, and increased road construction (greater global warming) instead of giving even more money to high-speed rail. The stimulus emphasis should have been on fast implementation, high-multiplier impact, and addressing long-term problems (eg. global warming). The employment situation now is worse than just the unemployment rate suggests - there are a record 6 applicants for every opening, the average work week is at 34 hours - the lowest since data was first collected in 1964, many have turned to disability instead of unemployment and are not counted.

Overall, Stiglitz believes there is far too much short-term thinking driving decision-makers, that business lobbies are too strong, and that markets are not naturally efficient. (Other inefficient market areas besides finance include health care, energy, manufacturing.) Meanwhile, we have done nothing to correct the underlying problems (big banks are even bigger) and Stiglitz also fears (reported elsewhere) the U.S. economy faces a "significant chance" of contracting again.

Interesting side-notes: 1)Stiglitz suggests that banks 'too-big-to-fail' should pay higher rates of deposit insurance, and incur restraints on executive incentives. In 1995 our five largest banks' market share was 11%, 40% now. Regardless, the world's largest three banks are now Chinese - #5 is American. (Not to worry - scale economics are no longer a factor for any of those banks, says Stiglitz.) 2)President Reagan made a major mistake in removing Paul Volcker as Chairman of the Federal Reserve Board and appointing Alan Greenspan in his place. Volcker had brought down inflation from more than 11 percent to under 4 percent, which should have assured his reappointment. But Volcker believed financial markets need to be regulated, and Reagan wanted someone who did not. Thus, Stiglitz believes regulations must be mandated, and enforced by a neutral, not political, source. 3)Repealing the Glass-Steagall Act in 1999 changed the culture of banking from conservative to high-risk, and also encouraged even larger institutions. 4)It is ironic that the Bush/Greenspan efforts to minimize government involvement in the economy resulted in our becoming de facto owners of the world's largest auto and insurance companies, and some of the largest banks. 5)Stock options are doubly damaging - they undermine stockholder wealth while remaining largely hidden from stockholders, and they encourage maximum short-term accounting manipulation to move stock prices up. 6)The U.S. national debt will reach 70% of GDP by 2019, and when it hits 90%, paying 5% interest on that debt will consume one-fifth of federal taxes.

Bottom-Line: Most books on current economic issues written for the public are superficial, or even worse, mere demagoguery. Stiglitz's qualifications - Nobel prize-winner in economics (2001), former Chairman of the President's Council of Economic Advisors (1995-97), and former World Bank Chief Economist help provide an important, interesting and credible alternative. "Freefall" was a pleasure to read.
61 von 67 Kunden fanden die folgende Rezension hilfreich
Economics 101 3. Februar 2010
Von W. P. Strange - Veröffentlicht auf
Format: Gebundene Ausgabe
I admit that economics confuses me, so when I read a book written in lucid easy to understand language I can begin to understand a compound-complex idea a little more clearly. Nothing in economics is as it seems because politics can often obfuscate with ideological explanations that are neither simple or even partially true when based on politics. Stiglitz doesn't say that the free market can't work, but that it isn't the entire answer. Regulations, as the banking meltdown of 2009 demonstrates, are necessary to prevent greed from becoming the dominating motivation for Wall Street and big banks, especially investment banks that measure success only in terms of how big their next bonus will be.

"Freefall" doesn't give us all the answers, and again I admit that I still have questions, but for a basic understanding of the markets as they played out in the past couple of years and how deregulation merely increased the problems for most of Main sreet this is a very good place to start. Some critics have already panned this book as a call to socialism, but those critics obviously lack even a basic understanding of what socialism really is and are only looking for a buzz word to sustain the belief that a totally "Free Market" system is the only good thing, when in fact it increases the chances of boom and bust cycles coming even closer together in the future. To begin, modest regulations are all that might be needed, and if bankers once again act trustworthy and preform ethically it could be enough. If greed continues unabated, then the middle class will disappear and only the wealthiest will profit.
19 von 21 Kunden fanden die folgende Rezension hilfreich
Pulls no punches 15. April 2010
Von Andrew Berschauer - Veröffentlicht auf
Format: Gebundene Ausgabe
With Freefall, Joseph Stiglitz presents a thoroughly argued - although at times convoluted - exposé on the downfall of the global economy and (he clearly hopes) the discrediting of the "markets can do no wrong" school of economic thought. I'm not an economist, and am not qualified to comment on the academics presented here, but the fact that no one emerges unscathed from this book gives me a degree of confidence that Mr Stiglitz has produced a well-balanced work focussed on outcomes rather than party platforms.

Many of the 1-star reviews harp on about Mr Stiglitz's wanting to give the government more power when the Fed and others were culpable in the Great Recession. At best that interpretation does a disservice to what Mr Stiglitz advocates. Yes, he calls for a balanced role for government involvement to keep markets in line (as, he argues, they have clearly demonstrated they cannot do it themselves), but he also takes regulators and the Fed to the mat for their poor oversight, and the Obama administration for poor choices of remedy (basically just continuing the failed policies of GW Bush). Mr Stiglitz goes further, though, in calling for a restructuring of the financial sector - from the ashes, a phoenix - saying that today's incentives produce bad behavior, and need to be rethought with "right" outcomes in mind. It's an admirable goal, but where the political will for this comes from is anybody's guess. If Obama couldn't part ways with GW Bush on this matter, how will he restructure finance? One reviewer laments the lack of moral outrage expressed by the author - did he read the book? It's full of moral outrage and condemnation of a system which has failed everyone except the heads of the financial sector.

I agree with a few thoughts from the 1-star reviews: Freefall tends to wander from topic to topic, and gets very repetitious. The final chapter is like reading a sermon - demanding we be, perhaps, unrealistically moral. Also, 1-star reviewers unfairly complain there are no remedies shared in the book - there are plenty (e.g., implementing a Global Reserve Currency at one end of "the possible" and Reinventing Economics at the other), but they are a) thinly distributed throughout the book (so easy to forget they're there), and b) sometimes so grand in scope and vision as to be almost meaningless in today's political reality.

At the end of the day, I found Freefall to be harshly (yet fairly) illuminating in the origins of the Great Recession, the shortcomings of the system and its actors in the market and in the government, and the fact that something good can emerge from this mess. It is clear that major changes are needed, and equally clear that there is good reason to be skeptical that necessary change is achievable. We live in a different, more interconnected global economy than when the current rules were created; Mr Stiglitz convincingly argues that a new way of managing this economy - even a new way for how we think about the economy - is mandatory. How we get from here to there, however, is anything but clear.
39 von 47 Kunden fanden die folgende Rezension hilfreich
Speaking Truth to Power -- Again 1. Februar 2010
Von JB Chalfont - Veröffentlicht auf
Format: Gebundene Ausgabe Verifizierter Kauf
Professor Stiglitz has repeatedly spoken truth to power. He wrote about the perils of unchecked globalization, the disaster of the Federal Reserves policies in the 90s and 00s, the wrong-footed solutions to the Asia crisis, and the cost of the Iraq War. Here he lays out in simple, straightforward jargon-free language, what happened to cause the worst economic crisis since the Depression and what steps we need to take to prevent it from happening again. Highly recommended.
26 von 31 Kunden fanden die folgende Rezension hilfreich
very important perspective, a bit uneven on blame 29. Januar 2010
Von A. Menon - Veröffentlicht auf
Format: Gebundene Ausgabe Verifizierter Kauf
Freefall is a fantastic overview of the crisis from both the multitude of causes to the social fabric that created the backdrop. Stiglitz in a fairly concise book, manages to discuss a lot of issues with a lot of clarity. It describes incentive misalignment, the abuse of barganing power by those who had it during the crisis under asymmetric informaiton, the failure of prices to reflect true costs, the abundance of negative externalities and market failures that inherintly exist and even the degredation of our social contract in promoting general well being. The book is not written in two parts but the contents of the book are sort of split into two categories.

The first part of the book is really a description of the causes of the crisis. It describes some of the specific actions taken by bankers, the incentives to take fees irrespective of the value add of the underlying contracts, and how that evolved into model "arbitrage" abuse in mortgage repackaging. It discusses the change in the distribution of wealth in the country and the stagnation of wages for most of the country despite general GDP growth that hides that fact, in particular the transfer of wealth from "main street to wall street". It discusses the failure of central bankers to address the bubbles of the economy and how their economic principles were too often based on faulty neo-classical principles. It then goes into how the crisis was used as an opportunity to hold the taxpayer "hostage" in the same way that one can price gouge a pedestrian for a ride in a hurricane. This part of the book prepares the unfamiliar reader with the much needed backdrop to understand most of the crisis.

The second part of the book starts off where the current events end and tries to set the scene for the steps we need to take for the future. This was the best part of the book for me. Stiglitz outlines many of the important principles that are violated in the neo-classical world that makes it apparant, desire for incremental benefit does not imply an aggregate improvement for the economy. Stiglitz makes a strong effort to show market failures are rife, the cost of a crisis as an example far exceeded the profit generated by fees, and as a result leaning on - "the market is better than regulators in forming solutions", clearly needs to be re-thought. It is hard to disagree... Stiglitz also discusses less in depthly but importantly nonetheless, the ecological economic principles that we are missing today- in particular the true "cost" of consumption as a tax on the future with resource scarcity as well as environmental damage. I dont think these are particularly contentious but they are often forgotten. Aspects of behavioural finance are brought up and the cognitive dissonance of financiers responses are described. Stiglitz ends with a call to action society at large to take the recent failure as an opportunity to ammend our social contracts and revitalize our trust and institutional arrangements. The need for better regulation he believes is truly clear and the recent crisis needs to be taken as a reason to fundamentally change the way our economy is structured, from capital/labour distribution to consumption investment balance (investment in both fixed assets as well as human capital).

This book is so far one of the most insightful I have read. I agree with a lot of the commentary but let me quickly go into why I dont think its quite five stars. The author is often a bit unbalanced in the criticism, of both central bankers as well as those in finance. Most of the book goes on about the almost inherent total disregard for any other people's interests by the bankers involved, but then later it contextualises their actions and describes their actions as a function of their environment and incentive set- making them more a time and place phenomenon than the bad people they are painted as elsewhere. Central bankers too are berated, but they arent incentivised by the pay. Hindsight is 20/20 and although some were very impressive with their foresight of the problems, it is hard to uniformly make out as though central bankers are all fools. The end goal of this book is to try to argue for a change in social architecture and institutional arrangement. Currently incentives are misaligned, the markets fail and we deal with things after rather than pre-emptively. If this is the goal then this book should have been written inclusively for all readers. I find it quite exclusionary for most in finance and many in politics. That is not that sensible given the goal is to convince. That being said, some scolding is in order, but the magnitude and the one-sidedness is a bit frustrating, predatory lending was a real phenomenon, but assuming away the responsibility by the many individuals speculating on property is not a fair evaluation. All in all the economics of the crisis are evaluated excellently, the conclusions can be debated, but in my opinion they are extremely valuable and provide an important framework to consider for the future. Alot is accomplished in this book and most of it is convincingly argued, this book is a very valuable addition to our recent crises's literature.
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