by Jerry O’Driscoll
My summer reading actually began in the spring and included a number of books written on the financial crisis that I was asked to review by various publications. My reviews will appear in fall issues. I can report that a number of the books written for the general public are quite good. These include, but are not limited to, works by John Taylor, Thomas Sowell and George Melloan.
I am currently reading This Time is Different: Eight Centuries of Financial Folly by Carmen Reinhart and Kenneth Rogoff. This is a major work and, while written to be accessible to the general public, contains a wealth of material for specialists. The book was in preparation years before the crisis, and its 2009 publication was fortuitous.
This Time is Different is sweeping in its compass and I have only just begun my reading. The aphorism is an “old saw” in the marketplace: “More money has been lost because of four words than at the point of a gun.”
R&R characterize the “This-Time-is-Different Syndrome,” and say in part: “The current boom, unlike the many booms that preceded catastrophic collapses in the past (even in our country), is built on sound fundamentals, structural reforms, technological innovation, and good policy. Or so the story goes.”
If this time is not different, then it is similar to past episodes. How can this be so? Is there no learning? Do borrowers, lenders and government officials really repeat the same mistakes over centuries? Are expectations not rational and markets efficient?
I’ll report again as I make progress. For now I offer one tidbit. Early in the book, R&R single out Greece as a serial defaulter. Anyone who read the book in 2009 should not have been surprised about the Greek debt crisis in 2010. In fact, the only wonderment should have been why it did not occur earlier. Unless they thought that this time is different.