The Escape from Balance Sheet Recession and the QE Trap

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Compare global experiences during the balance sheet recessionand find out what is needed for a full recovery The Escape from Balance Sheet Recession and the QE Trapdetails the many hidden dangers remaining as the world slowlyrecovers from the balance sheet recession of 2008. Author andleading economist Richard Koo explains the unique political andeconomic pitfalls that stand in the way of recovery from this raretype of recession that was largely overlooked by economists. Kooanticipated the current predicament in the West long before othersand issued warnings in his previous books: Balance SheetRecession and The Holy Grail of Macroeconomics. This newbook illustrates how history is repeating itself in Europe whilethe United States, which learnt from the Japanese experience, isdoing better by avoiding the fiscal cliff. However, because of theliberal dosage of quantitative easing already implemented, theUnited States, the United Kingdom, and Japan may face a treacherouspath to normalcy in what Koo calls the QE Trap. He argues that itis necessary to understand balance sheet recession in order toresolve the Eurozone crisis, particularly the competitivenessproblems. Koo issues warnings against those who are too ready toargue for structural reforms when the problems are actually withbalance sheets. He re-examines Japan's two decades of experienceswith this rare recession and offers an insider view on theAbenomics. On China, readers will gain a very different historicalperspective as Koo argues that western commentators have forgottentheir own history when they talk about the re-balancing of theChinese economy. * Learn from Japan which experienced the same predicamentafflicting the West fifteen years earlier * Discover how unwinding of quantitative easing will affect theUnited States, the United Kingdom, Japan, as well as the emergingworld * Examine solutions to the Eurozone problems caused by twobalance sheet recessions eight years apart * Gain insight into China's problems from the West's ownexperiences with urbanisation Koo, who developed the concept of balance sheet recession basedon Japan's experience, took the revolution in macroeconomicsstarted by John Maynard Keynes in 1936 to a new height. TheEscape from Balance Sheet Recession and the QE Trap offers theworld cure for balance sheet recession.

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Richard C. Koo

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Economics Macroeconomics Makroökonomie Volkswirtschaftslehre

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Praise for The Escape fromBalance Sheet Recession and the QE Trap "Richard Koo has been a pioneer in recasting macroeconomicsfor the current era of financial crisis and potential deflation.This book presents his latest thinking in a clear and powerful way.Agree or disagree his work deserves close study if the next decadein the industrial world is going to be better than the last." - Lawrence Summers, President Emeritus and Charles W.Eliot University Professor, Harvard University; former U.S.Secretary of the Treasury "This is an important, stimulating, exciting and timely book.Guided by the ideas in this book, growing numbers of experts areappreciating the parallels between the current world-wide crisisand the crisis Japan experienced 15 years ago. The basic insight- that in the presence of persistent liabilities, the privatesector minimizes debt - is one that needs to be fullyappreciated in order for appropriate policies to be devised. Thisis a must-read for all those seeking to respond to the currenteconomic malaise." - Dennis J. Snower, President, Kiel Institute for theWorld Economy; Professor of Economics, Christian-AlberchtsUniversity, Kiel "Koo's The Escape from Balance Sheet Recession andthe QE Trap provides the most insightful guide to currentmacroeconomic policy available today. Koo's concept of'balance sheet recession' adds depth and detail toobservations of the 'liquidity trap' and 'zerolower bound' of interest rates. He explains what needs to bedone now and how long it could take. Everyone concerned withmacroeconomic policy needs to read this analysis to learn how theworld economy can be revived." - Peter Temin, Elisha Gray II Professor Emeritus ofEconomics, Massachusetts Institute of Technology "I have always liked the Richard Koo style - succincttheories, razor-sharp points, self-sustaining logic, and, moreimportantly, a set of workable solutions. It's definitely aworthy read." - Gao Xiqing, Professor, School of Law, TsinghuaUniversity; former Vice Chairman and President, China InvestmentCorporation. "In the wake of the financial crisis of 2008, governments andfinancial institutions have instituted a wide range of changes insuch areas as risk management, regulation, market organization, andfiscal and monetary policy. Unfortunately, however, these measureshave suffered from a lack of a unified recognition of thefundamental problem. In a clear, engaging and penetrating way,Richard Koo has diagnosed the core nature of the challenge and theappropriate response. The Escape from Balance Sheet Recessionand the QE Trap is an essential guide for anyone interested inthe future of the global economy." - Jeffrey E. Garten, Juan Trippe professor ofinternational trade and finance and former Dean, Yale School ofManagement; former Undersecretary of Commerce "When the history of this depression is written, policymakerswho ignore Koo's finding will be judged harshly for imposingunnecessary suffering on their societies." - Richard Duncan, Author, The Dollar Crisis
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