A specter haunts the global economy, with the lingering prospect of another crisis that might throw the U.S. economy and others back into recession. Central banks and governments have worked to exorcise the specter, but their efforts have not eased anxieties. Nor have they addressed deeper systemic problems that make these economies vulnerable to banking sector risk. Uncertainty, heightened by a turbulent political year in America, casts a long shadow over the prospects for recovery.
Mervyn King, former governor of the Bank of England, who led that institution through the financial crisis of late 2007 to 2009, addresses what went wrong and how problems might be remedied in The End of Alchemy: Money, Banking, and the Global Economy. Ranging beyond present discontents, King discusses the historical and theoretical workings of finance in an engaging style that eschews technical jargon without compromising on substance. In so doing, he follows the injunction of Alfred Marshall, a key figure in the emergence of academic economics from the older idiom of political economy: to translate conclusions drawn mathematically into clear English illustrated with practical examples. Deftly comparing 2007-2009 to earlier crises, and how coping with them shaped policy, King avoids easy and misleading analogies, instead providing context for understanding the larger problem the global economy today faces.
Read Full Article »
