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Freefall: America, Free Markets, and the Sinking of the World Economy [Hardcover]

Joseph E. Stiglitz
4.0 out of 5 stars  See all reviews (116 customer reviews)

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Book Description

January 18, 2010

An incisive look at the global economic crisis, our flawed response, and the implications for the world’s future prosperity.

The Great Recession, as it has come to be called, has impacted more people worldwide than any crisis since the Great Depression. Flawed government policy and unscrupulous personal and corporate behavior in the United States created the current financial meltdown, which was exported across the globe with devastating consequences. The crisis has sparked an essential debate about America’s economic missteps, the soundness of this country’s economy, and even the appropriate shape of a capitalist system.

Few are more qualified to comment during this turbulent time than Joseph E. Stiglitz. Winner of the 2001 Nobel Prize in Economics, Stiglitz is “an insanely great economist, in ways you can’t really appreciate unless you’re deep into the field” (Paul Krugman, New York Times). In Freefall, Stiglitz traces the origins of the Great Recession, eschewing easy answers and demolishing the contention that America needs more billion-dollar bailouts and free passes to those “too big to fail,” while also outlining the alternatives and revealing that even now there are choices ahead that can make a difference. The system is broken, and we can only fix it by examining the underlying theories that have led us into this new “bubble capitalism.”

Ranging across a host of topics that bear on the crisis, Stiglitz argues convincingly for a restoration of the balance between government and markets. America as a nation faces huge challenges—in health care, energy, the environment, education, and manufacturing—and Stiglitz penetratingly addresses each in light of the newly emerging global economic order. An ongoing war of ideas over the most effective type of capitalist system, as well as a rebalancing of global economic power, is shaping that order. The battle may finally give the lie to theories of a “rational” market or to the view that America’s global economic dominance is inevitable and unassailable.

For anyone watching with indignation while a reckless Wall Street destroyed homes, educations, and jobs; while the government took half-steps hoping for a “just-enough” recovery; and while bankers fell all over themselves claiming not to have seen what was coming, then sought government bailouts while resisting regulation that would make future crises less likely, Freefall offers a clear accounting of why so many Americans feel disillusioned today and how we can realize a prosperous economy and a moral society for the future.

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Editorial Reviews

From Publishers Weekly

Starred Review. Dick Hill gives just the everyman kind of reading to make Nobel Prize–winning economist Stiglitz's analysis of the financial collapse plainly comprehensible and a ripping good—if enraging—yarn. With harsh words for the right and the left, Reagan-era deregulations that set the stage for the catastrophe, the Fed's bungling, the high costs of the Iraq War, and President Obama's refusal to take stronger measures, Stiglitz is passionate and iconoclastic. Hill handles the financial intricacies with clarity and delivers the material with warmth, urgency, and erudition. A Norton hardcover. (Feb.)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to the Audio CD edition.

From Booklist

Written by a Nobel Prize recipient, a graduate of President Bill Clinton’s Council of Economic Advisors, and a stout advocate of Keynesian economics, this inquest into the recession of 2007–09 lashes many designated villains, banks above all. Writing in a spirit Andrew Jackson would have loved, Stiglitz assails financial institutions’ size, their executive compensation, the complexity of their financial instruments, and the taxpayer money that has been poured into them. But unlike Jackson, who didn’t understand a thing about economics, Stiglitz is a little more analytical. He dwells on incentives—perverse, in his argument—for risky financial legerdemain in housing mortgages. The temptations stemmed from deregulation of the financial industry, a Reaganesque policy Stiglitz rebukes: he favors re-regulation and more government involvement in the economy. In fact, Stiglitz waxes unhappily about the Obama administration’s interventions, which thus far have been inadequate in his view. Zinging the Federal Reserve for good measure, Stiglitz insistently and intelligently presses positions that challenge those of rightward-leaning economists upholding the virtues of markets. Amid animated contemporary economic debate, Stiglitz’s book will attract popular and professional attention. --Gilbert Taylor

Product Details

  • Hardcover: 361 pages
  • Publisher: W. W. Norton & Company; 1 edition (January 18, 2010)
  • Language: English
  • ISBN-10: 0393075966
  • ISBN-13: 978-0393075960
  • Product Dimensions: 9.5 x 6.5 x 1.6 inches
  • Shipping Weight: 1.3 pounds (View shipping rates and policies)
  • Average Customer Review: 4.0 out of 5 stars  See all reviews (116 customer reviews)
  • Amazon Best Sellers Rank: #383,477 in Books (See Top 100 in Books)

More About the Author

Joseph E. Stiglitz is a professor of economics at Columbia University and the recipient of a John Bates Clark Medal and a Nobel Prize. He is also the former senior vice president and chief economist of the World Bank. His books include Globalization and Its Discontents, The Three Trillion Dollar War, and Making Globalization Work. He lives in New York City.

Customer Reviews

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Most Helpful Customer Reviews
463 of 490 people found the following review helpful
5.0 out of 5 stars Excellent and Credible Insights! January 5, 2010
Format:Hardcover
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.
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61 of 67 people found the following review helpful
5.0 out of 5 stars Economics 101 February 2, 2010
Format:Hardcover
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.
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19 of 21 people found the following review helpful
4.0 out of 5 stars Pulls no punches April 15, 2010
Format:Hardcover
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.
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Most Recent Customer Reviews
5.0 out of 5 stars A summary of this book
After reading this book, here are the main arguments that I found:
1) Globalization causes a shift of economic activities in the US. Read more
Published 6 days ago by 8_mile_road
5.0 out of 5 stars Good book! Gave to friend
Good book! Gave to friend.....also thought enlightening.....thank you for good service. Keep up good work & keep on top of privacy if at all possible......
Published 22 days ago by nora
5.0 out of 5 stars Five Stars
great
Published 2 months ago by always learning
5.0 out of 5 stars A Must Read
Important read if you want to know what is really going on with the economy world wide.
Published 2 months ago by H. Robertson
5.0 out of 5 stars Stieglitz is the most knowledgeable on all matters of globalization...
Stieglitz is the most knowledgeable on all matters of globalization and international financial failings. He understands who wins and who loses in this new world of business.
Published 2 months ago by Sharon Elizabeth Smith
5.0 out of 5 stars It could happen again.....
This man speaks so eloquently about what is wrong in America. My only criticism (and it applies to all business writers) is that they could have said all they needed to in an... Read more
Published 3 months ago by C. Anderson
5.0 out of 5 stars Outstanding
This book is very readable and intelligent. I wish every person in Washington would read it. If you want to know what caused the great recession of 2008-2009, and what we can do to... Read more
Published 3 months ago by John E. LeMoult
5.0 out of 5 stars A fascinating and broad reaching book that is full of brilliant...
This is an excellent book because it is very broad and comprehensive in its treatment of the recent 2007-2008 financial crisis but also because Stiglitz discusses the international... Read more
Published 7 months ago by C. B Collins Jr.
5.0 out of 5 stars A thoughtful treatment of the topic
Very well written showing a lot of knowledge and insight, just what you would hope for from a Nobel laureate.
Published 8 months ago by Larry
5.0 out of 5 stars It explains it all...
Although Stiglitz is a member of the establishment he is still able to explain how the government and the banks are sinking the world economy. Read more
Published 8 months ago by John-Eric
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