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Lost Decades: The Making of America's Debt Crisis and the Long Recovery Hardcover – September 19, 2011

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Product Details

  • Hardcover: 284 pages
  • Publisher: W. W. Norton & Company; 1 edition (September 19, 2011)
  • Language: English
  • ISBN-10: 0393076504
  • ISBN-13: 978-0393076509
  • Product Dimensions: 0.6 x 0.1 x 1 inches
  • Shipping Weight: 1.3 pounds (View shipping rates and policies)
  • Average Customer Review: 4.2 out of 5 stars  See all reviews (12 customer reviews)
  • Amazon Best Sellers Rank: #86,302 in Books (See Top 100 in Books)

Editorial Reviews


Here a leading economist and leading political scientist team up to explain in simple, straightforward terms the political economy of the financial crisis. If you have time to read only one book on the crisis, read this. (Barry Eichengreen, University of California Berkeley)

“Through pointed historical and comparative illustration, the authors show how financiers, politicians, and ideologues ushered in the crisis, and highlight the challenges we must overcome to avoid another lost decade.” (Nouriel Roubini, Stern School of Business, NYU)

“An integrated and compelling account of where our debts came from – and why they won’t go away any time soon. Chinn and Frieden combine the smartest kind of economics with the toughest kind of political science. Read this book for a somewhat disheartening but completely enlightening education – and then send 10 copies to the White House and Capitol Hill.” (Simon Johnson, MIT, co-author of 13 Bankers)

“This wonderful book by two leading political economists identifies the roots of the recent financial crisis and the deep recession that followed, but more important, tells us what awaits us if we do not fix the underlying problems. It is political economy as it was meant to be - accessible and concise, even while deeply troubling.” (Raghuram G. Rajan, Booth School of Business, University of Chicago)

“You will not read a better political-economic synthesis of America’s financial crisis than this book.” (Dani Rodrik, author of The Globalization Paradox)

“An intelligent, vivid, and accessible account of the first great crisis of the 21st century. Drawing on comparisons that will bother recalcitrant believers in American economic exceptionalism, the authors depict a gloomy panorama for the years to come unless policy makers get serious about fiscal reform. This is a must-read for the expert and the layman alike.” (Ernesto Zedillo, Director of the Yale Center for the Study of Globalization Former President of Mexico)

About the Author

Menzie D. Chinn teaches at the University of Wisconsin, Madison, and coauthors the influential blog Econbrowser.

Jeffry A. Frieden is Professor of Government at Harvard University. He specializes in the politics of international monetary and financial relations. Frieden is the author (with Menzie Chinn) of Lost Decades: The Making of America’s Debt Crisis and the Long Recovery. His previous books include Global Capitalism: Its Fall and Rise in the Twentieth Century; Debt, Development, and Democracy: Modern Political Economy and Latin America, 1965–1985; and Banking on the World: The Politics of American International Finance; and he is the co-author or co-editor of many other books on related topics. His articles on the politics of international economic issues have appeared in a wide variety of scholarly and general-interest publications.

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Customer Reviews

4.2 out of 5 stars
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See all 12 customer reviews
Extremely well written; objective, understandable to anyone with basic econ savvy.
J. M. Manner
This influence is also currently mitigated - by the Greek etc. debt crisis creating a surge of investment in the U.S. as a safe haven.
Loyd E. Eskildson
This is an academic written book but written in a form that is very readable for the layman.
R. Spell

Most Helpful Customer Reviews

21 of 24 people found the following review helpful By Law student on November 7, 2011
Format: Hardcover Verified Purchase
I thought this was a pretty clear, well articulated book by two academics [an economist and a political scientist] explaining broadly what caused America to go down a series of wrong turns. It reads quite well for a book written by academics and its easily possible to read it in one sitting if you have 8 or so hours lying around [like on a plane].

But there are a number of problems with the book, that if you have read other 'economic crisis porn', quickly jump at you. First, when discussing the 'shadow banking system' they lump in private equity funds like Blackstone with macro hedge funds like Bridgewater with investment banks. I think in a video symposium [very good by the way and found here [...] Menzie admitted that academic economist didnt usually pay attention to finance and their lumping of all the previously mentioned financial institutions shows this pretty well. Private equity funds may do a lot of fishy things but they generate their income by arbitraging US tax code's preferences of debt over equity and capital gains over income gains. They do not loan out money. And macro hedge funds like Bridgewater may have been involved in some aspects of buying synthetic instruments but since they usually make big bets on broad economic movements its hard to imagine those types of hedge funds buying up a lot of SIV paper.

The second and more glaring mistake was the total absence of 'repos' in the discussion. Repos and the need for increased margin payments on them were one of the principal reasons Bear/Lehman/AIG all went down [repos also just brought down MF Global, the 8th largest bankruptcy in the US.
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18 of 23 people found the following review helpful By Loyd E. Eskildson HALL OF FAME on September 18, 2011
Format: Hardcover
The 2001 and 2003 tax cuts during the Bush administration, combined with increased spending for the Iraq and Afghanistan wars and the new Medicare drug benefit, resulted in the largest and fastest fiscal deficit turnaround in 'peacetime' history. (That effort grew out of the 2001 recession and dot-com bubble.) Alan Greenspan, Federal Reserve Chairman at the time, played a very harmful role by supporting the 2001 tax cuts, giving political cover for the Bush administration claims that the tax cuts wold be self-financing (aka Laffer Curve). This borrowing was acerbated by borrowing to finance the housing boom and our merchandise and energy trade deficits. The effects of these combined debt crises are exacerbated by the current U.S. political impasse - fed by short-term expediency, economic demagoguery and ideology instead of fact-based decision-making, China's unlikeliness to support continued borrowing at past levels, and the fact that much of the debt was used to create a speculative bubble instead of raising profitability/productivity.

Federal government spending was also consumption focused - on health care spending that far exceeds that of our strongest competitors, defense spending exceeding that of the rest of the world - combined, and education spending that has increased at all levels without benefit. Meanwhile, our infrastructure was largely ignored - estimates are that we've accrued about $5 trillion in 'deferred maintenance.' That's in addition to the $5 - 7 trillion in new foreign debt incurred just between 2001-07.

We have lost the opportunity to maintain or strengthen our economic position during the first decade of the new millennium; the fear now is that we will lose the second.
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Format: Hardcover
When I finished reading the first chapter I knew I would read the entire book.

They point out the economics of what happened during the sub prime mortgage build up and collapse, the affect of two wars with no tax increases to pay for them, the two tax reductions for the benefit of wealthy wage earners, the saving of the 'too big to fail' financial organizations (the pros and cons), where the borrowed money came from, the historical precedents of when other countries have had this same situation, some of the probable impacts on America's future and the need for decisions.

Very worth the time to read and creates a new basis for understanding how we got here and some of what needs to be done for the future.
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3 of 4 people found the following review helpful By Krazy Star on October 23, 2012
Format: Paperback
The best thing about this book is that it is easier to follow than many of the other books that have been written on this topic. One needs to be reasonably intelligent, but does not need a degree in political science, economics, or finance, in order to grasp the ideas presented. The worst thing about the book is that it is clearly written by authors with an undeniable preference for the Democratic party. One example: in classifying deficit spending by party, the authors choose to begin their analysis in 1980 and to ignore the recent past even though the book was published in 2011. This allows them to blame the Republicans and exonerate the Democrats. It's also worth noting that they do this by relying on a carefully chosen sample of 4 observations (3 Republicans: Reagan, Bush 1, and Bush 2; 1 Democrat: Clinton). In a related vein, they choose to blame the huge deficits of 2009-2010 (and thereafter) on "Bush era policy" rather than on Obama presidency. In the few places where President Obama is mentioned, it is argued that he inherited a bad economy that was caused by Bush and therefore the deficits under his presidency are not his fault. I find this interesting because they don't give Reagan the same deniability even though he too inherited a pretty lousy economy. Instead, Reagan is largely credited with creating the whole national debt problem. I'm not a big fan of either party but I saw one professional review included on the book cover that claimed this book was "unbiased" and I just had to laugh. In conclusion, I think this is a great book but one has to be aware of the authors' agenda.
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