58 of 64 people found the following review helpful
Martin Wolf's latest book may well be the subject of debate, even strong controversy. I'd argue that this makes it even more worth reading, and would add it to the top of any list of "must read" books, especially for those interested in the state of our economy - past, present, and future. His take on the economic crisis of 2007 goes well beyond other works on the subject. It also isn't simplistic nor is it reassuring about the state of the economy. And it isn't a history or rehash of the crisis but is instead a look at what we should learn from it and a warning against complacency. He stresses that there are still great reforms that are needed - and the need is an urgent one. While that stance isn't unique, his rationale offers new perspectives.
Although it is impossible to list all the topics covered in this complex and extremely detailed book in a single review, some of the major ones are: the global financial crisis, policy measures used to tackle them, the Eurozone crisis, the fragility of the world economy which led to huge financial and economic shocks, possible solutions and where we should be going from here, the search for better economic ideas, and how to create a stronger financial system. This is only the tip of the iceberg when it comes to listing the various "shifts and shocks" which are included in the book. I hope it is enough to spark readers' interest.
Wolf's views are both blunt and what some may see as alarmist in his assessment of the current economy, an economy he sees as still being in great danger. And he also doesn't hold back when criticizing what he perceives as the flawed views of everyone from Ben Bernanke and Gordon Brown to those who he classifies as the "economic, financial, and political elites". At the same time, he is very open and honest about his own failure to anticipate the possibility of a meltdown of the Western financial system - and this in spite of the fact that he spent his career analyzing the world economy. His economic model simply didn't include the possibility of another Great Depression.
Partly because he felt that his own personal perspective was so mistaken - and on such a large scale - he was driven to write The Shifts and The Shocks. He wanted to impart the lessons he learned as well as share his strong belief that democracy is still greatly threatened by financial instability and rising inequality (among other factors noted) .
Wolf looks to the future by advocating actions, even radical ones, to avert a crisis which could be far worse than the one which shook the country to the core. In fact, Wolf notes that another one could be so severe that "our open world economy could end in the fire." He makes a strong case for this. Some may find this overly alarmist. But Wolf passionately refuses to believe that we are currently on a sustainable course or out of economic danger. Instead, he notes that the world has been forever changed by the crisis and the aftermath of high unemployment, low productivity growth, and uncertainty about fiscal solvency has failed to return high-income countries to anywhere even remotely close to good economic health.
Potential readers should know that this book is frequently so detailed and dense that it reads more like an academic book than one aimed at a general readership. But it is well worth the effort to tackle. At the back of the book, there is an extensive list of notes and sources listed for each chapter. There is also a detailed compilation of the many studies, articles, and books which were used as reference material. There were times when I took breaks from reading The Shifts and the Shocks and instead read some of the other material Wolf cited (some written in a less dense style). These included pieces on everything from what went wrong with the banking system to overcoming the greatest challenges still faced by the global economy.
22 of 24 people found the following review helpful
on September 27, 2014
In his newest book, Martin Wolf relentlessly explores the ins and outs of the financial and economic crisis which began in 2007-2008.
Mr. Wolf first reviews the shocks that have humbled many high-income countries, whose subdued performance stands in sharp contrast with the strong showing of many emerging and developing economies in the aftermath of that crisis.
1. A credit crash that has forced many households and businesses to stop spending consistently more than their incomes.
2. A reconfiguration of entire sectors of activity such as construction and finance in many high-income countries.
3. The higher cautiousness of chastised financial institutions in a changing regulatory environment.
4. The specter of deflation, or at least, consistently falling inflation rates in many high-income countries, especially in the Eurozone.
5. The vicious circle behind the weakening of the “animal spirits” of businesses in the same economies.
The author then clearly articulates the shifts that have led to the fragility of the world economy:
1. No living memory of the large financial and economic busts of the distant past, which bred complacency among the economic, financial, intellectual, and political elites of the West before 2007-2008.
2. No clear understanding of the ramifications associated with the evolution of the financial system, i.e., liberalization, globalization, innovation, leverage, and incentives, among the same elites.
Subsequently, Mr. Wolf reviews what has been done to make the financial system more resilient than it was before the above-mentioned crisis. The author is clearly not impressed with the post-crisis central-bank orthodoxy as it is embraced in the high-income countries of North America and Europe. He dubbed it the new orthodoxy, i.e. inflation targeting, macroprudential policy, the strengthening of the role of central banks as lenders of last resort, and the orderly resolution of troubled institutions. Mr. Wolf is especially critical of the sheer complexity of the regulatory structure that will probably be dead on arrival in the recurrence of a major financial and economic crisis. Unsurprisingly, the author pleads for a significant increase in the capital requirements of banks as a key improvement to the new orthodoxy.
Finally, Mr. Wolf makes the case for radical reform. Radical reform does not include liquidationism light as practiced within the Eurozone under the influence of Germany. Fiscal austerity, asymmetric adjustment of competitiveness, and limited assistance with recapitalization of banks in crisis-hit countries will probably not turn around the fortunes of these countries that are operating in less auspicious external circumstances that those that benefited Germany previously.
The author mentions as examples of radical reform the creation of a global currency to replace the national currencies currently used as anchors of the system, or a partial break-up of the open world economy. Mr. Wolf makes himself no illusion about the feasibility of these radical reforms. It will depend on 1) what sort of recovery emerges and 2) how much risk societies will be prepared to tolerate.
In summary, the author calls for a reassessment of the merits of the new orthodoxy which will probably fail too many economies in dealing successfully with the recurrence of a major financial and economic crisis.
17 of 18 people found the following review helpful
on October 17, 2014
Most people aren't apt to connect globalization and the Panic of 2008 in quite the way Wolf does here. So much additional capacity has come on to the international markets that its producers--China, for instance--either can't or won't generate enough domestic demand to soak it up. So they seek to export instead to willing consumers in places like the United States, who are all too happy to borrow to finance consumption. In fact, there's nearly as much excess savings floating around as there is excess capacity thanks to rising oil prices, aging populations, or outright repression of consumption in China's case. At the same time, the central banks of the borrowing countries make up for the stuff their own citizens don't produce by extending even more credit. You get a sort of bipolar world of high debtors and high savers, which is an accident waiting to happen. Low interest rates start driving up the prices of everything from houses to commodities, but it's a game that bound to come to grief. Nothing goes up forever, and when prices start to break, the party is over, with creditors scrambling, debtors getting wiped out, and the enablers to the the whole drama--banks and bankers, real or shadow, running for sovereign cover. What a mess.
Wolf also has lots to say about Europe, the Euro, and the ECB. The common currency was never a good idea when you had countries like Germany and Greece in the same harness. Individual debtor countries don't have a central bank that can create money, and the ECB simply doesn't have the resources to rescue all the sinners--unkindly called PI(I)GS (Portugal, Italy, Greece, Spain, and throw in Ireland). Add to this the majestic refusal of the Germans to countenance anything other than take your medicine and lose weight, technically called austerity. What is a PIIG to do? Getting into the common currency was a bad idea, getting out is a financial and legal nightmare, and in the long run, well, Wolf actually suggests that death might not be such a good thing, but he posts the usual British warning about Keynes' flippancy. Funny that. At least the Brits never bought into the Euro. The European catastrophe is the gift that keeps on giving, well past the point when the US and the UK seem to be on a slow mend. You could be proud of Mr Bernanke. Wolf doesn't quite say that, but in his heart, he knows that Ben was right.
This is like a rich man's version of Blinder's much more user friendly book, When the Music Stopped. It's full of heavy-going open macroeconomics-speak, and it's apt to slow a lay reader down. It slowed me down in places, and I'm not a novice. But then, anybody who says sneers politely at Bob Lucas and that crowd is going to get my vote, dense prose or not. The book is too long, it needed an editor who could stand up to someone with as much horsepower as Wolf, and all of that. Still, if you really want to get a feel for what a kind of professional post-Keynesian (is there such a thing?) blast would be, this is the book for you. It is extremely smart, extremely perceptive, but slow going and not for the faint of heart. Pick something easier to start with on 2008, and work your way up to this.
29 of 37 people found the following review helpful
on October 14, 2014
This is an awful book not worth your time.
The author's style of argumentation is annoying because everything is obvious to him. Since everything is obvious, only his side of the story in presented in a good light. It would have been enlightening to also get the counterargument described in at least a neutral manner. Instead we get four or five points why the counterargument is incorrect. This structure is repeated throughout the book. There is no way for the reader to form his own opinion. To strengthen his conclusion further, the author throws in a bunch of academic papers (that most of the time are not peer reviewed), which support his case.
Let me provide one example: In chapter 8 the author describes how the US economy is "18% below potential". He attributes the gap to the financial crisis and says that the cost is larger than the cost of the Second World War. (Never mind that the former is imaginary and the latter a real cost.) However, the gap is probably somewhat due to the GDP being inflated by easy credit prior to 2007. He acknowledges this fact and then quickly proceeds to state that the counterargument is wrong. One reason mentioned is that unemployment went down in all sectors after the crisis. You, the reader, are left not understanding what the author really meant. (The whole book reminds me of studying macroeconomics in the 1990s. The professor also knew "everything", but many of the arguments just felt like they were grabbed from a black top-hat.)
In the introduction to the book, the author is proud to note that he has changed his opinion a couple of times in the past. He used to like globalisation, he used to like balanced budgets, but now he likes Keynesian spending. It is all right to change one's opinion, but the author always seems to change to the standard establishment viewpoint. This makes me worried that he is too close to the establishment. The book says that all kinds of powerful people listen to Mr Wolf. However, it might be that Mr Wolf is too close to powerful people and inadvertently is influenced by their opinion. He is a little bit too proud over having changed his past opinions. I want to read an independent mind that conveys the full complexity of reality. The author has spent a life-time following the world economy, he should have higher ambitions than being an echo. That should be left to younger journalists.
My advice to the author: Cut of your connections for two years. Just read reports. Read history. Go to a cottage somewhere. Cleanse your mind. Get some distance. After some time your network relationships will no longer be just pipes of information, but prisms to viewpoints.
I have often read Mr Wolf in the Financial Times. He often has valid points, but this book really makes me worried about his judgement. Since the book is dense and requires a lot of effort, it should be assessed with that in mind. The reader should be rewarded after so much effort. Instead the reader ends up understanding Mr Wolf's view in 2014. When then establishment stops liking low interest rates (2016?) because they generate bubbles, then the author is likely to change his mind again. However, the really curious journalist highlights issues ahead of time. (Highlighting does not mean having all answers.) And he is very clear about reporting facts separately from opinions. In his FT column that separation is clearer than in this book.
Another FT columnist, Gideon Rachman, has written a book, (Zero-Sum Future: American Power in an Age of Anxiety), with similar flaws. After reading his book I have stopped reading his column. I will continue to read Mr Wolf's column because it often contain useful links, but I will no longer trust his judgement. I think his columns are better than this book, because writing in real-time, Mr Wolf cannot afford to be so damned certain about everything.
28 of 36 people found the following review helpful
Considering his spot with the Financial Times, the author clearly has the clout, experience, and knowledge to write his own comprehensive take on the recent financial crisis. And that he has done here. This book is packed full of information, insight, and worthwhile conjecture on every facet of the event. Having read many books on the topic, I can't say anything was totally new and crazy, but certainly, the author has his own, well thought out and defined take on the matter.
It was a difficult book for me to get into deeply, however, mostly because the writing is so wordy. I'm not saying the author isn't a talented writer, but it reads a bit too much like a pontificating thesis for a subject I usually think of as quasi-scientific. Look at the cover of this book - it's full of words. It's a premonition as to the rest of the book: lots of unnecessary phrases inside sentences that make it difficult to become fully immersed in the material. Just as the author couldn't settle on a more concise subtitle for the book, he rarely writes a sentence without some parenthesis, pairs of dashes, multiple commas, or mixtures of these.
Many people will regardless enjoy this book. Others will consider it mandatory reading due to the author. It's just not my favorite.
7 of 8 people found the following review helpful
on October 6, 2014
We have witnessed the growing role that Wall Street and financialization has played in creating booms and busts, most recently in their marketing of unsound mortgages, their excess lending with insufficient capital reserves, their issuance of the hard-to-understand derivatives, and the activities of hedge funds. Ralph Nader, a leading critic of corporate America, vented the strongest charge against banks for financing highly speculative investments, helping in the takeover of companies and bilking their assets, helping companies move their assets abroad and leaving American workers without jobs, and paying themselves obscene salaries profits in the process. Now I am glad that Martin Wolf has added his sharp criticisms to the over-financialization going on and offers excellent recommendations for making the financial system safe and sound again.
5 of 6 people found the following review helpful
on October 11, 2014
Wolf has certainly written an excellent book.For instance,his conclusion that bank capital reserves need to be increased to at least 10 % would certainly slow down,but not stop, the speculative excesses/financial crisis that have been occurring with clock work regularity since the late 1970's.Such reserves would also reduce the burden on the middle class ,which must pay the costs,direct and indirect,of the bailouts.
Wolf understands that the main function of both national and international finance from the perspective of all major banks is speculative returns or profits without the production of physical goods and services.This requires a great deal of artificially created volatility so that high speculative returns can be harvested .Wolf could have buttressed his argument had he relied more on what Adam Smith and J M Keynes had both concluded were the major,fundamental cause of all economic downturns-bank loans to projectors and speculators .
Wolf also needed to have come out more stridently and emphasize that,for instance, both the Republican and Democratic parties in the USA are dominated totally by Wall Street.
3 of 3 people found the following review helpful
on November 24, 2014
It is very detailed and at times repetitive but presents convincing arguments concerning the world's economic problems. It really appears that many of the world leaders that guide our economic ship are heading in the wrong direction, I would not recommend this to the casual reader because of the difficulty in reading it.
2 of 2 people found the following review helpful
on April 27, 2015
There has been an immense volume of literature written on the Global Financial Crisis; Martin Wolf seems to have covered an astonishing share of the titles produced, judging by references and endnotes. He races through the colossal host of basic ideas, propositions, and arguments, usually with a sharp and compelling argument as to why it's true or not. Personally, I found this aspect very helpful, at least in part because I'd already seen the debates thrashed out and mostly agreed with Wolf's conclusions.
For example, he explodes a host of urban legends about the crisis which are maddeningly persistent. The claims that the Community Reinvestment Act caused the whole disaster, or the so-called GSEs (Fannie Mae and Freddie Mac) did, have been done to death (1). Some of these don't really deserve a respectful hearing anyway. In any event, Wolf wants to address an extremely broad range of issues.
So I'd like to mention the leading strengths, followed by the leading disappointments, of this book.
STRENGTH #1: BREADTH
This book is a broad treatment of the subject, especially considering the scale of documentation required for this approach. If you really disagree with what Wolf says, you can follow his sources and hear the leading proponents thrash it out for you in greater detail. The advantages of the broad approach are that it reminds readers of the massive interconnectedness of issues: the role of international current accounts, international capital accounts, general banking conditions prevalent in the major industrial regions of the world, and some key ideologies in play. He summarizes the positions of different schools of economics, including that of the Austrians and Post-Keynesians, on key issues, and considers various proposals making the rounds for economic/financial reform.
A downside of this is that the treatment is naturally very rushed. For instance, the writings of Hyman Minsky/Wynne Godley have become influential (2), and Wolf mentions Minsky's financial instability hypothesis (FIH) several times. He also flirts with chartalism (Abba Lerner, MMT, and so on). But not only does he not really explain the implications of Minsky's ideas, I doubt he's really examined them much himself. For instance, he mentions (p.348) that some people "insouciently" wonder if perhaps plans to avoid financial crises like the last one are so needful if they only happen every 80 years. He makes answer as cheerful as any man could do in that condition (3), but still, Minsky's FIH strongly implies that such events are an inherent attribute of the capitalist economy. Like Minsky, Wolf believes that there is a need to replace debt financing of business enterprise with equity financing (4). But taxes have little effect on investment by firms--opportunity does; and Minsky knows this (see Minsky, 1986, p.244). Opportunity can consist of a new technology, or arbitrage opportunity, or some unforeseen circumstance. Wolf knows this too, but he can't detach himself from the everlasting faith that tax breaks can work miracles.
His discussion of the Eurozone takes up much of the book and seems owe a lot less to Minsky and more to MMT. There's a lot of projections about how different sectors of different national economies would either run deficits or surpluses, depending on how close each economy was to full employment. He rightly advises us to be skeptical of these projections (pp.74-77), since they vary all over the place (5). Not only do they vary, but (this is unspoken) they vary in a way to make it look as though the policy crisis was the fault of the country's leaders failing to comply with IMF advice, when in fact the IMF was at least as incompetent as the officials it fingered.
This acknowledgment is good, and leads to the next strength.
STRENGTH #2: CONTRITION
Wolf feels that he has been shown up by the GFC. With all respect, this is a reasonably effective polemical strategy: it's a lot harder to be mad at someone who admits he's wrong, and most intelligent people will see contrition as evidence of self-awareness, honesty, and high personal standards--not as evidence of being, (exceptionally) wrong. In the preface, he confines this a bit narrowly--many reviewers failed to pick up on this. The one error he owns up to is failing to imagine the scale of the disaster, which means he did not realize the financial problems would trigger a "real" (i.e., productive) response. Otherwise, his world view is largely intact.
Wolf focuses on errors of the IMF, the BIS, and the ECB. These errors are macroeconomic, i.e., they pertain to internal and external balances, employment, and monetary policy. The BIS has a sharp bias against fiscal policy; it regards monetary policy as the appropriate instrument for demand management, and "prudential policy" to ensure liquidity traps do not appear (6). The IMF insists that everyone run trade surpluses (7). The ECB has only made a bad scheme (the euro) worse--this receives a huge amount of criticism, all of it compelling. The euro imposed excessive exchange value on less-developed economies like Greece, and insufficient exchange value on ultra-developed countries like Germany and the Netherlands; this simple fact has crushed the economies of Greece and Spain, while propelling Germany to global market dominance. The ECB resisted any lender-of-last-resort (LoLR) role until it was largely too late (p.311). Likewise, it has veered to a liquidationist ideology that threatens the social models of Western Europe.
Clearly Wolf has one major issue nailed: creditors like the multilaterals and the German banking system want the debtors to make bricks without straw. Part of this, Wolf correctly identifies as a refusal of the lenders to accept blame for their bad choices. But turning to Minsky as a guru is bananas: Minsky was an austerity enthusiast (see Minsky-1986, pp.25-26), with no interest in the actual problems social programs exist to rectify. This becomes a pattern: Wolf identifies big public debts and lack of competitiveness as long-run problems for the EZ economies, but has nothing to suggest other than postposing balancing of the public sector. But the epic crisis of Europe's social model is extremely urgent. Likewise, the problem of greenhouse gases (especially, but not exclusively, in North America).
It gets worse: Wolf thinks one major problem is the lack of an alternative to the US dollar as a global reserve currency--this is a real problem, but why does he think a world currency will fix this? It's unrealistic, and in any event, money represents claims on somebody's banking system (and ultimately, productive output). Other developed countries don't run trade deficits; there's never going to be a vast floating reservoir of claims on the Chinese or German economy, so forget the reminbi and euro as possible alternatives. Other recommendations and proposals are uniformly impossible, or implausible. This is actually a universal shortcoming of books of this nature, so one ought not to judge so hard (8).
In sum, this is a valuable refence book with some good insights, but somewhat at odds with itself on recommendations.
SOURCES & ADDITIONAL READING
Bornhorst, Fedelino, Gottschalk, & Dobrescu, "When and How to Adjust Beyond the Business Cycle? A Guide to Structural Fiscal Balances," IMF Technical Notes and Manuals No. 11/2 (April 2011); this is available for free online as a PDF and explains how the IMF estimates covariance of different economic indicators, e.g, how would a change in GDP growth affect state revenues and expenditures.
Abba Lerner, "Functional Finance and the Federal Debt," _Social Research_ 10: 38-51 (1943). One of the most easy-to-understand papers on economics ever written.
Abba Lerner, "Money as a Creature of the State." _American Economic Review _ Vol. 37, No. 2 (May 1947)
Hyman Minsky, Stabilizing an Unstable Economy, Yale University Press (1986); this book was subsequently edited by Dimitri B. Papadimitriou & L. Randall Wray, and republished in 2008 by McGraw-Hill. Wray has also published a general outline of MMT (2012).
One useful point for politically conservative critics of economic thought: Hyman Minsky and his supporters actually call for a dramatic reduction in the size of government, to <20% of GDP. Arguably, they call for more direct government control over finance, but this is in order to reduce populist pressures on government, and free up nonfinancial enterprise from regulatory constraint.
(1) See comments for a link to my review of Raghuran Rajan's _Faultlines_, where I explain why this is wrong.
(2) A very special thanks to commentator Black-Helicopter for bringing Wynne Godley to my attention. Minsky _was_ (according to Mirowski, Never Let a Serious Crisis Go to Waste (2013), p.166, and Wolf, p.195) quite obscure before the GFC; MW mentions that even Larry Summers brought up Minsky as a new influence--along with John M. Keynes
(3) See The Diary of Samuel Pepys, 13 Oct 1660, "I went out to Charing Cross, to see Major-[G]eneral Harrison hanged, drawn, and quartered; which was done there, he looking as cheerful as any man could do in that condition." Martin Wolf's rejoinder is that there was no financial crisis for 80 years (in the USA and Western Europe) because finance was "caged" by, _inter alia_, the Glass-Steagall Act (1934). For an overview of the FIH (for free, online) see Hyman Minsky, "The Financial Instability Hypothesis," Jerome Levy Institute (1993). By the way, Minsky (1986), p.316 does acknowledge that various sorts of capitalisms can and could exist, with varying degrees of stability; but none are free of it.
(4) Wolf (p.336), following Minsky (1986), p.343, calls for the abolition of the corporate income taxes part of a scheme to reduce saving by corporate sector of economy.
(5) The IMF makes annual estimates of "structural" fiscal balances for members, which is the government's surplus/deficit adjusted in light of the business cycle. See "General government structural balance," in _Glossary of Statistical Terms_, OECD statistics portal. The IMF revises its estimates of past balances, like all stats bureaux; in 2008, the IMF said Ireland had run an average structural _surplus_ of 1.3% (of GDP) between 2000 and 2007. In 2012, the IMF changed its estimate; it now believed Ireland had run an average structural _deficit_ of 2.7% of GDP. Please note that (a) we're talking about events that in each case had already happened, not projections of the future, and (b) we're talking about long run averages over eight calendar years.
(6) Wolf, p.142; the practical definition of a liquidity trap has changed over time, but now it is used to mean any recession such that monetary policy alone is useless.
(7) Wolf, p.302 (on the IMF's plan to fix the Eurozone by insisting all member states run perpetually large current account surpluses--a mathematical impossibility). It is common for multilaterals like the IMF to make impossible prescriptions; that way, if disaster strikes, it can always blame the patient for failing to follow instructions.
(8) UPDATE: 5-22-2015 R. Taggart Murphy's Japan and the Shackles of the Past does acknowledge this in passing; I read Murphy's book after reviewing this one. Eswar S Prasad's The Dollar Trap does too, and I hope to review that one soon. UPDATE: 6-28-2015 I have read Murphy & Prasad. See comments for a link to my review of Prasad. I disagree with Murphy's book, mostly, but have withheld comment since I don't feel qualified to debate him.
2 of 2 people found the following review helpful
on October 30, 2014
Martin Wolf has a problem with Germany. His book is full of bank bashing and German bashing. They are easy targets so why not take a free kick and win some popularity. He is a greater wordsmith than Alan Greenspan. So what did I learn? The financial world is still fragile, the next crash will be bigger, in Europe the crisis is not over, it's a balance of payments problem, weak demand etc. etc. Wolf tells you very precisely how imprecise the world is. Not sure if that really helps? But then he comes up with simple but brilliant conclusions, for example, Europe can blame Germany and the U.S. can blame the banks.
In Wolf's Conclusion Chapter (page 341) he writes that Europe, under German influence, has sought to introduce Liquidationism but only on crisis-hit countries which has imposed huge costs on the peoples of some member countries. On page 177 he writes "The problem, in brief, is Germany". On page 337 "In accordance with the views of Germany, the reformed Eurozone is designed as a system for imposing discipline upon wayward countries: it is a 'discipline union'.....In essence, then, member countries are free to do precisely as they are told". Lack of discipline is what got these countries into trouble in the first place, so to argue against discipline does not seem very clever to me.
On page 339 Wolf writes "the cost would be borne by the hapless taxpayers of the crisis-hit countries". BUT THESE CRISIS-HIT COUNTRIES WERE NEVER TAXPAYERS. In 1994 I spent a week on the Island of Santorini Greece. The economy on this island was booming already back then, new hotels were being built, restaurants were busy, and they were expecting a huge influx of Russian tourists after the fall of Communism. One restaurant had a queue of customers at the door each night. One night I said to the owner, you need a bigger restaurant, why don't you expand? He told me without hesitation, no one pays taxes in Greece, it's 90% cash, he doesn't know what to do with all the money he is already making, why would he need a bigger restaurant? Wolf argues that the Germans knew about this problem yet kept lending money, so it's just as much their fault, yet they should now keep lending money because to get out of so much debt you need more debt (page 273). That may be true but nowhere in the book does he explain how to change these peoples' character. Have you ever done business with them Mr. Wolf? My family bought a business in Sydney, managed by some Greeks. You have no idea how callus and dishonest they were. My family suffered for over a year. What goes around comes around. I have little sympathy. And to speak of these countries being in a depression is a beat-up, simply scaremongering, to make Germans look bad.
It's a culture problem, and yes, if they don't like discipline they should leave the union. Many Greeks and southern Italians have already moved here to Australia over the last 50 years, and they are thriving here. They should all come to Australia! Not much discipline here to worry about and maybe the Germans could even pay for the flight over......? Would the US consider taking some as well?? Detroit has many empty houses, maybe the unemployed Greeks, Italians and Spanish might move to Detroit to get away from their depression? Even if you paid them, I don't think they would go. Maybe the Germans are not so bad after all?