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Debtors' Prison: The Politics of Austerity Versus Possibility Paperback – June 9, 2015
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—Joseph Stiglitz, winner of the Nobel Prize in Economics and author of The Price of Inequality
“Robert Kuttner has a gift for clear and forceful explanations of the complex dealings that brought the economy to its knees. Debtors’ Prison takes an innovative approach to economic history, using the lens of credit and debt to explore past boom-and-bust cycles and to illuminate the central issues in current economic debates. Kuttner’s impressive history also catapults the reader into the future, providing critical insight on strengthening the financial system. A must-read for anyone interested in our economic future.”
—Senator Elizabeth Warren
“Kuttner’s thesis is girded to a historical narrative that yields a coherent, readable and highly impassioned book….The charge that ‘austerity mongers’ on the Continent have been standing guard over a new debtors’ prison cannot be easily dismissed.”
—The New York Times Book Review
“Engaging… Kuttner does more than offer another garden variety liberal progressive shaming of the powers that be. He weaves together history, economics, and investigative reporting into an intellectual tapestry that is both a page-turner and an education... He not only demolishes the arguments of the deficit hawks but also offers cogent solutions to the present crisis.”
—New York Journal of Books
“Kuttner has provided some highly useful intellectual weaponry for the ranks of battle-scarred warriors who combat austerity economics on a daily basis. For that alone, he deserves thanks for this highly readable and erudite book.”
—The Huffington Post
“[T]imely . . . take[s] readers on a historical tour of indebtedness, starting in 1692 with Daniel Defoe and ending with the recent recession and according to Kuttner, the misguided austerity regimes that sprang up in response . . . Kuttner draws thorough comparisons among the Depression, World War II, and present day fiscal engineering . . . An insightful and relevant look at the topic of debt in the United States and abroad.”
—Susan Hurst, Library Journal
“[C]ontributes a much-needed historical perspective that explores, as Kuttner puts it, ‘how the bad economic advice of the austerity lobby became the prevailing view.’ . . . arrive[s] at an opportune time . . . [Kuttner] hold[s] out the possibility of a different future.”
—Meg Jacobs, Democracy
“This timely, thought-provoking book will add valuable insight to ongoing fiscal policy debates.”
—Mary Whaley, Booklist
“Kuttner (The Squandering of America), cofounder and co-editor of the American Prospect, pulls no punches in his latest full-throated defense of Keynesian economics and repudiation of the modern neoliberal system . . . Kuttner’s deft overview of economic history—most notably his coverage of the Marshall Plan—demonstrates that economic stimulus can be very effective at ending recessions.”
“Debtors’ Prison is more than a devastating brief against the trans-Atlantic pursuit of austerity. It is a magisterial retelling of our history through the prism of the struggle over credit and debt. Navigating between countries and eras with the authority of a scholar and the narrative skill of a journalist, Robert Kuttner has written the authoritative guide to economic recovery and financial reform.”
—Jacob S. Hacker, co-Author of Winner-Take-All Politics: How Washington Made the Rich Richer—And Turned Its Back on the Middle Class
“Robert Kuttner nails the missing piece in Barack Obama’s presidency—the reason the American economy is still stalled and sickly. Read this book, then send it to the White House. Kuttner has the plan. The president needs to see it.”
—William Greider, author of Come Home, America
“No topics in modern political life have spawned more confusion, misdirected effort, and overall malarkey than ‘deficits’ and ‘debt.’ Robert Kuttner does us the enormous service of explaining which kinds of debt we should worry more about, and which kinds less—and how to manage public and private debt so as to sustain an age of broadly shared prosperity rather than of austere decline.”
—James Fallows, author of China Airborne
“[I]nformed, passionate, at times angry . . . The breadth of Kuttner’s review of the politics of credit and debt through American history is impressive.”
—Mark Levinson, Dissent
About the Author
Robert Kuttner is cofounder and coeditor of The American Prospect magazine, as well as a professor at Brandeis University’s Heller School. He was a longtime columnist for BusinessWeek and continues to write columns in The Boston Globe, The New York Times Global Edition, and The Huffington Post. This is his tenth book.
- Item Weight : 8 ounces
- Paperback : 352 pages
- ISBN-10 : 1101910526
- ISBN-13 : 978-1101910528
- Dimensions : 5.15 x 0.7 x 7.98 inches
- Publisher : Vintage; Reprint edition (June 9, 2015)
- Language: : English
- Best Sellers Rank: #2,855,702 in Books (See Top 100 in Books)
- Customer Reviews:
Top reviews from the United States
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What Robert Kuttner admirably proves in this marvelous work is the fact that these kind of tragedies are perfectly avoidable. He does not say this sheltered and enriched by the benefit of hindsight. Resorting to a careful analysis of economic polies, relying upon a dissection of both macroeconomic and financial follies and studiously explaining available alternatives, Kuttner in “Debtor’s Prison” launches a very assault on what he terms “The Politics of Austerity”. My personal key takeaways from a reading of this illuminating and trenchant work would be the following:
1. Burgeoning financial industry debt
Rampant financial speculation and the creation of exotic financial instruments by investment banks, hedge funds and unregulated/barely regulated hybrids led to incredulous amounts of leverage in the financial sector. During the so called ‘boom years’, these institutions were typically operating with leverage ratios of 30:1 and in some unbelievable instances, more than 50:1!
2. Wall Street and Social Spending
A coalition of the so called deficit hawks of the likes of the billionaire investor Pete Peterson and his ilk engage in extensive lobbying and intense funding with a view to slash expenditure on social insurance and to direct the focus of the Government towards balancing budgets and cutting deficits.
3. The Greek Fiasco
In a splendid Chapter titled “A Greek Tragedy”, Kuttner chronicles the devastating impact of austerity collectively thrust upon an already suffering Greek populace. Harsh and inexplicable measures imposed in exchange for financial aid, such as cutting pensions, introducing three new tiers of value added taxes, and slashing pay packages of the salaried classes ensured that the Greeks were saddled with the most deflationary package ever imposed on the member of the European Union.
4. The Mortgage Mania
Unscrupulous brokers generating mortgages irrespective of the credit worthiness of the borrower, splicing and dicing of esoteric financial instruments with the covert blessings of credit rating agencies nursing conflicts of interests with the issuers of such instruments and a complicit, if not bewildered bunch of regulatory agencies all combined to create a domino effect that took the wind out of the sails of the global economy. Instead of aiding and assisting the hapless homeowners, Treasuries and Federal Reserve Banks on both sides of the Atlantic, came to the rescue of the very same greedy bunch of bankers responsible for triggering the very crisis which the world was trying to avoid, by mopping of trillions of dollars of toxic assets thereby recapitalizing and bailing out the ogres who were the creators of a dangerous specter.
Even though a decade has passed since the Great Recession, we are still ransom to the murky and shadowy practices adopted by the so called “Too-Big-To-Fail” institutions. The systemic risks posed by them are very real and their penchant for leverage has only exacerbated an appetite for risk taking. Policy mavens will do well to read the prescriptive remedies being offered by Kuttner before it becomes too late to reign in a global catastrophe!
Sooner or later (later unless we drastically revise prevailing assumptions and policies), recovery will occur. And at that point, the Fed will indeed allow rates to rise. Investors locked into low-rate long-term bonds of the Bernanke era will share the same fate as their counterparts in the 1950s and 1960s: they will have negative real rates of return. But there are worse things than a period of negative real interest rates. One is a prolonged depression. A key question today is whether gradual liquidation of government debt using the several strategies of repressing finance is better than the alternative of prolonged economic suffering. Though the rentier class paid a hidden tax in the decades after World War II, the real economy thrived: and, on balance, the rising tide soon lifted even the yachts.
I find this outlook very refreshing. We cannot forget that just 60 years ago we solved the economic/debt mess left by the depression/WWII. If we could handle that, we surely can emulate what happened in the late 40's, 50's and early 60's (the heydays of equitable prosperity) and take actions to bring wide-spread prosperity to the twenty-first century.
Top reviews from other countries
As Kuttner points out, “rising public deficits did not cause the financial collapse; the collapse caused the higher deficits.” “in the absence of vigorous government countermeasures both to prevent excessive speculation before the fact of a collapse and to halt the deflationary spiral afterward, the financial system is still, in modern economic parlance, ‘pro-cyclical’. In a boom, financial engineering underwrites euphoria. In a downturn, credit contracts. Harsh treatment of debt and debtors only exacerbates the general deflation.”
Kuttner observes that since 1993 the EU ‘has become an agent of speculation and austerity.’ “The European Union, now back in recession, provides a laboratory case of why austerity is the wrong cure for the aftermath of a financial collapse.” “The current austerity regime being inflicted on the European Union’s heavily indebted member nations ignores those lessons and deepens the Continent’s distress.”
He warns, “Europe is embracing austerity even more fervently than is the United States. Dangerously oblivious to the brutal lessons of the past century, the nation most fervently promoting belt tightening and a policy of no mercy for debtors is Germany.”
In 2010 Merkel’s Private Sector Initiative forced more austerity on Greece. Her scheme also spread the speculative mania from Greece to Ireland, Portugal, Spain and Italy. Ireland could no longer sell its bonds and became the second EU member to need a bailout. Unemployment rose to 15 per cent. The debt/GDP ratio, 25 per cent in 2008, soared to 108 per cent in 2012, due to the costs of bailing out the bankers.
Portugal became the third EU member to need a bailout. In 2012 the Portuguese government cut spending and raised taxes, cutting its deficit. The Commission exulted: “the fiscal adjustment in 2011-12 is remarkable by any standards.” Portugal’s economy shrank by 3.3 per cent that year and unemployment soared to 15 per cent.
We need public borrowing and investing to stimulate the real economy. We need to shield new funds for growth from the demands of old creditors, as in domestic bankruptcy law. Old debt should be written off. By contrast, the IMF and the ECB insist that new money pays the interest on old debts and that no new money goes into growth, on the false premise that debt repayment will reassure private investors so that they will pump in more speculative capital.
We need to put ceilings on the rates paid and charged by banks. India required its banks to deposit their reserves at the central bank to offset their exposure to derivatives. It banned hiding this exposure in off-balance-sheet affiliates.
著者の立場は、現在の緊縮政策を否定するものです。債務者へのあまりにも過度な緊縮策策の押し付けはつまるところ経済の回復を阻害し、最悪の状況に陥ってしまうことが、指摘され、なぜこれほどまでに債権者の立場が強調されるのかが歴史的にたどっていきます。そこに著者が見出すのは、政治の経済に対する優位です。政治的な権力構造の帰趨が経済的な施策の選択を決定づけているのです。これほどまでに、その正当性と優位性を失ってしまった「新自由主義」に基づく経済政策がその論理的な破綻と実務的な有用性がこれほどまでに否定されながらも Austerity: The History of a Dangerous Idea 、いまだに実行され続けているのは、政治が銀行を代表者とする「債権者」の一面的な利害に取り込まれているからなのです。
著者の年齢はわかりませんが、戦後の１９７０年までの時代をある意味での「黄金期」ととらえ、そこで金融が果たした限定的な役割へのある意味での回帰とも取れる政策装置の現代での再構築を目指しています。最期の取り上げられたfinancial repressionの議論は著者の意見が明確には打ち出されてはいないようですが、financial sectorのspeculationのrepresissionと考えているのでしょうか。investor(bond and equity)の長期的な損失の下に、全体の経済成長を図るというロジックはparadoxicalなものですが、納得のいくものです。
current economic crisis originated in the west.More precisely it originated in the u.s. financial sector.との一言は重いものがあります。