Book Bits | 4.7.2012

White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You
By Simon Johnson and James Kwak
Blog post by co-author (Johnson) via Economix (NY Times)
Debt has surged, relative to G.D.P., six times in American history, during the War of Independence, the War of 1812, the Civil War, World War I, World War II and since 2000. In the first five instances, debt rose as the government scrambled to raise resources to pay for a war effort. After each of those wars, debt was steadily reduced relative to the size of the economy – over decades, not over months or even years. The debt surge since 2000 is different – a point that James Kwak and I explain in detail in our book, published this week. To be sure, we have the two expensive wars, in Iraq and Afghanistan. But much more of the increase in the deficit was because of tax cuts under George W. Bush, Medicare Part D (which expanded coverage for prescription medicines) and – most of all – the financial crisis that brought down the economy and sharply reduced tax revenue starting in September 2008. Our modern debt surge is much more about declining federal government revenue than it is about runaway spending. If you believe strongly that our fiscal issues are primarily about “runaway spending,” please read our book. The smart approach is to begin the long and not-so-nice work of controlling deficits while allowing the economy to grow.

Time to Start Thinking: America in the Age of Descent
By Edward Luce
Interview with author via WNYC (The Brian Lehrer Show)
In Time to Start Thinking: America in the Age of Descent, Edward Luce argues that America is sliding into an economic and geopolitical free fall. Luce is Financial Time’s chief U.S. columnist and former speechwriter for Larry Summers, who served as Treasury Secretary during the Clinton administration.
The New Depression: The Breakdown of the Paper Money Economy
By Richard Duncan
Summary via publisher, Wiley
When the United States stopped backing dollars with gold in 1968, the nature of money changed. All previous constraints on money and credit creation were removed and a new economic paradigm took shape. Economic growth ceased to be driven by capital accumulation and investment as it had been since before the Industrial Revolution. Instead, credit creation and consumption began to drive the economic dynamic. In The New Depression: The Breakdown of the Paper Money Economy, Richard Duncan introduces an analytical framework, The Quantity Theory of Credit, that explains all aspects of the calamity now unfolding: its causes, the rationale for the government’s policy response to the crisis, what is likely to happen next, and how those developments will affect asset prices and investment portfolios.
Before the Lights Go Out: Conquering the Energy Crisis Before It Conquers Us
By Maggie Koerth-Baker
Q&A with author via Grist
Q. You write early on, “This isn’t a book about quick fixes,” argue there’s “no killer app” for renewable energy, and suggest that any sane path forward is going to involve a complex mix of new policies, technologies and systems. (I kept thinking of Clay Shirky’s line about the future of the media business: “Nothing will work, but everything might.”) How do we get there from here, when “here” is where so many Americans still think politicians can lower the price of gas — or that lower gas prices are a good thing?
A. That is a difficult question. And I don’t think there is a clear answer. But in the course of doing this research, I have come to the conclusion that part of the answer must involve some method of putting a price on carbon — precisely because that carbon is valuable. We’ve become dependent on fossil fuels for a reason — not because of any evil plot, but because these fuels are just that much more powerful than anything that came before them. The power of coal, the portability of liquid gasoline: There is amazing value there. At the same time, we’re also talking about fuels we have limited supplies of. And those fuels, when we use them, also cost us money in the form of health-care costs and climate change adaptation costs.
Saving Europe: How National Politics Nearly Destroyed the Euro
By Carlo Bastasin
Summary via publisher, Brookings Institution Press
Three times in the few years since the global financial crisis erupted, the euro has come close to extinction, endangering both the world economy and history’s most ambitious project in shared sovereignty. Yet each time, the case for a common currency proved to be more compelling than its weaknesses, and the euro survived. Saving Europe reveals how the nexus of international economics and national politics pushed monetary union to the brink of a breakup, how that disastrous development was avoided, and why the long-term viability of a common currency challenges politics as we know it.
Handbook of Research on Stock Market Globalization
Edited by Geoffrey Poitras
Summary via publisher, Edward Elgar Publishing
The stock market globalization process has produced historic changes in the structure of stock markets, the effects of which are evident throughout the world. Despite these transformations, there are relatively few sources examining the connections between the globalization process currently under way and previous periods of stock market globalization. This seminal volume fills that gap. The chapters in the first section examine previous globalization periods through the lens of the corporate economy, valuing equities and managed funds. Further chapters address current issues such as the social closure of the exchange, demutualization and mergers and acquisitions as well as cross-listing and liquidity. The final chapters consider the regulatory challenges posed by stock market globalization. These include the pressures on regulators from rent-seeking stock market participants, the demise of exchange trading floors and Latin America’s stock market.
Redesigning the Stock Market: A Fractal Approach
By Pravir Malik
Summary via publisher, Sage
Redesigning the Stock Market: A Fractal Approach aims to alter the core of the global business machinery by integrating more long-sighted heuristics into trading mechanisms. These trading mechanisms encompass both the macro-environment related to the stock market and the micro-act of stock trading. The book covers the following key areas:
* Discussion on a fractal basis for analysis of the macro financial environment and the stock market.
* History of stock market crashes and lessons we can derive from them.
* External changes that affect the stock market.
* Suggestions for redesigning the stock market to minimize future financial crises and ensure business and societal sustainability.