People with high financial responsibility often do not like debt, and I share this position. I agree that taking a little is better than taking a lot. However, over time, I learned that this is not necessarily the case, especially for society as a whole (as opposed to its individual members), because power structures have access to levers that are not available to individuals.
- Original Title: Big Debt Crises
- Authors: /
- Publisher: Mann, Ivanov and Ferber
- Number of pages: 496
- Age limit: 16+
- ISBN: 978-5-00169-193-8
- Year of publication: 2020
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Read a book on debt crises
The book shows a template that clarifies how all debt crises proceed, and formulates the basic principles for overcoming them.
It is difficult to assess loans as “good” or “bad”, because development in the economic sphere most often occurs precisely at the expense of borrowed money. If the economic benefit from using borrowed funds is enough to get the money back, that’s good. If credit conditions strictly require guaranteed payment of debt with interest, then there will be fewer loans and development will slow down. If the conditions are more flexible, it promotes more development, but it can create serious problems that cancel out all the benefits created: a “bubble” will form in the economy.
Bridgewater has done a great job of retrospective analysis of the debt crises of different countries. This analysis helped to understand their causal relationships, identify several archetypes of the crisis and develop principles for successful overcoming for each option.
These principles and decision-making algorithms help Bridgewater prepare ahead of time for economic “storms”, even those that have not happened in our lifetime. A few years before the 2008 financial crisis (and such events have not occurred in the economy since 1929-1932), the company developed a special “depression gauge” – and successfully overcame the crisis, when almost everyone else suffered huge losses.
The book contains a huge amount of material for thought and analogy.
What is in the book
- General theory of the development of debt crises.
- Comparative analysis of 48 crises in different countries.
- Detailed analysis and news background of several of the largest crises.
This is a book for statesmen, investors, executives, business owners, economists, financiers and anyone who needs to see the “bubbles” in the economy in advance.
From the author
After being caught by surprise more than once by events that I had never encountered before, I decided to no longer rely on my own experience, but to study all the major economic and market shocks in history and do it in such a way that they appear to me as my own “virtual experience” – that is, as if I myself experienced these events in real time. In this case, I would have to place my own bets in the market, as if I only knew what had happened up to that moment. I achieved this by studying in detail the examples from history in chronological order, experiencing each of them as if I personally were in those realities for long days and months.
This experience greatly expanded and deepened my vision of the issue, compared to how I would rely only on my own experience. During my life I went through the decay and gradual disintegration of the global monetary system (Bretton Woods system) in 1966-1971, the inflationary bubble of the 1970s and its “rupture” in 1978-1982, the Latin American inflationary depression of 1980 years, the Japanese bubble of the late 1980s and its “burst” in 1988-1991, the global debt bubbles that resulted in the dot-com crash in 2000, and the great deleveraging of 2008 … By studying the history of economics, I was able to witness and participate in the collapse of the Roman Empire in the 5th century AD. e., debt restructuring in the United States in 1789, life in the Weimar Republic in the 1920s, the global Great Depression and World War II, which swept many countries in 1930-1945, and many other crises.
It seems to me that watching the economy and markets (or anything) day after day is like being in the midst of a brewing storm, when millions of particles of information hit in the face, and you need to be able to synthesize them into one and react to everything at once. … Having done this work, you will notice that the flow of all historical examples is, in fact, the same, as described in the “archetype”, while you will notice their differences and think about why these differences exist and how to explain them, which will deepen your understanding of the issue. This way, when the time comes for the next crisis, you will be better prepared for it.