Author of many books on Japanese economy and leading economist Richard
C. Koo feels not enough has been done to alleviate the serious economic
issues that appear as a result of the 2008 financial crisis. In United
States, the unemployment remains elevated, yet industrial output has
only recently recovered to the levels of 2008. In Europe, unemployment
rate is running near euro-era high of 12 percent, while United Kingdom's
industrial production is no higher than it was in 1992. In Japan, the
mood has improved since “Abenomics” was launched at the end of 2012, but
industrial output remains stuck at the levels of 2003.
In his latest book, The Escape from Balance Sheet Recession
and the QE Trap: A Hazardous Road for the World Economy (Wiley;
October 2014; ISBN: 978-1-119-02812-3), Koo warns readers that the U.S.,
the U.K. and Japan could still face a major challenge in unwinding the
quantitative easing (QE), a problematic byproduct of a “balance sheet
recession” (recessions triggered by a private sector that chooses to
minimize debt).
“In my previous book, Balance Sheet Recession: Japan’s Struggle
with Unchartered Economics and Its Global Implications (Wiley; March
2003), I warned that a housing-bubble-dependent U.S. economy could
eventually fall into a severe balance sheet recession. And about six
months before the collapse of Lehman Brothers, then-Japanese finance
minister Fukushiro Nukaga recommended to Treasury secretary Hank Paulson
that the United States quickly inject capital into distressed financial
institutions. Both warnings, unfortunately, went unheeded. Had the U.S.
authorities listened to my warning and implemented Mr. Nukaga’s
proposal, the severity of both the balance sheet recession triggered by
the housing bubble collapse and the financial crisis sparked by the
Lehman bankruptcy could have been lessened substantially,” said Koo.
The Escape from Balance Sheet Recession and the QE Trap highlights
the many hidden dangers remaining as the world slowly recovers from the
balance sheet recession of 2008 and examines the similarities between
Japan in the past and the West today. Koo explains the unique political
and economic pitfalls that stand in the way of recovery from this rare
type of recession that was largely overlooked by economists. He
illustrates how history is repeating itself in Europe while the United
States, which learnt from the Japanese experience, is doing better by
avoiding the fiscal cliff. However, because of the liberal dosage of
quantitative easing already implemented, the United States, the United
Kingdom, and Japan may face a treacherous path to normalcy in what Koo
calls the QE Trap. He argues that it is necessary to understand balance
sheet recession in order to resolve the Eurozone crisis, particularly
the competitiveness problems.
The Escape from Balance Sheet Recession and the QE Trap offers
Western nations an opportunity to develop a clear understanding of the
economic problems they face today. The book presents the basic mechanics
of the balance sheet recessions with a focus on theoretical aspects and
provides a detailed solution for overcoming their predicament in order
to return to economic normalcy.
The Escape from Balance Sheet Recession and the QE Trap is
now available at all good bookstores nationwide and all major online
retailers. For more information, visit www.wiley.com/buy/9781119028123.
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Media contact:
Sharifah Sharomsah
Publicist, WILEY
skbsharoms@wiley.com
(+65) 6643-8099
Contact the publicist:
Sharifah Sharomsah
Publicist
skbsharoms@wiley.com
+65 6643-8099