The Holy Grail of Macroeconomics: Lessons from Japans Great Recession by Richard Koo
Richard Koo's "Holy Grail" is definitely on my wish list and I will definitely get to it before the end of this year (2010). He has a fascinating proposal that the 15 year recession in Japan was in effect was a "balance sheet recession" whereby asset prices and property prices dropped dramatically giving companies more liabilities than assets on their balance sheet. However, he argues the cash flow of these companies were still good so even though they were effectively bankrupt, they were still able to pay down their debts and it took them 10 years to pay off their debts. He argues (at least in the speech below) that this was the responsible thing to do. The speech below I believe covers a lot of the issues in the book very briefly. He comes accross as very sensible and rational economist and someone worth listening too for, at the very least, very engaging perspectives on Japan and also for the lesson we can learn for today.
I have embedded two speeches. The first is 10 minutes long and covers the essential ideas. The second one is a little more detailes in putting these issues in a global context.
You can buy from Amazon @ The Holy Grail of Macroeconomics, Revised Edition: Lessons from Japans Great Recession
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