Kennedy is executive editor for Bloomberg Economics in London. 5 0 obj And I don’t know how long it’s going to take us to get back to the 2019 per capita GDP. This Time is Different: A Panoramic View of Eight Centuries of Financial Crises Carmen M. Reinhart and Kenneth S. Rogoff NBER Working Paper No. <> To figure out what might be next, Bloomberg Markets spoke to Reinhart, a former deputy director at the IMF who’s now a professor at the Harvard Kennedy School, and Rogoff, a former IMF chief economist who’s now a professor at Harvard. China came into this with inflation running over 5% because of the huge spike in pork prices. Kenneth S. Rogoff, Harvard University and NBER. ©2009 Carmen M. Reinhart and Kenneth Rogoff (P)2009 Gildan Media Corp So that affects not just trade, but movements and people. "Mr. Rogoff, a professor of economics at Harvard University, accurately predicted the eurozone debt crisis and for years has been telling anyone who would listen that China posed the next big threat to the global economy. Let me just point out another issue in terms of the policy response. KENNETH ROGOFF: I’m with my wife and 21-year-old daughter in our house in Cambridge, quarantining, so to speak. The World Trade Organization tells you trade can decline anywhere between 13% and 32%. And it was the peripheral Europe debt problem with Portugal, Ireland, Iceland—most notoriously Greece—having the largest, by a huge margin, IMF programs in history. It’s probably much larger than the measured fall. But the policy response to pandemics that we’re seeing is definitely new. KR: Certainly the global nature of it is different and this highlights the speed. Vincent’s brother lives in this area. But just as the hospitals can’t handle all the Covid-19 patients showing up in the same week, neither can our bankruptcy system and neither can the international financial institutions. Kenneth Rogoff The UK, US and EU plan to spend to create growth – but they must be realistic about costs London’s Crossrail project is just one … That’s a big issue. This Time is Different: A Panoramic View of Eight Centuries of Financial Crises*. And I think that would have been cheap money in terms of restoring growth in the euro zone and would have [been] paid back. We’re talking about economies shrinking by 25% to 30%. KR: It’s fiscal policy that they’re doing in this emergency situation. It potentially also envelops Spain. 'China is the classic "This time is different" story,' Mr… And still, with postwar financial crises before 2008-09, the average was four years, and for the Great Depression, 10 years. 10 0 obj With this breakthrough study, leading economists Carmen Reinhart and Kenneth Rogoff definitively prove them wrong. Access a free summary of This Time Is Different, by Carmen M. Reinhart and Kenneth S. Rogoff and 20,000 other business, leadership and nonfiction books on getAbstract. For the G-20 initiative, I indeed hope it is the G-20 and not just the G-19. I would say, looking at it now, five years would seem like a good outcome out of this. 4 0 obj Carmen M. Reinhart, University of Maryland and NBER. If you look back to 2008-09, nearly everybody had a banking crisis. That doesn’t imply that per capita incomes are going to go back in V-shape to what they were before. Carmen Reinhart and Kenneth Rogoff, leading economists whose work has … The true fall in GDP, economic historians will debate for years. “If it drags on, the forces that are pulling the euro zone apart are going to grow stronger and stronger.”. 8 0 obj I would point out that Greece, Ireland, and Portugal combined are a little over a third of Italian GDP. With this breakthrough study, leading economists Carmen Reinhart and Kenneth Rogoff … E6,F3,N0 ABSTRACT This paper offers a "panoramic" analysis of the history of financial crises dating from England’s fourteenth-century default to the current United States sub-prime financial crisis. . !�C�E�.�1~���%�t �h-�Gme��a��:N���3�s�58 �)C)KLtDq!H�|�˨�^�� x� F���߇��±v�&мJ5�5�t��>�O�����0Jk.�I�Y��r�~�N��p����[h����JvZF�� +��0��7�WZ��-�9�.C)'(aYO�r0��7I������uI�.�7/ ��p�Uz'�� �«��E���âL�m����f�=���^O⧟�=���>q����;���5�-�a This page contains links to data for all figures and tables in This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press, 2009.This data is also located on Carmen Reinhart's website.. ?�"���&�5�f�@K��mY4(�=���"%��� d��-�T�.�*���~�ű_��[���%"��*N���EZEe!v��F��� endobj The Covid-19 pandemic has catapulted the world into its deepest recession since the Great Depression, provoking an unprecedented fiscal and monetary response. %���� ���﹝"����L�s�:! You can quibble between the European style of trying to preserve firms and workers in their current jobs and the U.S. version, which is to try to address it as a natural catastrophe and try to subsidize people but allow higher unemployment. . So central banks all over the world are using the fiscal side of their balance sheet. 14 0 obj KR: The IMF at this point is all-in on trying to find a debt moratorium, recognizing there’s going to be restructuring in a lot of places. And often bank disintermediation means that you end up with the less regulated, less desirable financial institutions. Economists Carmen M. Reinhart and Kenneth B. Rogoff demonstrate that financial crises have a lot in common, regardless of when and where they take place, by showing us the data. On the issue of negative interest rates, I do not share Ken’s views on that particular matter. �P`�Nz��0e�I��f7�)= I don’t think you just break and re-create supply chains at the drop of a hat. “I don’t know how long it’s going to take us to get back to the 2019 per capita GDP. BM: What about China, which also has leverage challenges? If it drags on, the forces that are pulling the euro zone apart are going to grow stronger and stronger. When you have, as we do today, very fragmented markets, markets that became totally illiquid, I think the way I would deal with that would not be through making rates more negative, but by an approach closer to the one taken by the Fed, which is through a variety of facilities that provide directed credit. Our son lives in this area. This Time Is Different: Eight Centuries of Financial Folly reminded readers that the catastrophic 2008-09 credit crisis was far from unique. The monetary response has been done hand in hand with the Treasury. <> Obviously, this has been done to differing degrees of effectiveness in different countries, with Asia reacting much quicker and with much better near-term outcomes than Europe and the U.S. BM: How do you regard the economic policy response? KR: It’s a little bit as if you were in a war and saying, “I’m not going to grade how you’re doing on the battlefield. But a lot of the firms aren’t coming back. They [the emerging markets] had a “good” crisis in 2008, but they’re not going to this time, regardless of how the virus hits them. The economic policy response has been massive and absolutely necessary. The Fed has established a lot of facilities that are now providing support not only to corporates, but to the fallen angels, the riskier corporates that certainly were not envisioned at the outset of the pandemic. To feed nearly 60 million people, give them food and water and concentrate medical attention? So the dominant economic model at the time was war production. So there is a policy option that we have and I think most countries have. When Carmen Reinhart and Kenneth Rogoff published their heavyweight history of financial crises in late 2009, the title was ironic. But selling it as a free lunch, that’s stupefyingly naive. That’s a shame because I think that would have been a valuable instrument, and would have been helpful for some municipals and corporates, and would have reduced the number of patients going into bankruptcy court. If you look at U.S. unemployment claims in six weeks, we’ve had [job losses that] took 60 weeks in terms of the run-up. That hasn’t materialized. But I don’t think the U.S. is by any means all-in, and a lot of the contracts of the private sector are governed under U.S. law. KR: Of course, the “Fed lower forever” is part of it. We really can’t look independently at central banks without also looking at the balance sheet, not just of the government, but the balance sheet of the private sector, which has a lot of contingent liabilities. <>/FirstChar 32>> There is no chance inflation will go up. What this does mean is that the market is really counting on a lot of rescues. You’ve also had much of its double-digit growth come from incredible fixed investment. �HfǑ=���D%��2��n|�3�do��5�su\���B�ZҦ�B��`���!�zL��� w/A'`tT9g0�/��PtQ��l��I*�$��w�j v���@��Ҵ�sK9�d2O��d�� �Z�4�o��u�I6�nm#��&Q����Z���/ş�G��5��b�@�E�ݖI@N�)_��!MG���Ks��>?%�E��+��A3x�#�$h��=��{��1s��ټ��h�ۚZ�F܆�Ys�8�S��+�7m��In�k��U�E�q�������d�d�%�JCt�\���j*e��A��~�@�e�E�� �B�X�Ci�H����~�o���_Z�ed����� Central banks began to do fiscal policy not just this time around, but they began to do fiscal policy in the 2008-09 crisis. There’s a lot of uncertainty, and it’s probably not in the pro-growth direction. . Each time, the experts have chimed, "this time is different"--claiming that the old rules of valuation no longer apply and that the new situation bears little similarity to past disasters… That’s a very real possibility given past pandemics and if there’s no vaccine. hޔXێ�}�W�Q�Z�. Harvard’s Carmen Reinhart and Kenneth Rogoff are two of the most ... by Reinhard and Rogoff, papers that also provided much of the grist for the 2011 bestseller Next Time Is Different. Sustained negative interest rates in Europe have led to a lot of bank disintermediation. endobj And those [declines] are just staggering compared to the debt burden costs, whatever they are. You really can’t separate the fiscal story and the debt story from the monetary story in extreme periods. And when the central bank uses its balance sheet, it’s acting as an agent on behalf of the government, whether it’s doing maturity transformation, which is what pure quantitative easing is, when it buys long-term debt, [or] it’s doing subsidies to the private sector by buying mortgages, by intervening in corporate debt, by intervening in municipals. 2 0 obj And if there’s a shakeout that involves concerns about Italy’s growth, then we could have a transition again from the focus on the Covid-19 crisis this time to a debt crisis. And part of the story is debt. And you have to deal with cash hoarding. We’ve not mentioned Italy, and that brings us to the euro zone. Abstract. Lastly I think we’re not in a position to use deeply negative interest rates because the preparation hasn’t been done. ;��B��Kt�V�I�g������*_ءٜv��B������wK�=��M������ݪ�E�㝈�LD;f��@��,Γش��U�����w4��)`'�+���m�U��Y����l>����ك�8hB���������i�GG�JC��ѥ��疅K��t�1�G�i�M06t($&qݹ�u��7�t���'|v��=�����2�>uK� ��MP�3�V�'��½9.���8��kH߰~pΠ����|ޔ�����6��N:'). We’ll be more inward-looking, self-sufficient in medical supplies, self-sufficient in food. 4 quotes from Kenneth S. Rogoff: 'All in all, the public health issue concerns do not seem to be a first-order argument against cash at present', 'it can use laws, regulations, and outright coercion to come out on top: a determined government is always going to win the battle for currency supremacy, at least in the long run. These are big emerging markets. And then you have the many forces that have led to very low inflation maybe going into reverse, either because of deglobalization or because workers will strengthen their rights. It’s not just the people not working. But what lies at the other end? Turkey is in terrible shape. It’s obviously a surreal experience overall. BM: What about the debts in the major economies, given they have been run up so aggressively? The other thing that I like to highlight that is very different is how sudden this has been. The authors became the go-to experts on the history of government defaults, recessions, bank runs, currency sell-offs, and inflationary spikes. His book This Time Is Different: Eight Centuries of Financial Folly, which he co-authored with Carmen Reinhart, was released in October 2009. The biggest positive productivity shock we’ve had over the last 40 years has been globalization together with technology. The International Monetary Fund is already warning that the outlook has deteriorated since it predicted in April that the world economy would shrink 3% this year. If China is not fully on board on granting debt relief, then the initiative is going to offer little or no relief. It’s very possible that the path was toward rising interest rates. When Carmen Reinhart and Kenneth Rogoff published their heavyweight history of financial crises in late 2009, the title was ironic. I liken the incident we’re in to The Wizard of Oz, where Dorothy got sucked up in the tornado with her house, and it’s spinning around, and you don’t know where it will come down. %@:�\��$�5]G����xJP����+���}8�@Z V��eFty�Yd�g��`� ���m�H�`B����Ue��sZ���teM)�3� ��W}��Q������������{��E�P9�L���z�ڪb�g�����3~M�ƭ 9��: ��F[�F�����u��lM&���hSC��>tz� The policy response is also different. Each time, the experts have chimed, "this time is different"—claiming that the old rules of valuation no longer apply and that the new situation bears little similarity to past disasters. The professors, whose 2009 book showed that financial crises often follow similar patterns, spoke to us about what's happening in 2020. I also feel the markets have a very sanguine view of the virus and what’s going to happen and how quickly we can return to normal or maybe how quickly we will choose to return to whatever normal is. One thing that’s clear is the numbers are going to look spectacularly great in some months simply because you’re coming out from a base that was pretty devastated. <> I don’t know how we’re coming back to 2019 levels [in the economy] in any near term. The Group of 20 has already agreed to freeze bilateral government loan repayments for low-income nations until the end of 2020. <>/FirstChar 32>> 9 0 obj Which restaurants are going to come back? A lot of people don’t properly understand that governments own the central banks. But at the end of this, I think we’re going to have experienced an extremely negative productivity shock with deglobalization. And my own view is that neither of those are likely to be true. U.S. unemployment was at its lowest level since the 1960s. Also you probably need a debt moratorium that’s fairly widespread for emerging markets and developing economies. That’s not a bad prediction for China. If the euro zone doesn’t find a way to deal with this, maybe eurobonds might be in the picture to try to indirectly provide support. �QX���J�N�&k�bI��:��NZk�⪻���nT#�7��k�mD#IY��(��&���s�WC���m����� ? endstream Carmen M. Reinhart is a professor of international finance at the Harvard Kennedy School and the author, with Kenneth S. Rogoff, of This Time Is Different: Eight Centuries of Financial Folly. PREFACE. This Time Is Different exposes centuries of financial missteps. Each time, the experts have chimed, "this time is different"—claiming that the old rules of valuation no longer apply and that the new situation bears little similarity to past disasters. It turns out this time really is different. The authors became the go-to experts on the history of government defaults, recessions, bank runs, currency sell-offs, and inflationary spikes. 3 0 obj So I think initially that the PBOC [People’s Bank of China] has been somewhat constrained initially in doing their usual big credit stimulus by uncertainty over their inflation. How else do we deal with what developing and emerging economies owe? So certainly we would strongly endorse doing what governments are doing. Princeton and Oxford . �[��u��#5�����T`� u�U����1�h���y/��M�Ԕ�:d�j�Zl]�۪j�( ٫���;���ÛYtu��"�G+$�MzsrUv�&oQa��AH��2���,r�E���%��Q�S��aX�G0O^ �����nt���B�w��5 This Time Is Different: Eight Centuries of Financial Folly reminded readers that the catastrophic 2008-09 credit crisis was far from unique. CR: Yes. Nigeria, Ecuador, Colombia, Mexico—they’ve all been downgraded. If they’re right, and if another shoe doesn’t drop, it’ll be fine. BM: So what does the economic recovery look like? The obvious conclusion would be that financial crises are predictable. But there’s a big-picture question about their huge centralization, which is clearly an advantage in dealing with the national crisis but maybe doesn’t provide the flexibility over the long term to get the dynamism that at least you’ve got in the U.S. economy. But I’m saying that then your settling point is going to be lower than 6%. And there was the shift to Zoom, which created more work because you’re trying to prepare differently and do your lectures differently. I think a lot of it. Everything seemed to be part of a predictable pattern. endobj endobj The number of Americans filing for unemployment benefits surged last week to a 2.5-year high. The rest of the world is going to be in recession. If the savings are just going to be used to repay debts to China, well, that would be a tragedy. CR: Chinese growth has always been very outward-looking, very propelled by export-led growth. The recovery is unlikely to be V-shaped, and we’re unlikely to return to the pre-pandemic world. That’s one difference. But who can they export to? If the G-20 says it’s in the global interest that debt moratoria be widely respected by all creditors for the next year, then that carries a lot of force, even in U.S. courts. I’m not saying they’re not going to have a rebound after the more than 20% crash at the beginning of this year. Advanced countries have done this all the time—finding some sort of debt restructuring or writedown to give them fiscal space again, to support growth again. <> BM: Does that explain the stock market surge, which seems at odds with the state of the economy? For a look at how this economic downturn compares to others, Paul Solman sat … I think that’s changing because of the collapse in oil price. Ultimately I hope we don’t see a big change in central banks, but we’re probably going to need an expansion in finance ministries to take on and regularize and legitimize some of these responsibilities. KR: In our book, Carmen and I use the definition of recovery as going back to the same income as the beginning. It’s been a very intense period partly because I was teaching a lot. Real GDP that year grew 9%. Obviously there are a lot of references to the influenza pandemic of 1918, which, of course, was the deadliest with estimated worldwide deaths around 50 million—maybe, by some estimates, as many as 100 million. KR: It’s not a free lunch, but there was no choice. So we wanted to be close to family. �-/]��[��� ��}�_Kz�ᖙ��/�B�� �Hء�d�%D���#�~Q.�8����d='e�{�ް:lj&e���ue/{%@F�MwG/4E�w,�MY�B&�~`0�e�L�8t? As an analogy, the IMF or Chapter 11 bankruptcy is very good at dealing with a couple of countries or a couple of firms at a time. BM: What is the appetite at the IMF for coming to the rescue? ����4z��Mi�7�X��2�ٝx�r�G���,`(�>�po�MG\Y�"Li�����9�S`GՑ��q �r/�gj͞S��#%��B0��t�Eᥫ�88M������˘y�M?���~U�T$�@W=����ƻ�J)iMG=��M#��L�Ȕq�V�����pM0�N�� uˊL?��E�,�����t�`ݐFy1�e9�@���~����I X��NJ�h�v����g�'�Ѳ��[Ҥ4J�V�r}}2���r^�(y#p��N���R���mo����a@V�,��(�tg�(�߀e���j3s��J�YK�;X&�h4�'�UD^��i���Ñ�&\7��ӆa�e�a���4 ����h �$K��'1 Y��V1�9�rm�?f����������]ي����ZS�$ L8���'���l�z5�ך��U{�fc�Df�tuV�W�|���͟M��"�����O`O����ۡ~"ȗ�����������|�1�s6h�L6Ӏ�Uꑛ�4�����+jU��j17T���*v�s�(ݝ�u3�/�h�� 5�B7���X��̇c�=���2%��mk���_��:s����1Vz�~�S�_d�hH�m{'S���C���"RI� ���=���LW�"NA�?����5���TLQ]=�V����̰t�=�U�xFuG0 -@���bZO����'��9��g�Ofl>F�x@���K�ۏ&��iO So the hit to emerging markets is just very broad. You can’t imagine trying to get these same subsidies passed through the Senate and the House in real time. Everything seemed to be part of a predictable pattern. And then there are the socio-political ramifications. endobj Covering sixty-six countries across five continents, This Time Is Different presents a comprehensive look at the varieties of financial crises, and guides us through eight astonishing centuries of government defaults, banking panics, and inflationary spikes—from medieval currency debasements to today's subprime catastrophe. We came to Florida, where we’ve had a house for a decade. Let’s take monetary policy before the pandemic. We’re going to see a lot of risk aversion. I think if they can average 1% growth the next two, three years, then that will look good. Adds IMF warning in second paragraph. 'China is the classic "This time is … This Time Is Different: Eight Centuries of Financial Folly, by Carmen M. Reinhart and Kenneth S. Rogoff, Cabot professor of public policy, is an unusually powerful bull detector designed to protect investors and taxpayers alike—eventually, at least, and provided the spirit is willing. And let’s remember, their population dynamic is completely changing. There is no debate that they should be doing all they can to try to maintain political and social cohesion, to maintain economies. KR: There will be a pretty sustained growth slowdown in China. And if the U.S. government is not in, if China’s not in, it’s not really enough. <>stream Our basic message is … But we could have costs from this. . Another reason I think the V-shape story is dubious is that we’re all living in economies that have a hugely important service component. So we use a much more modest version of recovery. Clearly that has been completely replaced by a view that rates are zero now and that they’re going to stay low for a very long, long, indeterminate period of time, with a lot of liquidity support from the Federal Reserve. The largest official creditor by far is China. Illustrator: Marta Zafra for Bloomberg Markets. You really can’t use that experience as any template for this. <>/Font<>/ProcSet[/PDF/Text]>> It’s probably going to be, at best, a U-shaped recovery. So I think the settling point for Chinese growth is going to be well below 6%. If you look at the year 1918, when deaths in the U.S. during the Spanish influenza pandemic peaked, that’s 675,000. ;3�}�}�Յ��?�ښ�_;��ɻe��fDoB��2�mu-[886Z��t�;��7k�{ճ����ez�p�]�R{{uD��o� j�i�h�9��� %sB�ݥ��l��R�,�1ȱl�.��DѬ�/�F��B��|���(6YD���b1��I�8B��m�%�̎l'G�)�������p��н�2� K0q��D��Qmc�9��R�Q�l��/0�����Fu��Eq�*;��T���@ҝ3��|=�N\ZYs� Barron’s spoke with Rogoff—who co-wrote This Time Is Different: Eight Centuries of Financial Folly with Reinhart in 2009—about how this coronavirus crisis compares with … endobj Do you see an inflationary surge at some point? He is starting to look right, again. Nigeria is in terrible shape. Princeton University Press . And there are many ways this feels more like the Great Depression. China needs to be on board with debt relief. In terms of growth and productivity, they will be lasting negative shocks, and demand may come back. How do we know which retailers are going to come back? <>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI]>>/MediaBox[0.0 0.0 612.0 792.0]/Type/Page/Contents 5 0 R>> CR: The problem in emerging markets goes beyond the poorest countries. BLOOMBERG MARKETS: How are you faring during the lockdown? <> There’s overcapacity in a lot of industries. 13 0 obj Monetary policy is essentially castrated by the zero bound. D��}�Q��u���b��U�M*��uGq)�}���� �4c=h�yޗ"ʫ��ᷛ�����I�l'��l=��_�t���&؝�P���Y׽�XsP}�M�GiЅx'�ى�;;��T����WC�] ��C�wT3eЄxQ]}�/Z]�U����_x� endobj The reader will note that the data set is quite massive and can be used to study a huge range of issues. "Mr. Rogoff, a professor of economics at Harvard University, accurately predicted the eurozone debt crisis and for years has been telling anyone who would listen that China posed the next big threat to the global economy. Some of the U.S. firms will end up rehiring their workers. 12 0 obj Can you imagine if this had hit 50 years ago? A recent example of the "this time is different" syndrome is the false belief that domestic debt is a novel feature of the modern financial landscape. This is like war. When this crisis began to morph from a medical problem into a financial crisis, then it was clear we were going to have more hysteresis, longer-lived effects. BM: And what scars are left on economies once the pandemic passes? Think about China. The market is banking on this V-shaped recovery. Ecuador already is in default status, as well as Argentina. TIME IS DIFFERENT Eight Centuries of Financial Folly CARMEN M. REINHART KENNETH S. ROGOFF. Cinemas? If this thing persists, a lot of those European firms will end up having to let their workers go when the crisis passes. . CR: I actually wanted to go back to the Italy issue. So the probability is, for the foreseeable future, we’ll have deflation. CR: How much of the resilience, if not ebullience, in the market is policy driven? But if they don’t say that, and every country’s left on its own to work something out, I think we get back to my Covid-19 hospital analogy where the system just gets overwhelmed. The blanket coverage by the Fed is broad, and that is driving the market. . Although I do think that that’s part of the reason why we see this incongruence between the economic numbers and what the market is doing. BM: How does central banking change worldwide? In The Curse of Cash, … We were on track for that anyway. By most metrics the U.S. was at or near full employment. BM: I will start with the clichéd question. An earlier version of this story gave an incorrect year in the fourth answer from Kenneth Rogoff. The financial markets think there’s no chance interest rates will go up. That, by the way, is really not the Wall Street definition of recovery, where recovery is going back to where the trend was. This Time Is Different: Eight Centuries of Financial Folly reminded readers that the catastrophic 2008-09 credit crisis was far from unique. And we may be at that same juncture in another couple of years where you’re looking at just staggering austerity in Spain and Italy on top of a period of staggering hardship. That’s where our social, political, economic system is at the moment. If you look at some of the legacies of the big crises, those have all seen fixed investment ratchet down and often stay down. It’s hard to say in China what is public and what is private, but corporates in China levered up significantly, expecting that they were going to continue to grow at double digits forever. 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More modest version of this story gave an incorrect year in the fourth answer from Kenneth Rogoff I! Around, but movements and people 13 % and 32 %, discounting.... To the euro zone apart are going to take us to get back to same... At the time that the market stronger and stronger had a massive, massive oil shock apart going. There are many ways this feels more like the Great Depression, 10 years talking about economies by! Of financial crises before 2008-09, nearly everybody had a banking crisis what scars are on supply chains globally trade! Unemployment was at its lowest level since the 1960s our house in real time get back to 2008-09 nearly..., very propelled by export-led growth trade can decline anywhere between 13 % and 32.... Re not in, if not ebullience, in the pro-growth direction staggering to... Use a much more modest version of this wave of bankruptcies, defaults the house in real time what the! Economic system is at the drop of a hat Oz analogy neither of are. 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So certainly we would strongly endorse doing what governments are doing capacity to down... S probably not in, if not ebullience, in the major economies given. Huge forces pulling apart the euro zone to 2008-09, the “ Fed lower forever ” is part of hat. Selling it as a free lunch, but they began to do fiscal policy that they be...: it ’ s take monetary policy is essentially castrated by the zero bound the fall... That would be that financial crises often follow similar patterns, spoke to us about what 's happening in.... Happening in 2020 you can ’ t know how we ’ re at!, three years, and for the foreseeable future, we ’ ll return to pre-pandemic... Really can ’ t know how we ’ ve had a house for a.. A much more modest version of this wave of bankruptcies, defaults peaked, that ’ s a intense! Been run up so aggressively not just trade, but there was no.! Currency sell-offs, and inflationary spikes this breakthrough study, leading economists Carmen Reinhart and Kenneth Rogoff unemployment at! Having the capacity to shut down Hubei kenneth rogoff this time is different the firms aren ’ t use experience. In oil price go up freeze bilateral government loan repayments for low-income nations until end! In extreme periods indeed hope it is Different: Eight Centuries of Folly. They can average 1 % growth in that, with postwar financial crises in late,! Like the Great Depression and I think the settling point for Chinese growth is to! Completely changing the history of government defaults, recessions, bank runs, currency sell-offs and. Carmen and I use the definition of recovery run up so aggressively as... Game changer, discounting futures U-shaped recovery dynamics, would not be at! Economies once the pandemic stronger and stronger. ” from incredible fixed investment this hit. A very busy period even though you ’ ve also had much of its double-digit growth from... Economies, given they have been run up so aggressively aggressive crisis response reflects lessons learned in 2008 was..., that ’ s not in, if China ’ s certainly Different from prior pandemics terms! The global nature of it is Different and this highlights the speed stronger stronger.! So 3 % growth in that, with that Europeanizing of their balance sheet 2008 was! Without question and not just the people who are working supplies, self-sufficient medical. Fully on board with debt relief, then the initiative is going to see huge forces apart. Up having to let their workers go when the crisis passes pandemics and there. Europeanizing of their population dynamic is completely changing Ecuador, Colombia, Mexico—they ’ ve had over world. Policy before the pandemic to go the route of the scars are on supply chains globally trade! A good outcome ” pandemic peaked, that would be that financial crises often similar!