This Time is Different: Eight Centuries of Financial Folly

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Overview

Throughout history, rich and poor countries alike have been lending, borrowing, crashing--and recovering--their way through an extraordinary range of financial crises. 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. With this breakthrough study, leading economists Carmen Reinhart and Kenneth Rogoff definitively prove them wrong. 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. Carmen Reinhart and Kenneth Rogoff, leading economists whose work has been influential in the policy debate concerning the current financial crisis, provocatively argue that financial combustions are universal rites of passage for emerging and established market nations. The authors draw important lessons from history to show us how much--or how little--we have learned.

Using clear, sharp analysis and comprehensive data, Reinhart and Rogoff document that financial fallouts occur in clusters and strike with surprisingly consistent frequency, duration, and ferocity. They examine the patterns of currency crashes, high and hyperinflation, and government defaults on international and domestic debts--as well as the cycles in housing and equity prices, capital flows, unemployment, and government revenues around these crises. While countries do weather their financial storms, Reinhart and Rogoff prove that short memories make it all too easy for crises to recur.

An important book that will affect policy discussions for a long time to come, This Time Is Different exposes centuries of financial missteps.

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Editorial Reviews

Economist
[E]ssential reading . . . both for its originality and for the sobering patterns of financial behaviour it reveals.
New York Times
[A] terrific book.
— Andrew Ross Sorkin
Washington Post
Everyone working on economic policy should own This Time is Different and open it for a bracing blast of sobriety when things seem to be going well.
— Greg Ip
Barron's
A tour de force of quantitative analysis covering financial crises affecting 66 countries over the past 800 years, the book identifies pre-crisis patterns that recur with eerie consistency. This Time is Different is a must-read for anyone on the lookout for canaries in coal mines.
Wall Street Journal
[O]ne of the most important economic books of 2009.
— Jon Hilsenrath
Harvard Business Review
This book's distinctive strength is that it's built around a massive international database going back as far as twelfth-century China and medieval Europe.
USA Today
Financial folly, economists Carmen Reinhart and Kenneth Rogoff show in this groundbreaking book, knows no boundaries and has no expiration date. . . . For a book built around numbers, This Time is Different makes for surprisingly good reading. The authors are well aware that human nature is at the heart of the disasters they document, and they enliven the text with brief and amusing accounts of charlatans and cheats.
— Paul Wiseman
Newsweek
[A] fine new history of financial debacles.
— Daniel Gross
Choice
Reinhart and Rogoff have compiled an encyclopedic analysis of the history of financial crises over the last 750 years. But their volume is not merely of historical interest. Rather, it has great relevance for anyone interested in understanding how the current financial crisis is likely to unfold.
New Statesman
The credit crunch of 2007 became the financial crash of 2008 and the recession of 2009. But there has been much debate about the scale of this crisis, and how it ranks against previous events. Reinhart and Rogoff have produced the most detailed study yet of financial crises, going back as far as 12th-century China. . . . [This Time is Different] will be a vital source of reference in debates on the causes and consequences of financial crises. By cataloguing so thoroughly every known instance of financial crisis, it performs a significant service and opens up new lines of inquiry.
— Andrew Gamble
Irish Times
[T]his is the kind of economics we desperately need, as it is relevant, fact-based and replete with wisdom from the past—and lessons for the future.
Financial Times
The four most dangerous words in finance are 'this time is different.' Thanks to this masterpiece by Carmen Reinhart at the University of Maryland and Kenneth Rogoff of Harvard, no one can doubt this again. . . . The authors have put an immense amount of work into collecting the data financial institutions needed if they were to have any chance of making quantitative risk management work.
— Martin Wolf
Globe & Mail
[S]uperb.
— Neil Reynolds
Harvard Magazine
This Time is Different . . . is an unusually powerful bull detector designed to protect investors and taxpayers alike—eventually, at least, and provided the spirit is willing. . . . The book's most memorable passages—what the authors call its 'core life'—are to be found not in colorful stories about long-ago personalities, but rather in its various tables and figures. They take some time to comprehend, but any responsible citizen can and ought to consider they evidence they present. It is overwhelming.
— David Warsh
New York Review of Books
This Time is Different takes a Sergeant Friday, just-the-facts-ma'am approach: before we start theorizing, let's take a hard look at what history tells us. One side benefit of this approach is that the current book manages to be both extremely useful to professional economists and accessible to the intelligent lay reader. The Reinhart-Rogoff approach has already paid off handsomely in making sense of current events.
— Robin Wells and Paul Krugman
Finance & Development
Reinhart and Rogoff present a sobering reminder that financial crises are a serial phenomenon—caused in no small part by the seductive 'this-time-is-different syndrome,' the prevalent belief that to us, here and now, old economic laws of motion no longer apply. Their ambitious quantitative history of financial crises draws out sweeping parallels between financial crises, across times and continents; and between inflating away domestic debt, currency debasements, and defaults on external debt.
Forbes.com
Here's a deep and rewarding assignment for all of you, young and old, poor and rich, bullish and bearish. Retire to a quiet spot with a copy of This Time Is Different: Eight Centuries of Financial Folly, by Carmen M. Reinhart and Kenneth Rogoff.
— Bob Lenzner
National Interest
For those who want to relearn the forgotten lessons of the past, This Time is Different, by economics professors Carmen Reinhart and Kenneth Rogoff, is an excellent place to start. . . . These are lessons worth learning.
— Liaquat Ahamed
Bloomberg News
Wouldn't it be nice to have $1,000 for every time a pundit proclaims an era of endless prosperity, consigning booms and busts to the dumpster of history? The next time you hear that canard (and you will) pour yourself a single malt and dip into Carmen M. Reinhart and Kenneth S. Rogoff's landmark study, This Time Is Different. Wherever you open the book, you'll find proof that debt-fueled expansions have ended in financial ruin for hundreds of years. . . . The result is a visual history laid out in beguilingly simple graphs and tables, making the book both definitive—a must read for professors and investors—and accessible to a wider audience.
— James Pressley
Idaho Statesman
[A] valuable new book.
Shanghai Daily
Having studied mountains of economic data during the past eight centuries, the authors insightfully point out the highly repetitive nature of financial crises resulted from a dangerous mix of hubris, euphoria and amnesia.
The American Interest
Carmen Reinhart and Kenneth Rogoff have delivered a powerful and eloquent statement. . . . Reinhart and Rogoff have done an extraordinary job in putting together statistics on government debt—a task that economic historians should have done long ago but shied away from because of the difficulties of defining 'government', which is often complex and multi-layered.
— Harold James
CNNMoney.com
Unlike prior narrative accounts of market panics from such finance writers as Charles Kindleberger and Edward Chancellor, Reinhart and Rogoff give us a data-driven study that is global in sweep but also a model of clarity. The authors package their notably nonhysterical analysis of the latest crisis in a large, self-contained section of the book inviting harried readers to skip right ahead to it.
— Daniel Akst
Dow Jones Newswires
[I]nstant classic tome on debt crises.
— Alen Mattich
Econlog.com
This is certainly one of the must-read books of the year.
— Arnold Kling
Arkansas Business
Rogoff and Reinhart . . . provide an eye-opening look at the cycles of boom and bust and how governments deal with those cycles.
AidWatch
[A]wesome.
— William Easterly
Nikkei Weekly
One book in particular has been circulating among economists and market insiders. This Time is Different analyzes vast amounts of historical data on financial debacles, including state failures around the world, bank crises, currency woes and high inflation. The title satirizes those who fail to learn from past blunders and repeat them while insisting, 'This time is different.'
— Hideo Tsuchiya
Greg Ip
The research that went into this book has established Reinhart and Rogoff as leading authorities on crises, routinely cited by policymakers, academics and journalists (including me). Everyone working on economic policy should own This Time is Different and open it for a bracing blast of sobriety when things seem to be going well.
—The Washington Post
New York Times
[T]he most comprehensive study of financial crises and their aftermath . . .
— Eduardo Porter
Dow Jones Newswires
[I]nstant classic tome on debt crises.
— Alen Mattich
New York Review of Books
This Time is Different takes a Sergeant Friday, just-the-facts-ma'am approach: before we start theorizing, let's take a hard look at what history tells us. One side benefit of this approach is that the current book manages to be both extremely useful to professional economists and accessible to the intelligent lay reader. The Reinhart-Rogoff approach has already paid off handsomely in making sense of current events.
— Robin Wells and Paul Krugman
Wall Street Journal
[O]ne of the most important economic books of 2009.
— Jon Hilsenrath
Washington Post
[This Time is Different] is perhaps the finest study of financial crises ever published.
— Ezra Klein
Economist
[E]ssential reading . . . both for its originality and for the sobering patterns of financial behaviour it reveals.
Newsweek
[A] fine new history of financial debacles.
— Daniel Gross
Bloomberg News
Wouldn't it be nice to have $1,000 for every time a pundit proclaims an era of endless prosperity, consigning booms and busts to the dumpster of history? The next time you hear that canard (and you will) pour yourself a single malt and dip into Carmen M. Reinhart and Kenneth S. Rogoff's landmark study, This Time Is Different. Wherever you open the book, you'll find proof that debt-fueled expansions have ended in financial ruin for hundreds of years. . . . The result is a visual history laid out in beguilingly simple graphs and tables, making the book both definitive—a must read for professors and investors—and accessible to a wider audience.
— James Pressley
CNNMoney.com
Unlike prior narrative accounts of market panics from such finance writers as Charles Kindleberger and Edward Chancellor, Reinhart and Rogoff give us a data-driven study that is global in sweep but also a model of clarity. The authors package their notably nonhysterical analysis of the latest crisis in a large, self-contained section of the book inviting harried readers to skip right ahead to it.
— Daniel Akst
Barron's
A tour de force of quantitative analysis covering financial crises affecting 66 countries over the past 800 years, the book identifies pre-crisis patterns that recur with eerie consistency. This Time is Different is a must-read for anyone on the lookout for canaries in coal mines.
Econlog.com
This is certainly one of the must-read books of the year.
— Arnold Kling
Arkansas Business
Rogoff and Reinhart . . . provide an eye-opening look at the cycles of boom and bust and how governments deal with those cycles.
Idaho Statesman
[A] valuable new book.
Shanghai Daily
Having studied mountains of economic data during the past eight centuries, the authors insightfully point out the highly repetitive nature of financial crises resulted from a dangerous mix of hubris, euphoria and amnesia.
Harvard Magazine
This Time is Different . . . is an unusually powerful bull detector designed to protect investors and taxpayers alike—eventually, at least, and provided the spirit is willing. . . . The book's most memorable passages—what the authors call its 'core life'—are to be found not in colorful stories about long-ago personalities, but rather in its various tables and figures. They take some time to comprehend, but any responsible citizen can and ought to consider they evidence they present. It is overwhelming.
— David Warsh
USA Today
Financial folly, economists Carmen Reinhart and Kenneth Rogoff show in this groundbreaking book, knows no boundaries and has no expiration date. . . . For a book built around numbers, This Time is Different makes for surprisingly good reading. The authors are well aware that human nature is at the heart of the disasters they document, and they enliven the text with brief and amusing accounts of charlatans and cheats.
— Paul Wiseman
New Statesman
The credit crunch of 2007 became the financial crash of 2008 and the recession of 2009. But there has been much debate about the scale of this crisis, and how it ranks against previous events. Reinhart and Rogoff have produced the most detailed study yet of financial crises, going back as far as 12th-century China. . . . [This Time is Different] will be a vital source of reference in debates on the causes and consequences of financial crises. By cataloguing so thoroughly every known instance of financial crisis, it performs a significant service and opens up new lines of inquiry.
— Andrew Gamble
Irish Times
[T]his is the kind of economics we desperately need, as it is relevant, fact-based and replete with wisdom from the past—and lessons for the future.
National Interest
For those who want to relearn the forgotten lessons of the past, This Time is Different, by economics professors Carmen Reinhart and Kenneth Rogoff, is an excellent place to start. . . . These are lessons worth learning.
— Liaquat Ahamed
Harvard Business Review
This book's distinctive strength is that it's built around a massive international database going back as far as twelfth-century China and medieval Europe.
Globe & Mail
[S]uperb.
— Neil Reynolds
Choice
Reinhart and Rogoff have compiled an encyclopedic analysis of the history of financial crises over the last 750 years. But their volume is not merely of historical interest. Rather, it has great relevance for anyone interested in understanding how the current financial crisis is likely to unfold.
Finance & Development
Reinhart and Rogoff present a sobering reminder that financial crises are a serial phenomenon—caused in no small part by the seductive 'this-time-is-different syndrome,' the prevalent belief that to us, here and now, old economic laws of motion no longer apply. Their ambitious quantitative history of financial crises draws out sweeping parallels between financial crises, across times and continents; and between inflating away domestic debt, currency debasements, and defaults on external debt.
AidWatch
[A]wesome.
— William Easterly
Nikkei Weekly
One book in particular has been circulating among economists and market insiders. This Time is Different analyzes vast amounts of historical data on financial debacles, including state failures around the world, bank crises, currency woes and high inflation. The title satirizes those who fail to learn from past blunders and repeat them while insisting, 'This time is different.'
— Hideo Tsuchiya
The American Interest
Carmen Reinhart and Kenneth Rogoff have delivered a powerful and eloquent statement. . . . Reinhart and Rogoff have done an extraordinary job in putting together statistics on government debt—a task that economic historians should have done long ago but shied away from because of the difficulties of defining 'government', which is often complex and multi-layered.
— Harold James
Financial Times
Two top-notch economists provide a clear and interesting explanation of why economic crises keep occurring. Broadly speaking, downturns such as the one we are recovering from are historically associated with characteristics that should sound quite familiar to today's investors.
Forbes.com
Here's a deep and rewarding assignment for all of you, young and old, poor and rich, bullish and bearish. Retire to a quiet spot with a copy of This Time Is Different: Eight Centuries of Financial Folly, by Carmen M. Reinhart and Kenneth Rogoff.
— Bob Lenzner
Journal of Psychohistory
Reinhart and Rogoff have produced a splendid book detailing the massive self-destructive behavior that all states have been undergoing over the past several centuries. . . . Reading this excellent book on the paths of previous economic cycles could help avoid some of the worst results of our self-destructive financial acts.
— Lloyd Demause
Economist.com
Anyone looking for a more academic take on where this meltdown places in the history of financial folly should turn to This Time is Different, a magisterial work on the causes and consequences of crises stretching back 800 years.
— Matthew Valencia
EH.Net
I couldn't put it down until I had gone all the way through it, and then I immediately ordered it as an assigned text for my Spring 2010 MBA course, 'The Development of Financial Institutions and Markets.' My students are finding it useful and engaging.
— Richard Sylla
Survival
Easily the most useful, and arguably the best, is this splendid piece of research and analysis on, as the subtitle says, 800 years' worth of booms and busts.
— Bill Emmott
CATO Journal
This Time Is Different changes the way we can study financial crises. It is the start of a truly comprehensive approach to the subject. . . . It adds new ideas that will be useful for gauging the risk of future crises and perhaps even reducing their impact, if investors and policymakers are willing to learn from other people's mistakes, not just their own mistakes.
— Kurt Schuler
Foresight
[T]he book will be essential reading for anyone who wants to put the recent crisis into some historical perspective—and get some ideas on how to prevent, or at least delay, the next one.
— David Orrell
The Browser
It's the only book I have seen that provides, with great detail and over 800 years, clearly defined, analytical, data-driven evidence of what the impact of a post-financial crisis period is and hence what we can anticipate. . . . I've never seen anything that comes close in terms of being comprehensive. It's a tour de force.
— Dambisa Moyo
TheAtlantic.com
[T]his Time is Different [is a] landmark work on financial crises . . .
— Megan McArdle
National Post
Readable, shocking, and vital, this is a book that every investor who has been tempted by a hefty interest rate in a faraway land should study.
— Andrew Allentuck
Sydney Morning Herald
[A] modern classic. . . . In their landmark study of hundreds of financial crises in 66 countries over 800 years, Reinhart and Rogoff find oft-repeated patterns that ought to alert economists when trouble is on the way. One thing stops them waking up in time: their perpetual belief that 'this time is different.'
— Ross Gittins
Time
[S]eminal . . .
— Rana Faroohar and Bill Saporito
New York Times Magazine
[T]he pre-eminent history of financial crises . . .
— Adam Davidson
Wall Street Journal - Edward Chancellor
Reinhart and Rogoff have compiled an impressive database, which covers eight centuries of government debt defaults from around the world. They have also collected statistics on inflation rates from every country where information is available and on banking crises and international capital flows over the past couple of centuries. This lengthy historical study gives what they call a 'panoramic view' of the unending cycle of boom and bust, showing how claims that 'this time is different' are invariably proven wrong. . . . This Time Is Different doesn't simply explain what went wrong in our most recent crisis. This book also provides a roadmap of how things are likely to pan out in the years to come. . . . This Time Is Different is an important addition to the literature of financial history.
Washington Post - Greg Ip
Everyonwe working on economic policy should own This Time is Different and open it for a bracing blast of sobriety when things seem to be going well.
New York Times - Devin Leonard
The authors use copious amounts of data . . . to make the compelling case that any well-informed person should have seen the Great Recession coming. The essence of their book is that while financial crises come in different varieties, they are not mysteriously born of undersea earthquakes, but frequently occurring events that can be spotted and even controlled if politicians and regulators know what to look for.
New York Times - Andrew Ross Sorkin
[A] terrific book.
New York Times - Eduardo Porter
[T]he most comprehensive study of financial crises and their aftermath . . .
New York Review of Books - Robin Wells and Paul Krugman
This Time is Different takes a Sergeant Friday, just-the-facts-ma'am approach: before we start theorizing, let's take a hard look at what history tells us. One side benefit of this approach is that the current book manages to be both extremely useful to professional economists and accessible to the intelligent lay reader. The Reinhart-Rogoff approach has already paid off handsomely in making sense of current events.
Wall Street Journal - Justin Lahart
Among policy experts and economists, This Time is Different: Eight Centuries of Financial Folly . . . has become so influential that when somebody says, 'We live in a Reinhart-Rogoff world,' everybody else in the room nods sagely.
Wall Street Journal - Brett Arends
Professor Rogoff and his longtime collaborator Carmen Reinhart . . . know more about the history of financial crises than anyone alive. The pair have just published their broad survey of financial crises, This Time is Different. In an era when most 'analysts' rely on maybe 30 or 40 years' worth of financial history—and then only that of the U.S.—the authors' knowledge of financial crises and government bond defaults going back to the Spanish empire and before offers a richer perspective.
Wall Street Journal - Jon Hilsenrath
[O]ne of the most important economic books of 2009.
Washington Post - Steven Pearlstein
[T]he definitive book on financial crises.
Financial Times - Martin Wolf
The four most dangerous words in finance are 'this time is different.' Thanks to this masterpiece by Carmen Reinhart at the University of Maryland and Kenneth Rogoff of Harvard, no one can doubt this again. . . . The authors have put an immense amount of work into collecting the data financial institutions needed if they were to have any chance of making quantitative risk management work.
Forbes.com - Bob Lenzner
Here's a deep and rewarding assignment for all of you, young and old, poor and rich, bullish and bearish. Retire to a quiet spot with a copy of This Time Is Different: Eight Centuries of Financial Folly, by Carmen M. Reinhart and Kenneth Rogoff.
Newsweek - Daniel Gross
[A] fine new history of financial debacles.
Bloomberg News - James Pressley
Wouldn't it be nice to have $1,000 for every time a pundit proclaims an era of endless prosperity, consigning booms and busts to the dumpster of history? The next time you hear that canard (and you will) pour yourself a single malt and dip into Carmen M. Reinhart and Kenneth S. Rogoff's landmark study, This Time Is Different. Wherever you open the book, you'll find proof that debt-fueled expansions have ended in financial ruin for hundreds of years. . . . The result is a visual history laid out in beguilingly simple graphs and tables, making the book both definitive—a must read for professors and investors—and accessible to a wider audience.
The American Interest - Harold James
Carmen Reinhart and Kenneth Rogoff have delivered a powerful and eloquent statement. . . . Reinhart and Rogoff have done an extraordinary job in putting together statistics on government debt—a task that economic historians should have done long ago but shied away from because of the difficulties of defining 'government', which is often complex and multi-layered.
CNNMoney.com - Daniel Akst
Unlike prior narrative accounts of market panics from such finance writers as Charles Kindleberger and Edward Chancellor, Reinhart and Rogoff give us a data-driven study that is global in sweep but also a model of clarity. The authors package their notably nonhysterical analysis of the latest crisis in a large, self-contained section of the book inviting harried readers to skip right ahead to it.
Econlog.com - Arnold Kling
This is certainly one of the must-read books of the year.
Harvard Magazine - David Warsh
This Time is Different . . . is an unusually powerful bull detector designed to protect investors and taxpayers alike—eventually, at least, and provided the spirit is willing. . . . The book's most memorable passages—what the authors call its 'core life'—are to be found not in colorful stories about long-ago personalities, but rather in its various tables and figures. They take some time to comprehend, but any responsible citizen can and ought to consider they evidence they present. It is overwhelming.
USA Today - Paul Wiseman
Financial folly, economists Carmen Reinhart and Kenneth Rogoff show in this groundbreaking book, knows no boundaries and has no expiration date. . . . For a book built around numbers, This Time is Different makes for surprisingly good reading. The authors are well aware that human nature is at the heart of the disasters they document, and they enliven the text with brief and amusing accounts of charlatans and cheats.
New Statesman - Andrew Gamble
The credit crunch of 2007 became the financial crash of 2008 and the recession of 2009. But there has been much debate about the scale of this crisis, and how it ranks against previous events. Reinhart and Rogoff have produced the most detailed study yet of financial crises, going back as far as 12th-century China. . . . [This Time is Different] will be a vital source of reference in debates on the causes and consequences of financial crises. By cataloguing so thoroughly every known instance of financial crisis, it performs a significant service and opens up new lines of inquiry.
National Interest - Liaquat Ahamed
For those who want to relearn the forgotten lessons of the past, This Time is Different, by economics professors Carmen Reinhart and Kenneth Rogoff, is an excellent place to start. . . . These are lessons worth learning.
Globe & Mail - Neil Reynolds
[S]uperb.
Dow Jones Newswires - Alen Mattich
[I]nstant classic tome on debt crises.
AidWatch - William Easterly
[A]wesome.
Nikkei Weekly - Hideo Tsuchiya
One book in particular has been circulating among economists and market insiders. This Time is Different analyzes vast amounts of historical data on financial debacles, including state failures around the world, bank crises, currency woes and high inflation. The title satirizes those who fail to learn from past blunders and repeat them while insisting, 'This time is different.'
Journal of Psychohistory - Lloyd Demause
Reinhart and Rogoff have produced a splendid book detailing the massive self-destructive behavior that all states have been undergoing over the past several centuries. . . . Reading this excellent book on the paths of previous economic cycles could help avoid some of the worst results of our self-destructive financial acts.
Economist.com - Matthew Valencia
Anyone looking for a more academic take on where this meltdown places in the history of financial folly should turn to This Time is Different, a magisterial work on the causes and consequences of crises stretching back 800 years.
EH.Net - Richard Sylla
I couldn't put it down until I had gone all the way through it, and then I immediately ordered it as an assigned text for my Spring 2010 MBA course, 'The Development of Financial Institutions and Markets.' My students are finding it useful and engaging.
Survival - Bill Emmott
Easily the most useful, and arguably the best, is this splendid piece of research and analysis on, as the subtitle says, 800 years' worth of booms and busts.
CATO Journal - Kurt Schuler
This Time Is Different changes the way we can study financial crises. It is the start of a truly comprehensive approach to the subject. . . . It adds new ideas that will be useful for gauging the risk of future crises and perhaps even reducing their impact, if investors and policymakers are willing to learn from other people's mistakes, not just their own mistakes.
Foresight - David Orrell
[T]he book will be essential reading for anyone who wants to put the recent crisis into some historical perspective—and get some ideas on how to prevent, or at least delay, the next one.
The Browser - Dambisa Moyo
It's the only book I have seen that provides, with great detail and over 800 years, clearly defined, analytical, data-driven evidence of what the impact of a post-financial crisis period is and hence what we can anticipate. . . . I've never seen anything that comes close in terms of being comprehensive. It's a tour de force.
TheAtlantic.com - Megan McArdle
[T]his Time is Different [is a] landmark work on financial crises . . .
National Post - Andrew Allentuck
Readable, shocking, and vital, this is a book that every investor who has been tempted by a hefty interest rate in a faraway land should study.
Washington Post - Ezra Klein
[This Time is Different] is perhaps the finest study of financial crises ever published.
Sydney Morning Herald - Ross Gittins
[A] modern classic. . . . In their landmark study of hundreds of financial crises in 66 countries over 800 years, Reinhart and Rogoff find oft-repeated patterns that ought to alert economists when trouble is on the way. One thing stops them waking up in time: their perpetual belief that 'this time is different.'
Time - Rana Faroohar and Bill Saporito
[S]eminal . . .
New York Times Magazine - Adam Davidson
[T]he pre-eminent history of financial crises . . .
Journal of Economic Literature
The book by Reinhart and Rogoff is one for the ages, and it will be remembered as a landmark event, not least given the coincidence of its publication of such a deep and broad historical analysis of economic crises with the very moment when the world was entering a massive 'hundred year flood' type of calamity. The authors' empirical work is encyclopedic and much of the data are highly original and the result of intense effort. The necessary theoretical framing is provided, but in terms that all target readers should be able to absorb. The overall view is panoramic and the message carried is an important one for all to hear—policymakers, commentators, and researchers. Crises are still with us, they are very painful indeed, and perhaps it will always be so. It is up to us to figure out why and how crises happen, and to figure out what, if anything, can and should be done to mitigate their devastating effects in future. This book is therefore, above all, a call to action.
Financial Times David Schwartz

Two top-notch economists provide a clear and interesting explanation of why economic crises keep occurring. Broadly speaking, downturns such as the one we are recovering from are historically associated with characteristics that should sound quite familiar to today's investors.
From the Publisher

"Easily the most useful, and arguably the best, is this splendid piece of research and analysis on, as the subtitle says, 800 years' worth of booms and busts."--Bill Emmott, Survival

"This Time Is Different changes the way we can study financial crises. It is the start of a truly comprehensive approach to the subject. . . . It adds new ideas that will be useful for gauging the risk of future crises and perhaps even reducing their impact, if investors and policymakers are willing to learn from other people's mistakes, not just their own mistakes."--Kurt Schuler, CATO Journal

"[T]he book will be essential reading for anyone who wants to put the recent crisis into some historical perspective--and get some ideas on how to prevent, or at least delay, the next one."--David Orrell, Foresight

"It's the only book I have seen that provides, with great detail and over 800 years, clearly defined, analytical, data-driven evidence of what the impact of a post-financial crisis period is and hence what we can anticipate. . . . I've never seen anything that comes close in terms of being comprehensive. It's a tour de force."--Dambisa Moyo, The Browser

"[T]his Time is Different [is a] landmark work on financial crises . . ."--Megan McArdle, TheAtlantic.com

"Readable, shocking, and vital, this is a book that every investor who has been tempted by a hefty interest rate in a faraway land should study."--Andrew Allentuck, National Post

"[This Time is Different] is perhaps the finest study of financial crises ever published."--Ezra Klein, Washington Post

"[A] modern classic. . . . In their landmark study of hundreds of financial crises in 66 countries over 800 years, Reinhart and Rogoff find oft-repeated patterns that ought to alert economists when trouble is on the way. One thing stops them waking up in time: their perpetual belief that 'this time is different.'"--Ross Gittins, Sydney Morning Herald

"[S]eminal . . ."--Rana Faroohar and Bill Saporito, Time

"[T]he pre-eminent history of financial crises . . ."--Adam Davidson, New York Times Magazine
"The book by Reinhart and Rogoff is one for the ages, and it will be remembered as a landmark event, not least given the coincidence of its publication of such a deep and broad historical analysis of economic crises with the very moment when the world was entering a massive 'hundred year flood' type of calamity. The authors' empirical work is encyclopedic and much of the data are highly original and the result of intense effort. The necessary theoretical framing is provided, but in terms that all target readers should be able to absorb. The overall view is panoramic and the message carried is an important one for all to hear--policymakers, commentators, and researchers. Crises are still with us, they are very painful indeed, and perhaps it will always be so. It is up to us to figure out why and how crises happen, and to figure out what, if anything, can and should be done to mitigate their devastating effects in future. This book is therefore, above all, a call to action."--Journal of Economic Literature

"[E]conomists Carmen Reinhart and Kenneth Rogoff take a much-needed longer view, placing the current crisis, with a focus on the U.S. housing bubble, into historical perspective."--Anil Hira, Perspectives on Politics

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Product Details

  • ISBN-13: 9780691142166
  • Publisher: Princeton University Press
  • Publication date: 9/11/2009
  • Pages: 496
  • Sales rank: 405,574
  • Product dimensions: 6.50 (w) x 9.10 (h) x 1.70 (d)

Meet the Author


Carmen M. Reinhart is the Dennis Weatherstone Senior Fellow at the Peterson Institute for International Economics. She was previously professor of economics at the University of Maryland. Kenneth S. Rogoff is the Thomas D. Cabot Professor of Public Policy and professor of economics at Harvard University. He is a frequent commentator for "NPR", the "Wall Street Journal", and the "Financial Times".
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Table of Contents

LIST OF TABLES xiii
LIST OF FIGURES xvii
LIST OF BOXES xxiii
PREFACE xxv
ACKNOWLEDGMENTS xxxvii
PREAMBLE: SOME INITIAL INTUITIONS ON FINANCIAL FRAGILITY AND THE FICKLE NATURE OF CONFIDENCE xxxix

PART I: Financial Crises: An Operational Primer 1
Chapter 1: Varieties of Crises and Their Dates 3
Crises Defined by Quantitative Thresholds: Inflation, Currency Crashes, and Debasement 4
Crises Defined by Events: Banking Crises and External and Domestic Default 8
Other Key Concepts 14
Chapter 2: Debt Intolerance: The Genesis of Serial Default 21
Debt Thresholds 21
Measuring Vulnerability 25
Clubs and Regions 27
Reflections on Debt Intolerance 29
Chapter 3: A Global Database on Financial Crises with a Long-Term View 34
Prices, Exchange Rates, Currency Debasement, and Real GDP 35
Government Finances and National Accounts 39
Public Debt and Its Composition 40
Global Variables 43
Country Coverage 43

PART II: Sovereign External Debt Crises 49
Chapter 4: A Digression on the Theoretical Underpinnings of Debt Crises 51
Sovereign Lending 54
Illiquidity versus Insolvency 59
Partial Default and Rescheduling 61
Odious Debt 63
Domestic Public Debt 64
Conclusions 67
Chapter 5: Cycles of Sovereign Default on External Debt 68
Recurring Patterns 68
Default and Banking Crises 73
Default and Inflation 75
Global Factors and Cycles of Global External Default 77
The Duration of Default Episodes 81
Chapter 6: External Default through History 86
The Early History of Serial Default: Emerging Europe, 1300-1799 86
Capital Inflows and Default: An "Old World" Story 89
External Sovereign Default after 1800: A Global Picture 89

PART III: The Forgotten History of Domestic Debt and Default 101
Chapter 7: The Stylized Facts of Domestic Debt and Default 103
Domestic and External Debt 103
Maturity, Rates of Return, and Currency Composition 105
Episodes of Domestic Default 110
Some Caveats Regarding Domestic Debt 111
Chapter 8: Domestic Debt: The Missing Link Explaining External Default and High Inflation 119
Understanding the Debt Intolerance Puzzle 119
Domestic Debt on the Eve and in the Aftermath of External Default 123
The Literature on Inflation and the "Inflation Tax" 124
Defining the Tax Base: Domestic Debt or the Monetary Base? 125
The "Temptation to Inflate" Revisited 127
Chapter 9: Domestic and External Default: Which Is Worse? Who Is Senior? 128
Real GDP in the Run-up to and the Aftermath of Debt Defaults 129
Inflation in the Run-up to and the Aftermath of Debt Defaults 129
The Incidence of Default on Debts Owed to External and Domestic Creditors 133
Summary and Discussion of Selected Issues 136

PART IV: Banking Crises, Inflation, and Currency Crashes 139
Chapter 10: Banking Crises 141
A Preamble on the Theory of Banking Crises 143
Banking Crises: An Equal-Opportunity Menace 147
Banking Crises, Capital Mobility, and Financial Liberalization 155
Capital Flow Bonanzas, Credit Cycles, and Asset Prices 157
Overcapacity Bubbles in the Financial Industry? 162
The Fiscal Legacy of Financial Crises Revisited 162
Living with the Wreckage: Some Observations 171
Chapter 11: Default through Debasement: An "Old World Favorite" 174
Chapter 12: Inflation and Modern Currency Crashes 180
An Early History of Inflation Crises 181
Modern Inflation Crises: Regional Comparisons 182
Currency Crashes 189
The Aftermath of High Inflation and Currency Collapses 191
Undoing Domestic Dollarization 193

PART V: The U.S. Subprime Meltdown and the Second Great Contraction 199
Chapter 13: The U.S. Subprime Crisis: An International and Historical Comparison 203
A Global Historical View of the Subprime Crisis and Its Aftermath 204
The This-Time-Is-Different Syndrome and the Run-up to the Subprime Crisis 208
Risks Posed by Sustained U.S. Borrowing from the Rest of the World: The Debate before the Crisis 208
The Episodes of Postwar Bank-Centered Financial Crisis 215
A Comparison of the Subprime Crisis with Past Crises in Advanced Economies 216
Summary 221
Chapter 14: The Aftermath of Financial Crises 223
Historical Episodes Revisited 225
The Downturn after a Crisis: Depth and Duration 226
The Fiscal Legacy of Crises 231
Sovereign Risk 232
Comparisons with Experiences from the First Great Contraction in the 1930s 233
Concluding Remarks 238
Chapter 15: The International Dimensions of the Subprime Crisis:
The Results of Contagion or Common Fundamentals? 240
Concepts of Contagion 241
Selected Earlier Episodes 241
Common Fundamentals and the Second Great Contraction 242
Are More Spillovers Under Way? 246
Chapter 16: Composite Measures of Financial Turmoil 248
Developing a Composite Index of Crises: The BCDI Index 249
Defining a Global Financial Crisis 260
The Sequencing of Crises: A Prototype 270
Summary 273

PART VI: What Have We Learned? 275
Chapter 17: Reflections on Early Warnings, Graduation, Policy Responses, and the Foibles of Human Nature 277
On Early Warnings of Crises 278
The Role of International Institutions 281
Graduation 283
Some Observations on Policy Responses 287
The Latest Version of the This-Time-Is-Different Syndrome 290

DATA APPENDIXES 293
A.1. Macroeconomic Time Series 295
A.2. Public Debt 327
A.3. Dates of Banking Crises 344
A.4. Historical Summaries of Banking Crises 348
NOTES 393
REFERENCES 409
NAME INDEX 435
SUBJECT INDEX 443

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Customer Reviews

Average Rating 3.5
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See All Sort by: Showing 1 – 20 of 36 Customer Reviews
  • Posted November 17, 2009

    more from this reviewer

    Sobering study of fiscal failures

    Every so often, experts sucker people into bidding up the prices of stocks or real estate because they announce that the economy has fundamentally changed. As the aftermath of the real estate bubble illustrates, the basics of economics don't really change, no matter what fantasies people come to believe. Economics professors Carmen M. Reinhart and Kenneth S. Rogoff present a thorough historical and statistical tour of financial hubris through the centuries, a postmortem that will make you wonder how anyone ever believed "this time is different." The staid tone, formulas, charts and somewhat confusing organization make this fascinating history challenging to absorb. Yet, the content, which sweeps ambitiously and carefully across centuries and countries, rewards the persistent reader with many insights and gems, like the nation-by-nation appendix of fiscal history low points. getAbstract recommends this analytical overview to history buffs, investors, managers and policy makers who seek perspective on "financial folly."

    8 out of 8 people found this review helpful.

    Was this review helpful? Yes  No   Report this review
  • Posted February 7, 2010

    Excllent book

    This book refutes the claims ( recently advocated by wall street bankers) that the US financial crisis is a one in a hundred year event and could not be predictable. In fact, and as Reinhart and Rogoff clearly show in their excellent book "This Time Is DIfferent", recent history is full of financial and banking crisis. If bankers and politicians paid more attention and learned from prior experiences, 2008 financial crisis could have been averted.

    5 out of 5 people found this review helpful.

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  • Posted January 9, 2010

    Great information - Tough Slog

    The information presented in this book is very relevent to business today. However, it is a tough read. Geared for those with a greater acedemic bent than Devil Take the Hindmost or other similar books.

    5 out of 5 people found this review helpful.

    Was this review helpful? Yes  No   Report this review
  • Anonymous

    Posted January 16, 2010

    Clear Writing, Careful Research, Fad Immunizing

    The book was nearly finished before the most recent collapse, since the project must have taken a great deal of time. It clearly states the case that we must avoid herd and self delusion in financial matters -- but we seldom do. A decade ago I remember the derision being heaped upon the "old economy" as opposed to the miracles of anything having a patina of "high tech." Before the recent collapse the wizard masters of the financial universe believed that certain algorithms could determine the credit worthiness of undefined and black-box financial instruments in the absence of old fashioned and stodgy research. As Britney would say, "Oops.did it again."

    The book is fascinating history. History as revelation, not bunko."

    4 out of 4 people found this review helpful.

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  • Anonymous

    Posted August 22, 2012

    TCB

    I like this book because it is about money

    1 out of 1 people found this review helpful.

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  • Anonymous

    Posted January 25, 2012

    Hard to Understand

    I'm certain of the competence of the authors. However, this is book is hard for a reasonably educated layperson (JD MA in History) to understand. It would appeal to others in the financial industry.

    1 out of 1 people found this review helpful.

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  • Posted November 21, 2011

    Tells why every investment, including in the mattress, is a risk.

    This book provides a great historical summary of why every financial institution and government is just a little suspect. The question is not who does not default, but how, and how frequently. Don't use your Nook for this one. You need the hardcopy to read the charts and diagrams. Though the book is long and complex, since the authors are trying to lay out the whole financial history of the last several hundred years, just reviewing the charts tells most of the story. It's hard to ever look at that dollar bill in your wallet in the same way.

    1 out of 1 people found this review helpful.

    Was this review helpful? Yes  No   Report this review
  • Posted October 15, 2013

    Very well researched and well articulated. Unfortunately, the de

    Very well researched and well articulated. Unfortunately, the decision makers will still believe that this time id different!

    Was this review helpful? Yes  No   Report this review
  • Anonymous

    Posted July 8, 2013

    Great presentation of data

    Someone else said that it's a technical book, which is true. Maybe read it after you get your masters in econ or finance, or perhaps after reading other econ books. But if your interest in financial (and other) crises is just starting, then there are other books that are better suited for the lay person.

    But it's not really all that technical when it comes to theory. There aren't any stochastic models that take up pages with definitions and assumptions and algebraic manipulations. It's the empirical work that eats up most of this book, justifiably. The authors have a huge dataset that they've already published from and here they combine some papers and some new material into a book.

    The first few chapters are a good introduction to the topic (lit review, a little theory, a full chapter of definitions, etc.), then it's pages of figures and tables. Their data is an antidote to theory on crises and borrowing that doesn't correspond to even the most stylized facts about sovereign debt; eg, how many models out there assume emerging economies borrow to smooth consumption, when, in reality, borrowing is pro-cyclical?

    The writing is straight-forward, but there are lots of numbers so it's good to have as a reference.

    Just know what you're getting into, because this book is great for what it sets out to do: make terminology around crises precise, present a massive amount of information about various types of crises, and make initial inferences about that data.

    Was this review helpful? Yes  No   Report this review
  • Posted January 11, 2013

    A very insightful book.

    This authors have researched the topic in great detail. It is very insightful into understanding economies, inflation and what is in store for us in the future. A great resource for anyone investing.

    Was this review helpful? Yes  No   Report this review
  • Anonymous

    Posted March 27, 2010

    I Received The Book Promptly

    I have no complaints, this book was sent promptly. B&N does a good job of filling your orders.

    0 out of 5 people found this review helpful.

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