[...]... economy 7 We hope some of the facts laid out in this book will be helpful in framing the problems that the new theories need to explain, not just for the recent crisis but for the multitude of crises that have occurred in the past, not to mention the many that have yet to unfold THIS TIME IS DIFFERENT - PART I FINANCIAL CRISES: AN OPERATIONAL PRIMER The essence of the this- time- is- different syndrome is. .. their share of world income Our immersion in the details of crises that have arisen over the past eight centuries and in data on them has led us to conclude that the most commonly repeated and most expensive investment advice ever given in the boom just before a financial crisis stems from the perception that this time is different. ” That advice, that the old rules of valuation no longer apply, is usually... note that the crisis markers discussed in this chapter refer to the measurement of crises within individual countries Later on, we discuss a number of ways to think about the international dimensions of crises and their intensity and transmission, culminating in our definition of a global crisis in chapter 16 In addition to reporting on one country at a time, our root measures of crisis thresholds report... period of the successful fix, there is always plenty of this- time- is- different commentary But then, as in the case of Argentina in December 2001, all the confidence can collapse in a puff of smoke There is a fundamental link to debt, however As Krugman famously showed, exchange rate crises often have their roots in a government’s unwillingness to adopt fiscal and monetary policies consistent with maintaining... instruments of financial gain and loss have varied over the ages, as have the types of institutions that have expanded mightily only to fail massively But financial crises follow a rhythm of boom and bust through the ages Countries, institutions, and financial instruments may change across time, but human nature does not As we will discuss in the final chapters of this book, the financial crisis of the... and his colleagues at Princeton Editorial Associates for skillfully negotiating all the technical details of producing this volume PREAMBLE: SOME INITIAL INTUITIONS ON FINANCIAL FRAGILITY AND THE FICKLE NATURE OF CONFIDENCE This book summarizes the long history of financial crises in their many guises across many countries Before heading into the deep waters of experience, this chapter will attempt... II, or on modern-day experiences in emerging markets This dichotomy has perhaps been shaped by the belief that for advanced economies, destabilizing, systemic, multicountry financial crises are a relic of the past Of course, the recent global financial crisis emanating out of the United States and Europe has dashed this misconception, albeit at great social cost The fact is that banking crises have... to the recent global financial crises that began with the U.S subprime crisis of 2007 Our aim here is to be expansive, systematic, and quantitative: our empirical analysis covers sixty-six countries over nearly eight centuries Many important books have been written about the history of international financial crises,1 perhaps the most famous of which is Kindleberger’s 1989 book Manias, Panics and Crashes.2... for almost a quarter century Back around the time of the collapse of the hedge fund LongTerm Capital Management in 1998, which seemed like a major crisis then but seems less so given recent events, he attended a meeting of the board of governors with market practitioners A trader with an uncharacteristically long memory explained, “More money has been lost because of four words than at the point of a... off bank balance sheets, not to mention unfunded pension and medical liabilities Lack of transparency is endemic in government debt, but the difficulty of finding basic historical data on central government debt is almost comical Part III also offers a first attempt to catalog episodes of overt default on and rescheduling of domestic public debt across more than a century (Because so much of the history . 2011 Paperback ISBN 97 8-0 -6 9 1-1 526 4-6 The Library of Congress has cataloged the cloth edition of this book as follows Reinhart, Carmen M. This time is different : eight centuries of financial folly/ Carmen.