The Escape from Balance Sheet Recession and the QE Trap: A Hazardous Road for the World Economy

  • 6h 43m
  • Richard C. Koo
  • John Wiley & Sons (US)
  • 2015

Compare global experiences during the balance sheet recession and find out what is needed for a full recovery

The Escape from Balance Sheet Recession and the QE Trap details the many hidden dangers remaining as the world slowly recovers from the balance sheet recession of 2008. Author and leading economist Richard 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. Koo anticipated the current predicament in the West long before others and issued warnings in his previous books: Balance Sheet Recession and The Holy Grail of Macroeconomics. This new book 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. Koo issues warnings against those who are too ready to argue for structural reforms when the problems are actually with balance sheets. He re-examines Japan's two decades of experiences with this rare recession and offers an insider view on the Abenomics. On China, readers will gain a very different historical perspective as Koo argues that western commentators have forgotten their own history when they talk about the re-balancing of the Chinese economy.

  • Learn from Japan which experienced the same predicament afflicting the West fifteen years earlier
  • Discover how unwinding of quantitative easing will affect the United States, the United Kingdom, Japan, as well as the emerging world
  • Examine solutions to the Eurozone problems caused by two balance sheet recessions eight years apart
  • Gain insight into China's problems from the West's own experiences with urbanisation

Koo, who developed the concept of balance sheet recession based on Japan's experience, took the revolution in macroeconomics started by John Maynard Keynes in 1936 to a new height. The Escape from Balance Sheet Recession and the QE Trap offers the world cure for balance sheet recession.

About the Author

Richard C. Koo (Tokyo, Japan) is the Chief Economist of Nomura Research Institute, with responsibilities to provide independent economic and market analysis to Nomura Securities, the leading securities house in Japan, and its clients. Before joining Nomura in 1984, Mr. Koo, a U.S. citizen, was an economist with the Federal Reserve Bank of New York (1981–1984). Prior to that, he was a Doctoral Fellow of the Board of Governors of the Federal Reserve System (1979–1981). Best known for developing the concept of balance sheet recession, he has also advised several Japanese prime ministers on how best to deal with Japan's economic and banking problems. In addition to being one of the first non-Japanese to participate in the making of Japan's five-year economic plan, he was also the only non-Japanese member of the Defense Strategy Study Conference of the Japan Ministry of Defense for 1999 to 2011. Currently he is serving as a Senior Advisor to the Center for Strategic and International Studies (Washington, D.C.). He is also an Advisory Board Member of the Institute for New Economic Thinking (New York City), and a charter member of the World Economic Association.

Author of many books on Japanese economy, his last book, The Holy Grail of Macroeconomics: Lessons from Japan's Great Recession (John Wiley & Sons, 2008), has been translated into and sold in five different languages. Mr. Koo holds BAs in Political Science and Economics from the University of California at Berkeley (1976), and an MA in Economics from the Johns Hopkins University (1979). From 1998 to 2010, he was a visiting professor at Waseda University in Tokyo. In financial circles, Mr. Koo was ranked first among over 100 economists covering Japan in the Nikkei Financial Ranking for 1995, 1996, and 1997, and by the Institutional Investor magazine for 1998. He was also ranked first by Nikkei Newsletter on Bond and Money for 1998, 1999, and 2000. He was awarded the Abramson Award by the National Association for Business Economics (Washington, D.C.) for the year 2001.

In this Book

  • Foreword
  • Balance Sheet Recession Theory—Basic Concepts
  • Monetary Policy and the Quantitative Easing Trap
  • The United States in Balance Sheet Recession
  • The Great Potential of Abenomics
  • Euro Crisis—Facts and Resolution
  • China's Economic Challenges
  • Afterword
  • Bibliography