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The Return of Depression Economics and the Crisis of 2008

3.83  ·  Rating details ·  7,875 ratings  ·  365 reviews

In 1999, in The Return of Depression Economics, Paul Krugman surveyed the economic crises that had swept across Asia and Latin America, and pointed out that those crises were a warning for all of us: like diseases that have become resistant to antibiotics, the economic maladies that caused the Great Depression were making a comeback. In the years that followed, as Wall Str

Hardcover, 288 pages
Published December 1st 2008 by W. W. Norton Company
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3.83  · 
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 ·  7,875 ratings  ·  365 reviews

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Arn Kawano
Apr 10, 2009 rated it did not like it
Reading this book reminded me of The Confessions of St. Augustine in which St. Augustine expounded on all the reasons that he should be an atheist yet he could never break from his faith in God and saw his questioning as a symptom of not having enough faith. In this book, Paul Krugman describes numerous recent financial crises that naturally arise from global capitalism yet he cannot break from his faith in capitalism (perhaps because professed socialists don't get Nobel Prizes in Economics nor ...more
Kristian Hermansen
Jan 08, 2009 rated it really liked it
I just finished reading "The Return of Depression Economics and the Crisis of 2008" by Paul Krugman, recipient of the 2008 Noble Prize in Economics. Great read. This book, given as a gift to me by my step-mother for xmas, turned out to be a real gem. Putting it all into perspective, I believe I have a better understanding of how complex economies of scale seemingly always return into major depressions for some time, even despite vast regulations meant to compensate for sharp short-term fluctuati ...more
Dec 29, 2008 rated it really liked it
This is an excellent review of the reasons why the American economy has turned into the debacle that is before us. Must read explanation at the end of Chapter 8 which dispels all the partisan B.S. and fingerpointing about the alleged causes behind the meltdown and focuses blame where it should properly reside.

Very interesting as well is the way that he deals with "moral hazard" not making judgments but allowing the reader to determine if this is a factor in causing fiscal chaos or not. How much
Mar 20, 2011 rated it liked it
Shelves: economics
This isn’t nearly as good a book as it could have been – the book it could have been is Freefall: America, Free Markets, and the Sinking of the World Economy, which, if you were looking for a book to read on the GFC that is quick, easy and jaw-dropping, that is the one I would recommend.

This book was really looking at the Asian Financial Crisis, but has been updated to include information on the GFC of 2008.

The most interesting parts of the book relate to the need to re-regulate the financial s
Hieu Cao
Mar 28, 2010 rated it really liked it
In how many ways can economic crises happen? Paul Krugman answers: “a lot!” In his book "The Return of Depression Economics," Krugman thrills us with the fact of how little we know about crises, how vulnerable our financial system is, and how dangerous globalization could be. In fact, he gives us three reasons to be obsessed about our economy: the breakdown of Japan, the vicious circle of financial crisis, and the haunting ghosts of non-bank banks.

From 1953 to 1973, Japan stunned the world wi
Krishna Kumar
May 19, 2015 rated it really liked it
Krugman analyzes the many financial crises the world had in the 20th century and this decade. He derides the economists who say that the Depression is a thing of the past. The first edition of the book did not have anything to point out, but Krugman was proved right with the collapse of the financial markets in 2008.

Krugman uses the example of a baby-sitting co-op to illustrate how money supply and inflation play their part in financial booms and busts. He also provides solutions on how the simp
Will Byrnes
Jan 11, 2009 rated it really liked it
This is a reworking of a book Krugman released in 1999, now new and improved. It is a popular-audience piece on the current economic debacle, focusing on the mechanics of banking. Krugman gets what is going on in the world of economics better than just about anyone. The Nobel committee would agree. He links the current downfall to several that have come before across the world and shows how we have arrived at a sort of financial perfect storm condition. It is readable and very incisive.
Sep 11, 2012 rated it really liked it
Recommends it for: Anyone interested in their money
Paul Krugman, if you haven't been paying attention to economics for a while, writes a column for the New York Times. He has a reputation as a modern-day Cassandra, who repeatedly describes the state of modern economics and lays out policy goals for how to fix them, only to not be listened to by anyone in power. His columns have definitely become more annoyed over the past five years because of that, and he even has his own image macro:

...which is honestly pretty appropriate, considering the utte
Oct 07, 2014 rated it liked it  ·  review of another edition
Recommends it for: people who wants to learn about the 2008/9 crash
Mostly very good. Krugman's claim at the front of the book that he intends to make it more readable to the wider non-economic savvy public doesn't really hold up by the end sadly. There are many head-scratching paragraphs that I had to read multiple times to properly understand. Economics to me is like most sciences, I'm sorry, but no matter what people say, they are the sort of subjects that can never be fully accessible to the average Joe. The very nature of their subject requires jargon, near ...more
Mark Valentine
Mar 13, 2016 rated it really liked it
I read this because I wanted to hold an informed opinion about the recent financial crisis both to help me interpret many of the headlines that have appeared lately and also to help me understand just how bad it is--I mean, really, is this going to be the unraveling that will cause us to implode? Krugman clearly taught me well on both counts. Reading the initial chapters (about Japan's economic crisis in the late 80s and 90s, Argentina's in 2002, Thailand in the late 90s) I thought less benefici ...more
Sep 25, 2009 rated it really liked it
CLIFF-NOTES VERSION: Interesting and very readable, but left some questions unanswered.


This book was very readable. Paul Krugman does a great job providing simple, succinct, easy-to-understand explanations of economic ideas and also to-the-point, in-a-nutshell historical information. I haven't yet found anything of his a slog to read, which I do appreciate.

His main thesis seems to be that economists don't know as much as they thought they did, and the profession needs to ditch the fa
Daniel Solera
Though I have a reasonable grasp of the current global financial crisis, I wanted to know a little more about its inner workings. After reading several articles by Paul Krugman, I decided to pick up his book, especially since it now has updates from the 2008 financial crisis.

Krugman strikes a fine balance between simplifying global investment banking and unloading the economist jargon. In order to explain the basic characteristics of a recession (and several other market fluctuations) he uses t
Sep 09, 2014 rated it liked it
This book is brilliantly accessible. He first chastises economists for not expaining things clearly. Then, he uses the simple example of a babysitting coop to explain the business cycle. Without using the term Demurage, he cites the Keynesian and Gesellian idea of forced spending into the economy which increases circulation and ends the deflation cycle. But he expains it without using any of these terms. Brilliant. Too bad phd students are not allowed to do this in a thesis (Yes I saw one such ...more
Julie Christine
My hope is that a) this book is on the nightstand, desk, bathroom book caddy, and coffee table of every economic policy wonk this side of the Potomac (and the other side, too!) & that b) these wonks read it. Krugman, who wrote this book in 1999 and updated it during the 4th quarter of 2008, clearly and succinctly presents the multiple case studies, warning signs and missteps that led to our current economic crisis. From Mexico and Argentina fiscal failures in the 1980s and early 90s to the J ...more
Tim Owens
Mar 07, 2016 rated it it was amazing
Two generations ago we solved the economics of the great depression of the 1930 19s and many economist thought it wouldn 19t happen again. Unfortunately we still don 19t learn from our mistakes. Paul Krugman uses a baby-sitting co-op as his economic model to explain how an economy can become imbalanced as to supply and demand. The US has been ignoring the demand side of this equation.He next explains recent economic crisis in Latin America and Asia, before addressing the panic of 1907 and the gr ...more
Oct 10, 2011 rated it did not like it
First, I'm not a huge Krugman fan to begin with, so keep that in mind. I tried to be as objective as possible when reading his book, however.

Most of the book is just background of various financial crises of the past 100 years. Of course in hindsight, Krugman in all his wisdom can see how if the different parties in the crises had just done what he thinks they should have, everything would have turned out fine. I'm not an economist, so I can't really argue intelligently about his conclusions. M
Jun Chen
Feb 12, 2017 rated it it was amazing
This book re-ignited my interests in economics and put my college economics knowledge to shame - I had to stop from time to time and Google the terms & incidents. Keynesian vs. Austrian economics, etc. This book offers a broad review of global economic crises and government & central bank policies and solutions; and it asks some of the most important questions: how could this one single incident have this global repercussion, what we can really learn from them, etc. Paul Krugman discusse ...more
Oct 31, 2018 rated it did not like it
Shelves: non-fiction
This book was disappointing. In every way, disappointing.

The book was about the return to depression Economics. What are depression economics, you ask? I don't know. He never actually explains what he means by that!

He ends the book by saying we have to go back to 'good old Keynesian macro-economics'. But he never explains what that means either!!!!! The book is SUPPOSED to be for non-economists. That's the whole reason he uses the 'Capital City Baby Sitting Co-op' in a 'whimsical' fashion to exp
Mark Lawry
Jun 21, 2018 rated it really liked it
Many people hate economics because economists tend to argue. This would be like listening to two doctors in the halls of a hospital debating treatment options and deciding that because doctors don't always agree on such things this means modern medicine is of no value. Surely this would be a very bad takeaway. I tend to be an ardent supply-side guy myself. Krugman is a demand-side guy and loves to mock guys like me. I get it. For this reasons many of my friends hate him and find him arrogant. Th ...more
Good book. A little light on specifics, but only because the scope was so big. Krugman is thinking about some of the collapses in several non-us economies during the 1980'0 and 1990's. He makes a case that serious turn downs are not a thing of the past and wonders why these down turns are handled without regard to what is known about economies suffering from lack of consumption. He makes it quite clear that the global financial economy (he is writing in 2000) is a difficult and complicated affai ...more
Jan 21, 2016 rated it really liked it  ·  review of another edition
Shelves: economics, modern
Krugman's rhetoric here is incisive; while many 'pop-economics' books resort to simply pointing out similarities between various situations and leaving the reader to form associations themselves (sometimes simply a result of superficial treatment - unfortunately more often a display of intellectual dishonesty), The Return of Depression Economics explains why various crises across the world happened, and illustrates how the same reasoning applies to the crisis that was then developing across the ...more
Going by the title, I was hoping that this book would give an insight as to why the world is hit by recession and the cure to the financial mess that has been created in the name of free markets and capitalism.

I was disappointed because this book is more of a history of the various recessions and depressions that have affected the world in the past 60 odd years. The author has explained their causes and how successful the measures to combat them were. But the book stops right there.

What I found
Jul 26, 2014 rated it liked it
This book seemed a little slapped together to capture the fame of Paul Krugman's 2008 Nobel Prize. Nonetheless, I think it offered a lot of insight.

I was struck by the following passage, in which Krugman wrote about the decline of mainstream socialist thought. Though "socialism" remains the right's favorite bugbear, Krugman captures the reality in American life pretty succinctly, for better or for worse.

"But who can now use the words of socialism with a straight face? As a member of the baby boo
Oct 07, 2015 rated it really liked it
only 191 pages long. Economics explained in terms of a babysitting co-op makes this book an easier way to understand national economies. I finally made it through this book. I'm not used to concentrating so hard nowadays, and some of it was over my head.... I better understand how global economies are interrelated and how " the fall of 2008, the troubles of housing loans in places like Florida had destroyed the banking system of Iceland." The important role of "shadow banking"-- entities a ...more
Jul 29, 2011 rated it it was ok
The book is too superficial and almost without a coherent purpose. It spends a lot of time on long history but with too much description of event details and hardly any elaborate justification of the causes cited.

Too many broad-brush reasons were given as if they were undisputed facts. Notwithstanding quite a few ridiculous errors, the efforts at drawing common elements in all crises were also woeful.

As a result, the conclusions drawn were always likely to be faulty and they were. But much wor
Nov 28, 2011 rated it liked it
This is a tough book to "review" because it is downright painful to read yet necessary if you are trying to understand how liberals think. I don't mean it's painful because of the subject, but because it makes you want to bang your head against the wall.

Krugman, the mouthpiece for liberal inflationary economics, is often touted for his "Nobel Prize" which is actually specific to international trade. What stands out when you read his books is that his "solutions" always include examples that didn
Jan 16, 2016 rated it liked it
This is a good explanation for how a seemingly small number of mortgage failures turns into such a large crisis. The author describes several recessions and gives good explanations of the factors that lead to collapse of the system. My take on the authors message is that investors want better returns than they can get from regulated banks so they put money into other investments that have a history making very good returns. He describes the 'shadow bank' system very well. The author's conclusion ...more
يوسف زهدى
A very nice read by a Nobel winner and skilled writer economist!
The author takes readers through a hypothesis based analysis to reach a conclusion about return of depression economics, he analyze various economic crises around the world over the last half century, each crises with specific reasons and various outcomes - leading to the world's economic situation post 2008 financial crises, then delivering future outlook, its challenges as well as suggested methods to overcome predicted crises.
Eugene Kernes
Jan 31, 2016 rated it really liked it
Shelves: economics
Many countries have crises, Krugman explains many of them in the past century. Not a difficult book to read, a good introduction to crises. Various details about each crises is recounted in this book. The economics is usually discussed in basic terms but sometimes does miss explanations. Through out the book, in explaining some crisis the author states that the many problems that caused the crisis had to do governments control over the allocation of financial and physical resources, but when it ...more
Aug 04, 2014 rated it liked it  ·  review of another edition
Informative for the most part. I was somewhat put off by his repeated reference to the babysitting coop as a way to discuss debt, but I suppose it works. I kept waiting for him to excoriate Greenspan, but he never did - this seems short-sighted in light of how wrong Greenspan was for so long, and how right Krugman always claims himself to be. He never really, to my satisfaction, explained why the bundling of credit packages for the housing market had the impact that they did. Of course, this is ...more
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Paul Robin Krugman is an American economist, liberal columnist and author. He is Professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs, Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times. In 2008, Krugman won the Nobel Memorial Prize in Economics for his contributions ...more