Renowned economist Andrew Smithers offers prescriptive advice and economic theory on avoiding the next financial crisis In The Road to Recovery, Andrew Smithers one of a handful of respected economists to have accurately predicted the most recent global financial crisis argues that the neoclassical consensus governing global economic decision-making must be revised in order to avoid the next financial collapse. He argues that the current low interest rates and budget deficits have prevented the recession becoming a depression but that those policies cannot be continuously repeated and a new consensus for action must be found. He offers practical guidance on reducing government, household, and business debt; changing the economic incentives for the management class that currently inhibit long-term growth; and rebalancing national economies both internally and externally. Further, he explains how central bankers must broaden the economic theories that guide their decisions to include the major factors of debt and asset prices. Offers practical, real-world economic policies for restructuring and rebalancing the global economic system Presents a modern economic theory for preventing the next collapse Ideal for economists, investors, fund managers, and central bankers Written by an economist described by the legendary Barton Biggs as "e;one of the five best, most dispassionate, erudite analysts in the world"e; As the global economy continues the long climb out of recession, it's imperative that central bankers and other economic decision-makers not repeat the mistakes of the past. The Road to Recovery offers prescriptive guidance on redesigning an economic system that is healthy, stable, and beneficial to all.

Renowned economist Andrew Smithers offers prescriptive adviceand economic theory on avoiding the next financial crisisIn The Road to Recovery, Andrew Smithers--one of a handfulof respected economists to have accurately predicted the mostrecent global financial crisis--argues that the neoclassicalconsensus governing global economic decision-making must be revisedin order to avoid the next financial collapse. He argues that thecurrent low interest rates and budget deficits have prevented therecession becoming a depression but that those policies cannot becontinuously repeated and a new consensus for action must be found.He offers practical guidance on reducing government, household, andbusiness debt; changing the economic incentives for the managementclass that currently inhibit long-term growth; and rebalancingnational economies both internally and externally. Further, heexplains how central bankers must broaden the economic theoriesthat guide their decisions to include the major factors of debt andasset prices.* Offers practical, real-world economic policies forrestructuring and rebalancing the global economic system* Presents a modern economic theory for preventing the nextcollapse* Ideal for economists, investors, fund managers, and centralbankers* Written by an economist described by the legendary Barton Biggsas "one of the five best, most dispassionate, erudite analysts inthe world"As the global economy continues the long climb out of recessionit's imperative that central bankers and other economicdecision-makers not repeat the mistakes of the past. The Road toRecovery offers prescriptive guidance on redesigning aneconomic system that is healthy, stable, and beneficial to all.

Foreword ixChapter 1 Introduction 1Chapter 2 Why the Recovery Has Been So Weak 3Chapter 3 Alternative Explanations for Today's LowBusiness Investment and High Profit Margins 47Chapter 4 Forecasting Errors in the UK and the US 61Chapter 5 Cyclical or Structural: The Key Issue for Policy69Chapter 6 The Particular Problem of Finance and Banking 81Chapter 7 Japan Has a Similar Problem with a Different Cause107Chapter 8 The End of the Post-War Era 125Chapter 9 Misinformation as a Barrier to Sound Policy Decisions149Chapter 10 Avoiding Future Financial Crises 169Chapter 11 The Current High Level of Risk 179Chapter 12 Inflation 195Chapter 13 Prospects Not Forecasts 219Chapter 14 Tackling the Bonus Culture 229Chapter 15 The Need for Change in Economic Theory and theResistance to It 237Chapter 16 Summary and Conclusions 255Appendix 1 Mean Reversion of US Profit Margins 259Appendix 2 Goods' Output Requires Much More Capital ThanService Output 261Bibliography 263Acknowledgements 269Index 271