Recessions and financial crises can dramatically impact businesses of all sizes. In Shocks, Crises, and False Alarms: How to Assess True Macroeconomic Risk, economists Philipp Carlssonn-Szlezak and Paul Swartz advocate for a broader understand of economics that is strategic and not reactionary.
The authors provide insight into different types of events, such as how they are caused and how to handle them (like understanding that recessions can be caused by bad policy, such as tariffs that turned a bad recession into the Great Depression in 1930 or by an external shock of some sort, like Covid-19). The authors believe that it's important to focus on cause and how businesses and the government react. A large chunk of the book dives into inflation and examining how higher interest rates can impact debt (but also that not all inflation is created equal, especially if the economy grows and additional wealth is created).
Bubbles -- such as real estate and even cryptocurrency -- get coverage as well. The authors provide some healthy insight into how to manage business growth and make decisions about it without getting, in the words of Alan Greenspan, too "irrationally exuberant." For many businesses that are in a "profit now, win now, grow now" mode, being strategic about understanding risk and growth will be a hard challenge and mindset to get into. However, developing an understanding of how economies grow and contract and how rates can impact business is critical in making sound financial decisions. Shocks, Crises, and False Alarms offers a sound instruction into the market and finance in general.
MY RATING: 4.5
