Carmen Reinhart

This Time Is Different

1. IDEA 1

   Every boom claims it is different

   Reinhart and Rogoff study financial crises across eight centuries and many countries. They argue that before each crash, people convince themselves that old rules no longer apply, which they call the this-time-is-different syndrome.

2. IDEA 2

   Governments default far more than expected

   The authors show that governments failing to repay their debts is common in history, not rare. Many countries that are rich today defaulted repeatedly in earlier centuries. Default, in their account, is a normal part of financial history.

3. IDEA 3

   Banking crises strike rich and poor

   The authors find that banking crises happen in wealthy and developing countries alike. Rich nations, in their data, are not immune to the same booms and busts seen elsewhere. Similar warning signs appear in each case.

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