Surely all teachers of economic history courses now find their students want to know if things will turn out differently this time after the Great Recession than they did after the Great Depression. No doubt either that Barry Eichengreen has had especially responsive students, given the wealth of expertise he has to offer on both episodes. Years of research on the Great Depression, and active consultant work during the Great Recession, especially its spillover into the euro-zone, make his remarks particularly insightful and authoritative. All teachers of economic history now have available his best lectures, which they can palm off as their own insights, whether they deal with the causes, repercussions, policy consequences, or specific comparisons of these two major financial crises of the past century. Eichengreen divides his material into four sections, just to make the lectures more accessible for teachers.

Part I, The Best of Times, describes the hubris that arose as first the United States and then Europe enjoyed recovery from the horrors of WWI, which led to the mis-steps that created the Great Depression. Along the way, acerbic asides relate similar signs of misplaced euphoria in the United States as it recovered from the dot-com crisis in 2000 and Europe as it established the euro as a common currency. He highlights the role of colorful individuals in finance, banking, and government as they careen into disaster. Clarence Hatry in the 1920s and Angelo Mozilo in the 2000s are examples. Trouble, it is clear with hindsight, was brewing during both the “Roaring Twenties” and “The Great Moderation” and it is a toss-up which cast of characters is more colorful. In both periods, moreover, financial innovations made historical comparisons with past crises less meaningful for guiding effective policy responses.

Part II, The Worst of Times, relates the incoherent responses of policymakers in the United States to shocks coming from Europe, from Florida's collapsing land bubble, from falling commodity prices, and continued bank failures, shocks which then spread to Europe ending with the exit of Britain from the gold standard in September 1931. President Hoover's responses were unavailing, given the change of administration over the months from early November 1932 to late March 1933, when Roosevelt's diverse team of advisers took office.

Barack Obama's team of economic advisers had to confront a similar array of pressing problems when he took office in January 2009, with expert opinions divided then, as in 1933, on which problem was most pressing or most amenable to government action. The ramifications of falling house prices, which began early in 2007 did not alert the gatekeepers to the possible consequences for the new financial structures of the United States, United Kingdom, and the Netherlands, freed from the shackles placed on them in the regulatory aftermath of the Great Depression.

The onset of both the Great Depression and the Great Recession took the initial set of regulators by surprise and the further problem of replacing one set of policymakers with another in each crisis led to a series of missteps by policymakers in the two momentous crises. Failure to staunch the financial crisis in the U.S. consequences proved dire indeed as the U.S. policy leaders careened from one minor bailout to increasingly large bailouts, culminating with the takeover of AIG and the eventual spread of the crisis to Europe. First, the financial innovators in the United Kingdom, the Netherlands, and tiny Iceland experienced similar runs on their innovative shadow banks. The repercussions on Europe took a full two years before they upset European confidence in their common currency.

Part III, Toward Better Times, spells out a recurring theme, that the failure to staunch the Great Depression in the first few years enabled major reforms to take place, affecting the entire economy thereafter, although possibly delaying more rapid recovery until the armaments spending to support European allies kicked in. In contrast, the effective steps taken in the United States to stabilize the financial system after the Great Recession then limited incentives to make further reforms. Europe, by careening from one failed stop-gap measure to another in efforts to sustain the common currency, however, has set the stage for its eventual collapse.

Part IV, Avoiding the Next Time, draws the implications for future uses of history. The main conclusion is that the recent experience with the Great Recession has made us (presumably all subscribers to this journal) more sympathetic to the problems faced by policymakers around the world who had to deal with the immediate pressures of the financial crisis as it impacted on their economies around the world during the Great Depression. Recasting our interpretation of the causes of the Great Depression from being essentially problems of macro-economic mismanagement into a more nuanced recognition of the essential fragility of leveraged financial structures, then and now, should make all of us focus more on the importance of fundamental reforms in the financial system, our fiscal regimes, and especially our social welfare programs. The success of current policymakers in limiting the damage from the current crisis has, alas, also limited the sense of urgency to make such fundamental reforms. Eichengreen concludes, “the very success with which policymakers limited the damage from the worst financial crisis in eighty years means we are likely to see another such crisis in less than eighty years” (p. 387).