WHEN THE MONEY RUNS OUT

A high-ranking economist employed by a major international bank expresses pessimism about the future of the economy in the United States and other traditionally powerful nations.

King issued many of the same warnings in Losing Control: The Emerging Threats to Western Prosperity (2010). Here, the author updates and expands his argument based on his vantage point in London, where he is group chief economist and global head of economics and asset allocation research at the HSBC banking conglomerate. King does not blindly defend gigantic banks when discussing the recent world financial crisis, but he does suggest that there is plenty of blame to distribute among smaller banks and nonbanking institutions. He believes central banks must act as a regulator of individual banks, forcing policies favoring long-term stability over short-term profit. But a conundrum exists, he writes, since national banks cannot effectively regulate international banking practices. As a result, King calls for regulation that crosses national boundaries but is vague about how that might actually work. Banking consumers might have to pay some of the costs through fees on checking accounts and ATM use. The author moves beyond banks to examine how the increasing financial clout of nations such as China will lessen the power of the Western nations and quite likely lead to further economic chaos. Policymakers in Western nations, whether they believe in austerity as the solution to the global economic mess or in larger government stimulus programs, are failing to grasp the enormity of the overhaul needed. King worries about an "optimism bias" emanating from both the austerity and stimulus camps, which would prevent sweeping reform.

A well-written book, mostly free of jargon, that is short on practical solutions and thus, profoundly pessimistic.