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Carmen Reinhart
Photo: Martha Stewart / Courtesy Harvard Kennedy School
The Havana-born economist Carmen Reinhart has been Vice President of the World Bank in Washington since June. She devoted her academic career to researching economic crises and national debt. In 2009 she published the bestseller "This time everything is different. Eight centuries of financial crises" with Kenneth Rogoff. According to this, investors, central bankers and politicians often overlook the warning signs of a severe recession because they believe that it cannot be compared with previous ones.
SPIEGEL:
Ms. Reinhart, you warned in March that this economic crisis was really different.
Why were you so sure so early?
Reinhart:
Because this slump did not begin with the usual excesses that usually precede financial crises.
It didn't start with a real estate bubble, with over-indebted households and businesses.
Some of these problems existed, but they did not cause the crisis.
Historical comparisons with previous pandemics do not go very far either.
The first thing I did when the Covid broke out was to analyze the 1918 Spanish flu.
The real economic power in the USA grew by nine percent at that time, we were in the First World War.
Why should that be a useful comparison?
SPIEGEL:
If this downturn is so different, what does that mean for the pace of recovery?
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