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"An intelligent explanation of the mechanisms that produced the crisis and the response to it...One of the great strengths of Tooze's book is to demonstrate the deeply intertwined nature of the European and American financial systems." --The New York Times Book Review From a prizewinning economic historian, an eye-opening reinterpretation of the "An intelligent explanation of the mechanisms that produced the crisis and the response to it...One of the great strengths of Tooze's book is to demonstrate the deeply intertwined nature of the European and American financial systems." --The New York Times Book Review From a prizewinning economic historian, an eye-opening reinterpretation of the 2008 economic crisis (and its ten-year aftermath) as a global event that directly led to the shockwaves being felt around the world today. In September 2008 President George Bush could still describe the financial crisis as an incident local to Wall Street. In fact it was a dramatic caesura of global significance that spiraled around the world, from the financial markets of the UK and Europe to the factories and dockyards of Asia, the Middle East, and Latin America, forcing a rearrangement of global governance. In the United States and Europe, it caused a fundamental reconsideration of capitalist democracy, eventually leading to the war in the Ukraine, the chaos of Greece, Brexit, and Trump. It was the greatest crisis to have struck Western societies since the end of the Cold War, but was it inevitable? And is it over? Crashed is a dramatic new narrative resting on original themes: the haphazard nature of economic development and the erratic path of debt around the world; the unseen way individual countries and regions are linked together in deeply unequal relationships through financial interdependence, investment, politics, and force; the ways the financial crisis interacted with the spectacular rise of social media, the crisis of middle-class America, the rise of China, and global struggles over fossil fuels. Finally, Tooze asks, given this history, what now are the prospects for a liberal, stable, and coherent world order?


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"An intelligent explanation of the mechanisms that produced the crisis and the response to it...One of the great strengths of Tooze's book is to demonstrate the deeply intertwined nature of the European and American financial systems." --The New York Times Book Review From a prizewinning economic historian, an eye-opening reinterpretation of the "An intelligent explanation of the mechanisms that produced the crisis and the response to it...One of the great strengths of Tooze's book is to demonstrate the deeply intertwined nature of the European and American financial systems." --The New York Times Book Review From a prizewinning economic historian, an eye-opening reinterpretation of the 2008 economic crisis (and its ten-year aftermath) as a global event that directly led to the shockwaves being felt around the world today. In September 2008 President George Bush could still describe the financial crisis as an incident local to Wall Street. In fact it was a dramatic caesura of global significance that spiraled around the world, from the financial markets of the UK and Europe to the factories and dockyards of Asia, the Middle East, and Latin America, forcing a rearrangement of global governance. In the United States and Europe, it caused a fundamental reconsideration of capitalist democracy, eventually leading to the war in the Ukraine, the chaos of Greece, Brexit, and Trump. It was the greatest crisis to have struck Western societies since the end of the Cold War, but was it inevitable? And is it over? Crashed is a dramatic new narrative resting on original themes: the haphazard nature of economic development and the erratic path of debt around the world; the unseen way individual countries and regions are linked together in deeply unequal relationships through financial interdependence, investment, politics, and force; the ways the financial crisis interacted with the spectacular rise of social media, the crisis of middle-class America, the rise of China, and global struggles over fossil fuels. Finally, Tooze asks, given this history, what now are the prospects for a liberal, stable, and coherent world order?

30 review for Crashed: How a Decade of Financial Crises Changed the World

  1. 5 out of 5

    Mehrsa

    Some writers know a little bit about a lot of things. Some know a lot about one thing. Foxes and hedgehogs I suppose. Rarely does an author know a lot about a lot. Adam Tooze is that author. This book is so comprehensive and so insightful. He seems to understand nuanced political thought and history in every country in the world. I know the most about the aftermath of the 2008 crisis in the US and his description hits the nail on the head. I didn't know much about the Eurozone crisis and the Chi Some writers know a little bit about a lot of things. Some know a lot about one thing. Foxes and hedgehogs I suppose. Rarely does an author know a lot about a lot. Adam Tooze is that author. This book is so comprehensive and so insightful. He seems to understand nuanced political thought and history in every country in the world. I know the most about the aftermath of the 2008 crisis in the US and his description hits the nail on the head. I didn't know much about the Eurozone crisis and the Chinese crisis, but now I feel so much more informed. The thesis of this book is so important. To misquote the Clinton's team: It's politics stupid. Not just the economy.

  2. 4 out of 5

    Max

    Tooze digs deep into the 2008 financial crisis and its aftermath through 2017. He explains in great detail how the Fed, ECB, IMF, economic and political leaders dealt with a globally integrated financial system facing collapse. He ties in the political fallout which paved the way for the turmoil and nationalist movements we see today including the Ukraine crisis, Brexit and the election of Trump. It is a demanding but very worthwhile read best suited to those with an interest strong enough to wa Tooze digs deep into the 2008 financial crisis and its aftermath through 2017. He explains in great detail how the Fed, ECB, IMF, economic and political leaders dealt with a globally integrated financial system facing collapse. He ties in the political fallout which paved the way for the turmoil and nationalist movements we see today including the Ukraine crisis, Brexit and the election of Trump. It is a demanding but very worthwhile read best suited to those with an interest strong enough to wade through ten years of the constantly shifting economic policies and endless negotiations in the US, Europe and Asia. My notes follow. The real key to the 2008 financial crisis was not just that subprime mortgages and other low grade debt were bundled and labelled AAA by rating agencies paid by the owners of the securities. The real key was that large amounts of these overvalued collateralized debt obligations (CDO) were owned by banks. With sleight of hand the banks offloaded them to Structured Investment Vehicles (SIV) that had only a fraction of the capital reserve requirements the banks had to meet, yet the banks were still responsible. The banks then used the SIV’s holdings to back lower interest rate short term securities called asset-backed commercial paper (ABCP) they sold to money market funds and others wanting short term investments. The banks through their SIVs would make the difference between the higher long term interest rate and lower short term rate. Thus the lower the debt quality of the CDOs the more the banks made through their SIVs, that is, until consumers started defaulting, then the core of the financial system, the banks themselves, imploded. By contrast the dot com bubble resulted from artificially inflated investments but did not bring about a banking crisis, because the banks were not primary holders of the bad debt. While the crisis started in the US, foreign banks were left holding the bag too. European investors went for the lowest quality highest yielding nonconforming mortgage backed securities (MBS) owning 29% of them. In essence, European banks such as Deutsche Bank and Credit Suisse were simply an extension of Wall Street. China played it safer investing primarily in bonds backed by Fannie May & Freddy Mac. Europe’s large banks carried far more debt relative to their assets than American banks. Banks in Iceland and Ireland had debts 700% of their countries GDP as they funneled money throughout Europe. The Eurozone with its central bank the ECB served the function of a national central bank but without the associated governance and no clear policy to handle bank failures in constituent countries. Any solutions would have to be ad hoc and politically decided which usually meant deadlock. When in 2008 banks began to fail, governments scrambled to bail them out. In Europe some countries didn’t have the resources or the will to shore up their banks, and Germany bluntly objected to collective action. Thus there was a piecemeal approach to dealing with the systemic problem of globally interconnected banks. European countries had connected their financial system but not their political institutions leading to disarray. In the US President Bush bucked his party and let Treasury Secretary Paulson and Fed Chair Ben Bernanke address the problem. It did take the failure of Lehman Brothers before they finally realized a complete breakdown of the banking system was at stake. Using guarantees for and the purchase of illiquid assets called Quantitative Easing (QE), direct investment of capital, arranging buyouts of failing banks and the TARP program Paulson, Bernanke and New York Fed Chair Geithner stopped what otherwise would have been a total collapse. Interestingly it was Democratic votes in Congress that supported Bush in getting TARP passed. This was the point where the Republican Party as a whole split its right wing constituency from its Wall Street constituency. If right wing Republicans had prevailed in their righteous notions that those who overextended themselves deserved what they got, let them fail, the subsequent collapse of the financial system could have resulted in a depression. In the years prior to 2008 West European money flowed into Eastern Europe as the EU, the Eurozone and NATO expanded. Putin felt threatened and plush with oil and gas money he pushed back. The evidence things had changed was in the small country of Georgia which wanted to be in NATO. Its aspirations and those of Ukraine were actively encouraged by the West. In 2008, Russia fomented internal revolt in Georgia and when the Georgian Army put it down, Putin sent Russian troops in. Putin quickly showed who was in charge challenging the West to a fight if NATO was expanded to Russia’s doorstep. Putin drew a red line around Georgia and more importantly Ukraine with a much larger economy. Putin even had Russia dump its $100 billion of Fannie May and Freddy Mac bonds in 2008 to exacerbate America’s financial crisis. Russia and Eastern Europe were hit hard by the world wide banking debacle of 2008. Russia had dollar reserves and Putin forced Oligarchs into coordinated policy, although he played favorites. For example, Oleg Deripaska, owner of aluminum giant Rusal, received $4.5 billion from VEB bank. VEB’s chairman was Putin. Former Soviet satellite countries had no reserves and had to turn to the IMF, World Bank and other sources as the ECB refused to help limited by German objections. The crisis and imputed inferior status caused countries like Hungary to turn to the nationalist right politically. Ukraine suffered badly in the financial crisis resulting in extreme political turmoil paving the way for the crisis with Russia five years later. The Fed helped global European banks lest they dump their dollar denominated portfolios, flood the market, and face insolvency. Further the Fed swapped currencies with foreign central banks to keep the global market liquid in dollars. Despite Fed help inaction by European institutions meant their banks continued to carry toxic assets long after American banks had disposed of theirs. This inaction led to the Eurozone banking crisis in 2010. China was also hit hard but responded aggressively with a massive stimulus package stemming the crisis. In 2009 China’s economy showed little decline from 2008 to 2009 unlike the rest of the world. The government’s total control of banks made implementing policy easier. It was the actions of the US and China that were keeping the world economy afloat demonstrating in essence a G2 world. South Korea was hit even harder than China with exports falling off a cliff. It also engaged in a large carry trade, borrowing on short term dollar loans to finance long term Korean Won assets making money on the interest rate differentials and continuous Won appreciation vs. the dollar. When the dollar commercial paper market froze, Korea could no longer roll over its short term financing, essentially the same problem banks worldwide were facing. The US Fed included Korea in its currency swap program bailing it out. Southeast Asia emerging economies also suffered. They resorted to significant stimulus and received indirect help from the US via the Korea currency swap facility. By 2010 the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) were in trouble. Ireland and Greece were completely overwhelmed with bank debts far exceeding their resources. Italy was not as bad off as the others, but it was a far more important economy. ECB and member country actions in 2008 and 2009 had only helped prolong the crisis with half measures. The PIIGS needed debt restructuring or infusions of capital not more loans or temporary reprieves. But again Germany objected to joint EU action and the EU finally approved a joint ECB and IMF loan tied to a harsh austerity program for already impoverished Greece. Ireland was next. What Tooze calls the troika (the European Commission, the ECB and the IMF) again demanded austerity in return for loans. Ireland’s poor would suffer for a crisis created by the greed of banks and their investors. Tooze sums it up “Extend-and-pretend on a national basis merely turned a banking crisis into a fiscal crisis, which widened uncertainty while deflecting attention from the real issue.” By 2010 America had stabilized its banks, but its citizens were losing their homes at record rates and many could still not find work. In response the Fed unleashed QE2 purchasing more bonds. Interestingly, while European finance ministers called QE irresponsible expansionism, European banks more than American ones readily unloaded their US bond portfolios to the Fed. Deutsche Bank and Credit Suisse in particular had already dumped many of their toxic assets to the Fed in QE1. Thus thanks to the FED’s QE European banks built up their cash dollar balances, deleveraged and increased their stability while EU governments did little but complain. True to Keynesian economics, the austerity program forced on Greece sent it into a downward spiral nearing 25% unemployment (50% for young people) and leaving those still working with reduced incomes. Hundreds of thousands in a nation of ten million relied on food banks and soup kitchens. Rapidly falling GDP and tax revenues left Greece unable to pay its debt. Ireland suffered similarly and its banks were also headed towards insolvency. Unlike the Fed the ECB took the position it had no mandate to fight unemployment, only to maintain price stability. Thus its only concern was enabling banks to pay their debts, not to help put people back to work. This narrow view undermined its efforts. Spending cuts and increased taxes reduced demand devastating the economies of Greece and Ireland and in turn their banks. The failure of EU policies in these countries made investors question the future of those that might be next in line. Investor money flowed out of suspect countries threatening contagion. If Italy were to fall to the status of Greece, the whole Eurozone would unravel and all of its banks put at risk. Such an event would reverberate throughout the world. The crisis was also leading to political unrest and the rise of nationalist parties in Greece and beyond. As 2011 rolled into 2012, the EU’s situation became desperate. Germany now became much more open to significant debt restructuring. Germany and France used their influence to help get prime ministers both in Greece and Italy changed to more cooperative ones. Both were American trained economists. Italy PM Monti, Greece PM Papademos, the new head of the ECB Draghi, and Merkel’s favored economic advisor Issing, had all worked at Goldman Sachs and shared similar views. Draghi had attended MIT at the same time as Fed chief Bernanke, Papademos, and Mervyn King head of the Bank of England. The next shoe to drop was Spain in 2012 when its housing bubble popped. Spain with a population of 45 million compared to Greece’s 10 million and Ireland’s 4.5 million had to be dealt with. Again Germany held back, although it now agreed to an EU growth fund stimulus as opposed to austerity. Germany also agreed to a permanent fund to back Eurozone debt for countries that complied with set guidelines, but it still would not commit to maintaining the Eurozone, no matter what. Then, Draghi did just that. With an off the cuff remark he told investors that the ECB would do whatever it takes to support the Euro. Eurogroup chief Juncker quickly backed up Draghi. Merkel, French President Hollande, and Italian PM Monti then chimed in. Now the crisis eased as investors believed that the ECB was committed to supporting the Euro just as the Fed was the dollar. What had worked in America is that investors believed the Fed would do whatever was necessary to back US government debt and its banking system. In America since the 1990s bubbles had propelled the economy only to bust begging the question whether the economy could grow without them. Those that profited from these financial excesses were almost exclusively the 1%. Income inequality steadily increased. In 2011 the Republicans took control of Congress. The conservative rich had funded the Tea Party and other right wing groups that not only took a hard line against any more stimulus but wanted government largely eliminated. Without more stimulus the economy could only recover slowly extending the pain of those who had lost their homes and jobs. Worse the Republicans wanted austerity which could have brought a real depression. Republican opposition led to a dysfunctional government shutdown in 2013 and compromise budgets that unsettled markets and forestalled a robust recovery. When in 2013 the Fed discussed tapering its bond purchases markets began to dive. The Fed quickly turned around initiating QE3 and making permanent its currency swap program with foreign banks showing its commitment and stabilizing markets. In 2012 The EU had struck an Association Agreement with Ukraine. By 2013 there were talks of military and technology cooperation. The EU also pursued such agreements with Moldova, Georgia, Armenia and Belarus. Russia wanted these former Soviet republics in its own economic union. Putin did not take kindly to the EU’s encroachment. In severe financial straits like all of Eastern Europe, Ukraine asked both the EU and Russia for help. The EU offered some help. Russia offered far more if Ukraine would join its economic union. Ukrainian Prime Minister Yanukovych took Russia’s deal and anti-Russia activists took to Ukraine’s streets chasing Yanukovych out of the country. The new government took the EU-IMF deal and Russia took a piece of Ukraine. Ukraine then got more but still insufficient financial help from the West. The EU and the US imposed limited sanctions on Russia which were increased after the downing of a Malaysian airliner by a Russian military group. In EU parliamentary elections in 2014 Merkel did well in Germany, but there were big gains for the right wing in the UK and France. Membership in the EU was being seriously questioned. In 2015 half of Greece’s population was living off the pensions of senior citizens which were below the poverty level to begin with. Homelessness was rampant. The young and well-educated were leaving in droves. Draghi responded by initiating QE. The ECB’s purchase of bonds eased the situation. Unfortunately this only allowed “extend and pretend” to continue. After prolonged intense negotiations primarily between Greece and Germany, a new package of loans was agreed to but without the necessary debt restructuring that would actually solve the problem. Portugal with 60% youth unemployment and Spain were suffering badly as well. As political turmoil unfolded in Greece so did it in other stressed out EU countries. In Greece and Portugal left wing parties aligned with right wing ones to break the status quo. In the UK the Conservative Party won a majority. In Poland the Law and Justice Party won the presidency. The financial crisis changed Britain’s relationship with the EU. The deep recession plus increasing immigration made many question EU membership. While other EU countries were looking for an ever tightening relationship, Prime Minister Cameron wanted a looser more flexible relationship for Britain. He wanted to reform the EU, not leave it. He wanted to restore and expand the City of London’s pre-crisis stature as a global banking hub. He envisioned an EU deal that would make the City of London the recognized financial linchpin for money flowing between the EU and both the US and China. But the idea of Brexit took on a life of its own, an all-out attack on globalism, the opposite of where Cameron started. The UK referendum vote for Brexit shocked the City of London and energized nationalist parties from France, to Netherlands and across Europe. Financial and political instability marched on hand in hand. The US election of Trump in 2016, an outgrowth of the forces unleashed in 2008, further destabilized the world. Trump’s tariffs and isolationist policies threatened world trade. His tax “reform” exacerbated income inequality and created huge deficits at a time of prosperity. Republicans since Reagan have returned money to their well-off supporters through tax cuts, raising deficits to create a crisis to be followed by spending cuts targeting programs that primarily benefit middle and lower income Americans. Widespread deregulation encourages business and financial practices once again to get out of hand. Trump’s brinkmanship and constant disparagement means the cooperation that was essential in 2008 may no longer be there. As one who knew firsthand how hard it was to achieve consensus, former Treasury Secretary Paulson said “What would have happened if a divisive character such as Trump were president during the 2008 financial crisis?”

  3. 5 out of 5

    Justus

    The more I read of Crashed the less I liked it. Not because it is a bad book per se. But because it wasn't the book I thought it was going to be. It wasn't the book it *could* have been. The book is divided into three sections: a history of the 2008 crash with a focus on the US; a history of the 2010 Eurocrisis with a focus on Europe; and a third chapter that is a smattering of quasi-related "other stuff that has happened since 2010". It was while reading this third section that my disappointment The more I read of Crashed the less I liked it. Not because it is a bad book per se. But because it wasn't the book I thought it was going to be. It wasn't the book it *could* have been. The book is divided into three sections: a history of the 2008 crash with a focus on the US; a history of the 2010 Eurocrisis with a focus on Europe; and a third chapter that is a smattering of quasi-related "other stuff that has happened since 2010". It was while reading this third section that my disappointment crystalized. Each of these chapters is almost entirely standalone and reads like a run-of-the-mill, not very spectacular The Atlantic article on the subject. (The section on Trump's election is probably the worst example of this.) Ukraine, Brexit, Trump's election, further European developments (particularly in Greece), even China's 2015 stock market slump. But there's very little tying these together and usually only very slight ties to earlier 2008 & 2010 crises. In a book that is both a 10-year retrospective and carries the subtitle "how a decade of financial crises changed the world" it actually spends most of its time in "at the moment" journalistic re-telling rather than looking back historical analysis. What I mean is: you'll get lots of "and then Merkel had a meeting and said X; and then Geitner had a meeting and said Y". You get far less of "and now that 8 years have passed we can see that Merkel's statement X was totally off base because of A, B, C". The first time I really noticed this was in a passage on the 2008 crisis when bankers & regulators were arguing about capital increases and whether X% would destroy the banks or whether Y% would leave the system disastrously risky. Well, they eventually settled on a number and 10 years have passed. Surely there's been some research? Or at least some anecdotes & case studies? Were the bankers completely wrong? Were the regulators? Instead of clarity brought to us by the passing of time we are just left with a "he said, she said" argument. Ultimately, that's the why I felt disappointment as I read more & more. Much of this book could have been written shortly after the respective events; you'll notice, for instance, that when discussing 2008 most of the references are to things published in the 2009-2012 period. For the Eurocrisis, most of the references are to things published in 2010-2012. And the situation is even worse for the more recent events, simply because very little time has passed since most of them have occurred. There are times where it feels like Tooze is trying to show us major recurring themes or make explicit the linkages between all of these events. But it happens pretty rarely in the 700+ pages and often takes a backseat to more detailed day-by-day journalistic reporting. I would have liked to see that priority inverted -- bring those themes to the forefront and just put in the details as needed to support the themes. For instance, one of the themes running throughout the book is the tension between decision-making in a crisis, which doesn't exactly have time for parliamentary/Congressional discussions that can takes days or weeks, and democracy -- and the eventual backlash, especially in the US and parts of Eastern Europe, against loss of autonomy to regional/global institutions. There's another thread about the surprising solidification of US supremacy via dollar-denominated debt but it only comes up occasionally and the consequences of it aren't explored in much detail. Don't let my low review make you think this is a bad book. If you've never read anything else on the 2008 crisis or the Eurocrisis, this is a pretty good place to start. But I feel like this book missed an opportunity to really tie all these things together and advance a strong thesis, instead of spending so much times just being a retelling of what happened & when.

  4. 4 out of 5

    Elle

    Adam Tooze is a historian of WWI and Nazi Germany. Recently, however, he’s spent the past few years focusing on the Global Financial Crises and its aftermath, with regular updates on his excellent blog at adamtooze.com. Crashed is the long-awaited product of that research, a globetrotting, expansive history of the GFC and its reverberations and aftershocks the world over. And indeed, as a history of the crises it’s first rate. Tooze is particularly strong in unpicking the role of historical cont Adam Tooze is a historian of WWI and Nazi Germany. Recently, however, he’s spent the past few years focusing on the Global Financial Crises and its aftermath, with regular updates on his excellent blog at adamtooze.com. Crashed is the long-awaited product of that research, a globetrotting, expansive history of the GFC and its reverberations and aftershocks the world over. And indeed, as a history of the crises it’s first rate. Tooze is particularly strong in unpicking the role of historical contingency, how the actions taken by various political actors in governing the vast, complex, interconnected systems of global capitalism, actually had real effects and made real differences. Straight off the bat he rightly dispenses with standard macroeconomics accounts that hone in on trade balances and national income accounting, where surplus and deficit are seen as epiphenomenon of internal credit relations, unit labour costs and national competitiveness. These accounts of world trade would have great consequences, as they led many prominent economists and commentators to predict the wrong crisis, a crisis of Sino-American relations, where China would eventually refuse to continue purchasing US Treasury bonds and securities, and the dollar would tumble. And indeed, the perspective of imbalances still holds a great deal of purchase in standard accounts of the EU crisis, and is used to justify the harsh treatment meted out to the Eurozone’s periphery. What actually happened was a crisis of trans-atlantic finance and the implosion of bank balance sheets. And to explain this we need to look, Tooze argues, not at national income accounting, but macro-financial statistics – the flow of dollars and euros from bank to bank, country to country, financial institution to financial institution. What we find is alarming, because for all the talk of national varieties of capitalism, freewheeling Anglo-Saxons vs patient and productive Germans, we see that German and French banks were just as financialised, and just as imbricated, in the meltdown as their American counterparts. Indeed, German banks were some of the most exposed and most dangerous, their US branches had invested heavily in the US mortgage boom with dollars leveraged from US money-markets. Compared with their American counterparts, they were laughably undercapitalised given the risk exposure of their portfolio. But this fact would be entirely absent from traditional macroeconomic measures and accounts. (It’s this aspect of the crisis that the late, great Marxist IR theorist Peter Gowan so astutely identified not long after the meltdown began. He was way ahead of the curve on this and his contributions are greatly missed https://newleftreview.org/II/55/peter...) But Merkel and Sarkozy would initially dismiss the crisis as a US problem, a meltdown that had nothing to do with them. And it was only the FED’s dramatic intervention in extending half a trillion dollars in currency swap lines to the UK, the EU and Asian central banks, ensuring that their banking systems did not collapse through a shortage of dollars, that averted a full scale breakdown. From here, the narrative moves at a brisk pace as we follow the full scale of measures that countries did or didn’t introduce as the crisis worked itself out. TARP, the Chinese mega-stimulus, debates at the G20, Russia corralling oligarchs into line, the unfolding of the Eurozone debt crisis as private sector bailouts became a matter of public finances, honing in on the absurd and sadistic torture of Greece for the sake of French and German bank balance sheets. It concludes with the Ukraine crisis, the humiliation of SYRIZA, the rise of Trump and the long brewing emerging markets crisis that will soon unfold with full force. It’s of the Eurozone’s response that Tooze is most contemptuous. In failing to ‘Go Big’ in response to the meltdown and co-ordinate an adequate, EU wide fiscal response, Merkel and Sarkozy are essentially guilty of economic vandalism, and this is true even from the perspective of ensuring the rude health of capitalism and capitalist enterprise. EU banks remain fragile and undercapitalised, and compared with the laughably lax regulations and stress tests imposed by the ECB, the compromised and incoherent Dodd-Frank act looks like a bold achievement in fiscal regulation and rectitude. A decade of austerity and ‘extend and pretend’ has seen EU corporations outmaneuvered and less able to compete against US and Chinese multinationals, and wild dreams of the EU as a counter-hegemonic anchor, and indeed competitor, for world power have rudely awoken to the doldrums of stagnation, catastrophic youth unemployment and social disintegration. All good so far, and yet for an account of the crisis, it’s strangely lacking. This is an account of the crisis relayed through Tim Geithner or Gordon Brown’s memoirs, Obama’s speeches and Paul Krugman op-eds. It’s focused and brisk and well-written, but also strangely sterile. We rarely leave the realm of high-politics, and when ordinary people do make an appearance it’s through the statistics of mortgage foreclosures or measures of unemployment and income. The anger that most of us feel or the pain that we’ve gone through rarely penetrates the narrative. And when it does so, it’s fairly limp. For all his emphasis on contingency, Tooze holds his tongue, or has little to say, about better or fairer responses to the crisis. Except perhaps his sympathy for Christina Romer’s push for an Obama stimulus twice the size of the one actually enacted that would have included distressed mortgage holders, or a strained frustration that Merkel and the ECB didn’t respond as forcefully as the US. He questions whether Bernanke and Geithner comparing themselves to firefighters or bomb disposal experts à la The Hurt Locker is apropos, but although he points out that the bailouts were elitist, kept the broken system ticking over to fight another day, and enriched a small minority of those lucky enough to benefit from capital gains, he doesn’t strain himself to dispel it. Indeed, some of them come across as unlikely heroes. Some of the most repugnant and mendacious people, who enjoyed a great deal of levity and power, have immiserated millions of people worldwide, leading to untold misery, dashed hopes, ruined life chances and in many cases, an early death. Every single one of them has gotten off scot-free, even, it would seem, from the harsh judgement of history’s chroniclers. And around the world, everywhere you look, the far-right is on the march. What should we expect from a history of the greatest economic catastrophe in our lifetimes? A little more boldness, please.

  5. 4 out of 5

    Gary Beauregard Bottomley

    This is not an easy book to follow but it is a necessary one in order to avoid being misled by bloviators of substance free self appointed spewers of financial misinformation. It deals intelligently with an incredibly complicated set of worldwide connections (financial, geo-political and sociological) and delves into one of the defining moments of our time period, the financial crisis and its aftermath. If one reads a book about WW II, one should know the date September 1, 1939 as the date when This is not an easy book to follow but it is a necessary one in order to avoid being misled by bloviators of substance free self appointed spewers of financial misinformation. It deals intelligently with an incredibly complicated set of worldwide connections (financial, geo-political and sociological) and delves into one of the defining moments of our time period, the financial crisis and its aftermath. If one reads a book about WW II, one should know the date September 1, 1939 as the date when it started and that way the narrative of the story telling never gets away from the reading of the book. Similarly, if one wants to understand our present times one must know the date September 15, 2008, the day that the ATMs almost did not deliver $20 bills and the day that the commercial paper almost ‘broke the buck’ if the government had not intervened. The day the world’s financial system almost collapsed. This book tells that day’s story, what led up to it and what happened after. There’s a movie and a book that are cited by the author, ‘The Big Short’. They captured the craziness that led to the ‘great recession’. This book, ‘Crashed’, fills in the details and the aftermath and explains in a detailed and erudite fashion (unfortunately, this book does read complexly and I would even venture to say that the person who wrote the review on this book in the New York Times was not able to fully understand this book, but he definitely understood enough of why this book is important and relayed enough such that I knew I wanted to read this book. Even if a reader doesn’t know the difference between a ‘swap and a ‘repo’ or ‘reverse repo’ a reader will get the gist of the book). The author explains the world before September 15, 2008 and what led to it, then highlights the FED and what America did right, and then looks at the pre and post 2011 period and the self inflicted chaos that Europe and Asia foisted on themselves when they wrongly dealt with the systemic problem inherent in the financial system. The world and its parts are globally connected and made of many moving parts. NATO matters and Putin was an authoritarian thrower of monkey wrenches even in those days and wanted to create chaos mainly against America and in order to try to expand his hegemony at any cost even if it meant unilaterally selling MBSs in order to hurt America just for its own sake, and China did smart things and then did stupid things. Confidence fairies (bond vigilantes) and austerity hawks (lovers of misery for others, but never for themselves) riled against all the solutions that worked and mindlessly echoed empty slogans such as ‘don’t debase the dollar’ and ‘runaway inflation is the real threat’ and ‘balance the budget to restore prosperity’ in their substance fact free universe while preaching against every single reasonable action while being wrong about everything. The author does specifically quote from Fox News, Brietbart News and Steve Bannon, Glenn Beck and Niall Ferguson (sp?) as gloom and doom substance free and fact free mongers who had nothing but fear and feelings as their guidepost as they spouted those empty slogans. That kind of substance free critic never gets proved wrong since they have no solutions but only offer substance free criticism void of data or academic rigor. They can never fail. They can only be failed by imaginary others, and they never let facts get in the way of the false version of reality they create, because in the end they need FUD (fear, uncertainty and doubt) in order to maintain ignorance so they can ultimately keep people afraid and try to convince you to hate the same people they hate. This book is an antidote to that stupidity. A major theme of the book is that blame for the crisis was put on ‘politicians, workers and welfare recipients’ and not on the real culprits ‘bankers and financial institutions’. As stated in this book, at the start of the crisis Fox News and other right wing outlets blamed the Community Reinvestment Act (CRA) for the crisis for allowing minorities to have subpar loans thus in their twisted world view causing the complete melt down of the housing market. This book will provide data, facts, and a narrative shooting down such irresponsible statements. The bankers and the financial institutions (with the assistance of the rating agencies) almost destroyed the financial stability of the world and their enablers in the media put the blame on politicians and regulators, workers and welfare recipients (remember, they used to say 47% of Americans don’t pay taxes as if that was the cause of the rich bankers and financial institutions stealing and purposely creating a financial bubble. The only honest thing Greenspan ever said was ‘I’m shocked, I can’t believe it. The bankers lied to me’). We live in a complex world within a web of interlocking connections. Simpletons love to get on TV and spout their idle chatter on subjects that they know nothing about all the while thinking that the more they talk about the subject means the more they know, when in reality it’s the converse, the more they talk the less informed they are. Reality is complex, and the financial world and its interactions are not easily comprehended. The hateful want us to remain ignorant of the connections and it is easy for them to shout ‘fake news’ and spout substance free idle chatter on my TV in order to control us through fear. The truth is out there but it sometimes takes effort to find it and understand it. It’s not easy to understand what happened. It is easy to be misled. A book like this one goes a long way towards immunizing us from the virus of substance free deceivers.

  6. 4 out of 5

    Athan Tolis

    Crashed has been timed to coincide with the ten-year anniversary of the financial crisis of 2008. Most books about the crisis have been written by 1. protagonists with a record to defend, such as Hank Paulson, Tim Geithner, Ben Bernanke, Neil Barofsky, Mervyn King, Adair Turner and Paul Tucker 2. economists who watched from the sidelines, such as Joseph Stiglitz, Paul Krugman, Bob Shiller, Atif Mian & Amir Sufi, Hans-Werner Sinn, John Kay, Bob Reich, Greta Krippner (genius!) and Simon Johnson 3. j Crashed has been timed to coincide with the ten-year anniversary of the financial crisis of 2008. Most books about the crisis have been written by 1. protagonists with a record to defend, such as Hank Paulson, Tim Geithner, Ben Bernanke, Neil Barofsky, Mervyn King, Adair Turner and Paul Tucker 2. economists who watched from the sidelines, such as Joseph Stiglitz, Paul Krugman, Bob Shiller, Atif Mian & Amir Sufi, Hans-Werner Sinn, John Kay, Bob Reich, Greta Krippner (genius!) and Simon Johnson 3. journalists who had reported on it, such as Andrew Ross Sorkin, Bethany McLean, David Dayen and the always incisive Martin Sandbu 4. people who fought in the trenches: practitioners such as the anonymous author of “Diary of a Very Bad Year”, the very eponymous George Soros, and the troubled genius that is David Stockman Some wrote about the crisis in advance, such as the rather monothematic (but regardless 100% correct) Richard “balance sheet recession” Koo, some wrote in real time, like Simon “I saw your kind when I was at the IMF” Johnson did in the Atlantic, but most of these authors wrote in retrospect. I’ve read them all. Some are better and some are worse, but all these authors are satisfied to cover one or two angles of the crisis, rather than the whole thing. None of them attempts to provide with a theme that could cover all of the causes and all the ramifications, from how housing went crazy in the US to how Europe lost its way to how the authorities may have done more harm than good and how we ended up where we are. With a single exception, that is: Alan Blinder did just that in his rather comprehensive (and uniquely readable) “After the Music Stopped.” The problem with Blinder’s account is that, much as he acknowledges many factors that drove the crisis, much as he provides the most accessible account to a layman, much as he has (and succeeds in sharing) a deep understanding of finance, he holds the belief that a single event, the Lehman bankruptcy is what took us from a mere crisis to a disaster. Which simply cannot be true. In the words of Christopher Hitchens “If a great city or a great state should fall as the result of an apparent accident, then there would be a general reason why it required only an accident to make it fall.” Enter Adam Tooze. A historian! Not to spoil it for you, but the conclusion to this 600+ page opus is that “politics drives economics.” Not the other way round, which is what we’ve always been led to believe! I don’t agree with everything Adam Tooze has to say, nor do I think he’s fully qualified to write this book. But of his main conclusion I am now 100% convinced, and Adam Tooze is whom I have to thank for this epiphany / realization / new conviction. On at least one measure, therefore, “Crashed” is now the best book about the great financial crisis of 2008. In short, an amateur has taught us a lesson here. I don’t call Adam Tooze an amateur to disparage him. It really shows here that he did not live the crisis like I did from my trading desk and all those authors from their positions in government or on the sidelines. Among other things: • he’s wrong about Mitsubishi and Morgan Stanley, I distinctly remember the Japanese almost lost everything. They decidedly did not have guarantees! • he’s wrong to date QE on March 19, 2009: Bernanke blew a huge hole in my P&L in December of 2008. By March of ’09, if anything, it was “buy the rumor, sell the fact” on QE. • he glosses over the significance of the 2011-announced LTROs, arguably the biggest European “save” of all: Southern European banks were finding it impossible to roll billions and billions of 3-yr debt they’d issued mid crisis; not only that, but they were massive holders of BTp and Bono junk, hence the sudden stop, hence MF Global, hence the LTRO; he fails to mention most of this, let alone make the connections! • on p. 241, I came across the following gem: “Everyone wanted safety. Treasury prices were rising, yields soaring, so too was the dollar.” It does not work that way, does it? And yet, he’s written a book that’s well worth reading, for the following three reasons: 1. He makes a decent fist of looking at the crisis globally: US, Europe, EM, China and Russia 2. He’s not afraid to make some very strong judgements that go against the grain 3. He lays it all out so well that even if you disagree with his conclusions, by dint of having read his book you will be transported to a place you could not have reached on your own. His first controversial insight is that the crisis caught the great and the good napping. The Stephen Roaches of our world could not get enough of telling us about the dangers lurking in the Chimerica structure’s imbalances and our leaders (from Larry Summers to a young Illinois senator called Barack Obama) could not get enough of telling the US to borrow less and the Chinese to spend more, when of course the danger was lurking at home. His second controversial insight is that Paulson 1. made an explicit choice to look principled and teach everybody a lesson and let Lehman go, 2. was driven to this decision by a miscalculation regarding the impact the Lehman bankruptcy would have and 3. was quick to reverse gears and go down on his knees and ask Congress for the necessary funds to clean up his mess after he realized he’d miscalculated. Three cheers for Adam Tooze! His third controversial insight is that the biggest financial mess was in Europe, rather than the US. The boldest and stupidest trade of all bold and stupid trades entailed the crème de la crème of the European banking establishment holding trillions of dollar-denominated questionable US assets, which they funded by issuing short-term dollar liabilities. He calls out Steinbrueck and Sarkozy for being showboaters and liars in calling the crisis American, basically, and pays tribute to the Fed that stepped in with gigantic dollar swap lines to the ECB and the SNB, who covertly passed on stupendous amounts of dollar funding to the BNPs, Deutsches and UBSs of this world. On the other hand, you distinctly get the impression that somebody told all this to Adam Tooze, that he did not dig it out on his own. His “deep throat” has left out some big stuff. So nobody seems to have informed the author that a trillion dollar swapline is three orders of magnitude smaller than the quadrillion dollars of derivatives (that’s a million billion dollars of derivatives for those sitting in the back) that the authorities could have wiped out by going “Swedish” on the banking system and thereby making all those arrows start and end in the same place. He talks about how the banks were forced to beg for billions and how that was all for show because the losses were in the single-digit trillions, but somebody should show him the 100-odd trillion with a T of derivatives each of Bank of America Merrill Lynch, Barclays etc. had on their books that nobody did anything to remove when there was a genuine opportunity to do so. Nobody other than the Swiss, that is: again, nobody seems to have informed the author that the SNB found an amazing way to shrink UBS and CSFB: they quite simply told them “any amount you’re up on a derivative you now need to treat as an asset” and “any amount you’re down you need to treat as a liability.” And that was that! Until last year there were fantastic jobs to be had killing the derivatives books of those behemoths :-) Deutsche, on the other hand, is still very much in the news… The author does seem to comprehend that a “hero” in year 2005 was not a guy who had funds, but a guy who could “source product.” However, Tooze cannot connect the dots too well from there: 1. He somehow gets it into his head that your objective as a maker of CDO is to seek crappy product, in order to maximize the difference between what the meat’s worth and what you sell the sausage for! No, not really: all you want is to charge the borrower the rate that you charge to crappy borrowers, but you don’t care at all if he’s a good borrower or not. If it turns out he can pay, that’s a small bonus, actually. Indeed, some of the biggest fraud perpetrated was against African-Americans who were high-credit borrowers but were pushed into costlier subprime anyway. 2. More importantly, the biggest implication of this fact is that it was incumbent upon America to police the creation of assets and that this was something the US singularly failed to accomplish. Steinbrueck and Sarkozy were not all that off-piste to say the crisis of their banks was American in origin. The US is where the lax lending rules were to be found. Much as I’m ecstatic that the current go-to book about the crisis boldly states that Paulson was a hypocrite, basically, the author gets a B- from me on all his revelations. He isn’t knowledgeable enough, bottom line. Sorry… Fortunately, his account is not the biggest contribution! From reading “Crashed” I took away two big messages; one intended by the author and one probably unintended! The first message Adam Tooze managed to hammer into my head is that, once they had picked up their socks and dusted themselves off following the Lehman bankruptcy, (to use Obama’s parlance) the American authorities, from the President, the Fed and the Treasury all the way to the courts and the diplomatic service, resolved to fully restore the status quo: “no more bankruptcies anywhere, ever” became the mantra and the entire might of the state was put behind that goal! • No more banking bankruptcies, US or otherwise • No losses to Chinese investors in bad American paper • No losses to anybody else who holds paper either: bondholders’ rights trump homeowners’ • No European Government defaults • No Grexit • No breaking of ranks even on the method: you, the rest of the world, had better also print Tooze does not argue that this was some type of plan. When you read his account, rather, you understand that there’s no turning back from Shock and Awe. So there wasn’t one! You look at it that way and you understand there was no way the subprime borrower was ever going to get any help to stay in his home. The moment his money was pledged to the Chinese, his goose was cooked. Similarly, and Tooze says this explicitly, my country’s government was never going to default to the French and German banks that held its paper, because “the system” came first. I’ve always blamed Trichet for this, but with the wisdom I’ve now acquired I must now acknowledge he was but a first line of defense. And that the “hegemon” pushing this agenda was indeed the US, with Obama himself putting in the important phone calls. The second major takeaway I took from reading Crashed is a dividend of its “universal” approach to setting the scene. The author takes you on a tour of the US, Europe, Eastern Europe, China and Russia. And you sit down, you do the graph and you come to a realization: a single country is connected to every node of the graph: • The ECB was set up on the model of the Bundesbank • German banks were up to their gills in American paper • German investors of all stripes were up to their gills in BTp, Bono and GGB paper • German industry had set up production across Poland and Hungary and the Czech Republic • The former German Chancellor sits on the board of the Russian gas pipeline • The current German Chancellor traded blows with Putin in their days in East Berlin • Germany is by some margin the biggest exporter to China I don’t know why I’d never made all those connections. So Angela Merkel is a “villain” in this book, but not at all from my angle. The way I see it, under Angela Merkel: • German Landesbanken were forced to sell all their mortgage junk right away • German investors, uniquely among their European peers, were forced to hold on to their GGBs till the bitter end, in a show of solidarity they never got any credit for • The BuBa and the Laender were browbeaten into passing on banking supervision to the ECB • Germany accepted more refugees than everybody else put together • Real sanctions were imposed on Russia post the Ukraine / Crimean fiasco, with the French, the Italians and swathes of German business firmly in opposition. • Europe made direct loans to a large number of insolvent nations, a policy that was extremely unpopular with the German public! Yes, there are things that Merkel could have done better. But she was literally in the eye of the storm and is amazing enough a politician that she managed to steer through three elections and always deliver the goods with both her country and Europe in mind. I read this book and it reinforced my belief that no politician in history could possibly have played her awful hand as well as she did. The book closes with two very strong chapters: one on Trump and the concluding chapter which lays out the author’s main thesis: politics trumps economics. Amen. A couple last observations / grumbles from me: Grumble #1: “Crashed” was advertised as the book that draws the line from the bailouts to Brexit and Trump. It really isn’t. Grumble #2: I hope somebody somewhere writes a book / an article / a Tweet / whatever that exposes Draghi’s “whatever it takes” moment for what it actually was: one half of a bargain whereby: (i) on one hand Germany allowed the ECB to lend money to Southern European governments via the printing press (ii) on the other hand (under the false pretenses that this is to do with NPLs, rather than the suppression of hard money creation south of some parallel) no loan will be given ever again by a bank in Italy, Portugal or Greece. Tooze does not grasp this at all and has been fed the story that Target 2 blew up when northern investors withdrew. What’s really happened is Germany regrets allowing Southern banks to create hard Euros and it won’t happen again. They will fund the governments instead, where at least you have some clue what happened to the money 😊 Grumble #3 My country's "young, charismatic, radical-left" prime minister is no different from any of his predecessors. Stop romanticising him! Anyway, enough from me. Go buy the book, for Blinder’s reign as the best author about the crisis has ended. Step forward, Adam Tooze!

  7. 4 out of 5

    Steve

    This volume does a great job explaining the financial meltdown that began in 2007. I particularly found the author's discussion of liquidity, or rather the lack of liquidity, to be of interest. The first half of this book is strong and, I believe, sets the historical standard for the crisis from 2007-2012. The second half, however, reads as a general survey, presenting little insight to those who follow world affairs. For example, the author, it seems, dwells unrelentingly on that chain-smoking, This volume does a great job explaining the financial meltdown that began in 2007. I particularly found the author's discussion of liquidity, or rather the lack of liquidity, to be of interest. The first half of this book is strong and, I believe, sets the historical standard for the crisis from 2007-2012. The second half, however, reads as a general survey, presenting little insight to those who follow world affairs. For example, the author, it seems, dwells unrelentingly on that chain-smoking, unemployed, alcoholic cousin at the Thanksgiving table, Greece. I think it was Eric Hobsbawn who commented that writing history so close in time to actual events is dicey business; Mr. Tooze proves it so. This book lacks any feel for life on the front lines during the crisis. To satisfy that deficiency, I offer up no less notable an observer than ... me. I wrote the following in August 2017: The Financial Meltdown (2008-2009): An Education Gifted authors have well documented the 2008-2009 financial crisis and its aftermath. More good stuff will be written. As a contribution to the record, what follows are the modest, personal reflections of an unimportant former investment banker who had a bleacher seat view of events. The Prelude All seemed well. For those who lived through the dot-com bubble, the years immediately following seemed relatively calm. From a distance the financial markets showed little cause for concern. The 10-year treasury began 2003 at 4.05% and ended 2007 at 4.10%. The S&P 500 had moved from a 2003 low of ~830 to a 2007 high of ~1560. Despite the gains, the stock market did not then seem overvalued. The S&P 500 forward P/E was ~15x in 2007, compared to a 1999 high of ~25x. We had learned our lesson – in the end, a dollar must be worth a dollar. What pain we endured to learn that clicks and page views were not proper valuation metrics. The financial world was a safe place again. Alice But there was one annoyance – Alice in Wonderland at the workplace. Since the first bank was founded, bankers held relationships with customers who in turn did business with the bank. It was obvious who played the role of banker and that of customer. Beginning in the early 2000s, a white rabbit appeared in investment banks. The power structure of the large banks changed. Groups who held questionable relationships with hitherto unknown entities assumed greater control of securities and banking business lines. Traditionalists, who covered companies like P&G, 3M or IBM were perplexed. Enormous amounts of money were being generated and yet it wasn’t apparent exactly how. The white rabbit was the structured products industry. When formed in the 1980s, that industry, though complex, was relatively easy to understand. A financial institution aggregated mortgages or credit card debt, then sold a package of securities that contained those assets to fixed income investors. It seemed an understandable and reasonable business model. By the early 2000s, securitization had become extremely opaque. Terms like CLO, CBO, CDO, Super Senior or equity tranche were among the trade’s argot. Unlike the centuries-old relationships between bankers and customers, the structured products teams were working with newly-formed, little-known, entities that managed large asset pools. The pool managers evolved as something of a cottage industry in response to accounting and regulatory changes that made it prohibitively costly for banks to hold certain assets on their own balance sheets. What these managers did was a mystery to those of us in the bleachers. A whole lot of attention was being paid to what seemed like “two persons and a Bloomberg terminal”-type operations. The white rabbit continued hopping, milling with a few other Lewis Carroll characters. And then in 2007, began the gradual, slow-motion, melt-down. We traditionalists had no clue of what was to unfold. Yes, we reached the final chapter of Alice’s adventures. The white rabbit hopped away. What word best describes its footprints? Carnage? Ruin? Calamity? Was it Warren Buffet who remarked that only when the tide goes out do we see who is swimming unclothed? For when the tide went out, we then saw how the structured products business was engineered. What did we see? An unholy alliance among government, rating agencies, investors, and banks. The Actors: Government It is no surprise that the 2008/2009 melt-down began with government. Government had set the stage through decades of public policy for what followed, fostering home ownership and minimizing borrowing costs for homeowners. As expected, firms advantaged themselves through government behavior. Wall Street is very good at profiting from cracks in government policy. Through time, those cracks became chasms. Rating agencies The rating agencies are for-profit entities that constantly seek new ways to grow revenues. Rating structured product securities was an important growth element to those firms. It is only somewhat less surprising that the rating agencies could be buffaloed – anyone who has worked on Wall Street knows the reason for this. They proved themselves to be (unwitting?) pigeons in this poker game. They also suffered relatively few consequences, compared to their contribution, in the wake of the crisis. Institutional Investors Institutional investors relied upon the banks and the rating agencies to affirm the quality of their purchases. It was somewhat surprising that investors would be so ignorant of the underlying risks they were bearing, relying far too heavily on the rating agencies and bankers. Aren’t institutional investors paid to assess risk independently? Well, it turns out that’s not how it works. If the rating agencies were to rate Imelda Marcos’ shoes AAA and we had a Bloomberg terminal, we could easily sell old Imelda’s shoes off to the highest bidder. This is only a mild exaggeration, sadly. To be fair, fixed income investors are known for doing their homework with non-investment grade securities (below BBB-). Most of the structured product securities were sold as investment grade (BBB- and higher), however. It was something of a shock to realize that fixed income investors put so much faith in the rating agencies and so little thought into their decisions. The Banks Finally there were the banks. Large banks employ large staffs of risk managers. Their job is … to manage risk. This works as expected in ordinary times. When large sums are being earned, though, let’s just say those risk managers can be a bit malleable. Further, the sheer size of profits awed CEOs into fawning support - best not to ask too many questions. Operating in this system, the structured products bankers were the classic actors in the principal-agent problem. The Drama The excruciating slow pace of decline The downturn in the financial markets began with events in early 2007. Nearly two years passed from that time to the S&P 500’s bottom. If you were an investor in the S&P 500, you bore a 56% loss from peak to trough. Investors in Bank of America, AIG and Lehman saw losses of 94%, 99.5% and 100%. The US government bond market became the safe haven for investors. From mid-2007 to the end of 2008, the iShares 20+ Year TBond ETF moved from ~$84 to ~$122, a 50% increase in price for a risk-free asset. Why did it take so long for the market to incorporate information into prices? In this era of instant information, shouldn’t security prices have immediately reacted to the possible consequences of the structured products excesses? The answer was no. Why not? A few thoughts come to mind: (1) Structured products themselves were opaque. Who issued them, who owned them and what they contained were not obvious to those in the bleachers. (2) Because Wall Street’s structured products groups generated so much revenue, there was a powerful institutional bias toward maintaining the status quo. (3) Governments created the Band-Aid du jour to mend each newly-opened wound, thus slowing and prolonging the crisis. (4) Rather than immediately re-rating the financial system, the rating agencies produced a sort of rolling thunder, issuing one downgrade after another over an extended time period. (5) Regulatory forbearance occurred globally, where the true effects of economic outcomes were prevented from being recognized publicly. If an institution were to fail a financial regulatory test, such as a risk-based capital measure, the regulator changed, or temporarily ignored, the test’s thresholds. Extraordinary government responses Governments, behaving in unprecedented fashion, lowered interest rates to zero or negative levels – and then left them at those levels. Since the dawn of civilization, it has been an unquestioned rule that the lender of 10 goats shall receive at least 11 goats upon repayment. No longer. Governments also took unprecedented action when they provided liquidity against certain asset classes, like mortgage backed securities, direct investment into financial institutions (effectively nationalizing major banks), and indirect backing to funding for various financial firms. Though the crisis in total was measured in years, individual situations arose in real-time, requiring immediate government response. With imperiled entities like Lehman and Bear Stearns, there was no time for reflection. Given the realities of trading, action was often needed before market openings. The response times governments faced were measured in hours rather than months, weeks or even days. The results were seemingly random. Each of common stock, bond and preferred stock owners were treated differently depending on the crisis of the moment. Institution............./.Common./.Preferred./.Bonds...../.Clients FHMA+FHLMC......./.Loss........./.Loss........./.Saved....../.Saved Lehman+WAMU...../.Loss........./.Loss........./Impaired./.Saved Bear+Merrill.........../.Impaired../.Saved....../.Saved....../.Saved Goldman+MS........../.Saved......./.Saved....../.Saved....../.Saved AIG+BofA+Citi......../.Impaired../.Saved....../.Saved....../.Saved Afterwards Mockery of technocracy For all the planning from technocrats in government, the crisis proved a mockery. Decisions were made on the fly. Inconsistencies abounded. Why were Lehman and WAMU allowed to go down when all other major institutions were saved? The simple way to handle a crisis was to throw the full weight of the government behind any large failing enterprise. Thus begat the phrase too big to fail. Investors are now conditioned to recognize the willingness of governments to support the integrity of large financial institutions, skewing the risk/reward dynamic for securities of those entities. Why should the senior notes of a large bank be viewed differently than an equivalent risk senior note of a brewer? And if banks are just extensions of the federal government, then perhaps they should be owned and operated as such? Authority bias We want to believe those in the know badly, so badly we’ll pay for access to those authorities. The crisis exposed a tremendous amount of authority bias. For the authorities know no more about the future than the person on the street. The authority does have access to a larger set of real-time data, presumably. Perhaps a better appreciation for risk, yet that does not lead to a better understanding of the future. The crisis demonstrated the limited value added from notable financial institutions, advisors and managers, none of whom foresaw the oncoming crisis or its extent. The unquoted value of cash When the markets began to sell-off heavily, why didn’t investors immediately respond? Financial prices, it turns out, do not fully reveal emotions. There is a non-quoted value of holding cash. Fear is the culprit. Some called it the fear of catching a falling knife. If a security were trading for $100 on day 1, $80 on day 2, $60 on day 3, why even think of investing on day 4? You could invest at $40, only to see your investment worth $20 one day later. It was well known on Wall Street that private equity investors were told by their limited partners not to place a call for cash, even though the LPs would have been legally obligated to deliver cash. It was also known that there were instances of large institutions being denied access to revolving credit facilities even though the banks had a similar legal obligation. Holding a dollar was worth much more than a dollar, it seemed. There was no corresponding price quote, however. That’s why there is a paradox in investing. Market declines are the time to be investing, not shying from investing. We see the value of securities. The value of holding cash is intangible. Failure to let market forces reach equilibrium Because governments intervened to prevent Adam Smith’s invisible hand from exerting its proper influence, a set of consequences – some intended, some unintended – followed. What would have happened had government not responded? Several financial institutions would have gone bankrupt including most large securities firms. Depositors at several banks would have experienced losses to at least some of their deposits above FDIC limits. Fixed income investors in many surviving financial institutions would have seen the value of their securities significantly reduced. Money market investors would have suffered losses, an unthinkable outcome prior to the crisis. Collateralization requirements in structures like derivatives would have forced counterparty losses. In short, the system and many, many Americans would have been instantly hurt badly. But - investors and managements that took risk would have born the consequences of that risk. Regulators would have upheld the rules of the road. After the pain, the system would have reached equilibrium and a rebuilding would have begun. The world would have relearned an important lesson about risk and return. Government intervention, however, took the hurt and spread it over many years. Many investors and managements that took risk avoided the consequences of that risk due to government action. We preserved the financial system – at what cost? In substance, government action has taken from savers and taxpayers and given to those borrowing institutions many of which should have failed. This action has played out over a decade so, like inflation, the impact is hidden from direct view. To a bank, the cost of goods sold is represented by their cost to borrow money. Borrowing costs for banks have been at record lows now for nearly a decade. All in an attempt to salve wounds. Central banks have now set a new boundary level for financial stimulus with zero or negative interest rates, trillions of dollars in government supplied liquidity, and inconsistent treatment of security holders in imperiled institutions. What happens in the next crisis when central banks ease, but not as far as the old boundary? What if they provide liquidity but not as much as before? What message does that send? Perhaps central banks will be forced to exceed the prior boundaries lest they not be taken seriously? Hints of things to come? Government protections and regulations enacted following the Great Depression created the impression that banking panics were a thing of the past. Not true it turns out. The loss of confidence in the financial system was an unanticipated and unforeseen surprise to all. It serves to remind us that despite all the efforts to insulate the financial system, panic cannot be prevented. And next time? What could happen then? Looking at developing countries in crisis, we get an idea of just how far governments can go to control financial panic: bank deposit freezes/confiscations (Brazil), cash withdrawal limits (Greece), bank bail-ins (Cyprus), retirement account confiscation (Argentina), currency exchange controls, just to name a few. Will these tactics used by less developed countries now become policy in the developed world under crisis? What will it mean to hold cash in that world? Conditions precedent for another major dislocation? Given that nearly 75 years passed between the last two panics, there’s good reason to believe another panic is unlikely anytime soon. Yet we know that the massive government interventions of the past decade have seriously impaired price discovery in the markets. Clearly, the removal of government subsidies will have an impact. The conditions are set, therefore, for a significant market downturn even without a panic. What could serve as the spark? Will Europe be forced to break apart or to federalize? Will China’s financial system collapse? Is there a black swan lurking in the US financial system? It’s far more likely a downturn will come from something unseen or ignored today. Given the sheer size of government intervention, it’s also more likely to be later rather than sooner. It’s comforting to hear market warnings from so many managers/pundits. We can be certain, with 99.97% confidence, that they are in error. There are too many sophisticated investors calling for a market correction for it to happen now and it just makes too much good sense. It’s when those investors surrender to the market that we should worry. Make no mistake, the mammoth government subsidies will produce major market dislocations at some time. The laws of nature tell us so. We don’t know when. No one does. Someone will, however, make a timely call on the market’s demise, for as they say, even the broken clock is right twice a day.

  8. 4 out of 5

    Henri Tournyol du Clos

    This book feels like being post-prandially cornered in your living room by a somewhat inebriated and chatty guest that goes on and on telling in no particular order unfocused anecdotes and grand ideas he gathered from other people or read about, throwing in some political commentary to boot. Although the author sometimes, out of the blue, makes some apt statement, he seems to lack the ability to discern between what is really important and what is not, and to order his thoughts. Having myself tr This book feels like being post-prandially cornered in your living room by a somewhat inebriated and chatty guest that goes on and on telling in no particular order unfocused anecdotes and grand ideas he gathered from other people or read about, throwing in some political commentary to boot. Although the author sometimes, out of the blue, makes some apt statement, he seems to lack the ability to discern between what is really important and what is not, and to order his thoughts. Having myself traded through several major financial crises, written a textbook, and taught seminars on the subject, I find this offering not wholly uninteresting but quite underwhelming.

  9. 4 out of 5

    Alex

    This is an undoubtedly brilliant account of the 2008 financial crises, both laying out the causes and the long term economic and political consequences of the events. But it's a highly technical account and a bit too dense for what I feel like consuming at this time.

  10. 5 out of 5

    Mona

    This book requires full reader's attention and is not an easy read. Author is very knowledgeable on the topic, he did very good research and in eloquent way presented facts related to 2008 financial crisis. The strength of this book lies in its global approach to the problem, not focusing only on the US (likely because autor is a Brit). The interconnections among different markets are well described. The political background to financial decisions was well presented.  However, I have to admit tha This book requires full reader's attention and is not an easy read. Author is very knowledgeable on the topic, he did very good research and in eloquent way presented facts related to 2008 financial crisis. The strength of this book lies in its global approach to the problem, not focusing only on the US (likely because autor is a Brit). The interconnections among different markets are well described. The political background to financial decisions was well presented.  However, I have to admit that this book overwhelmed me at times. I think I reached for it at the wrong moment, I may come back to it in the future. I felt like I lacked some basic data and knowledge to understand all presented nuances in depth. I don't have any grounded financial background and I think having it would allow me to gain more from reading this book.  This book requires time. Some financial background would be helpful. It is very good and comprehensive for prepared mind. 

  11. 4 out of 5

    Dax

    Financial crisis leads to sovereign debt crisis which leads to the rise of populism which paves the way for a Trump election. There have been hundreds of books written about the financial crisis, but Tooze's new work is the first I have come across that illustrates the path that lead us to where we are today. In the age of global integration, financial markets and political policy walk hand-in-hand, and Tooze does a nice job of showing us how the markets have shaped the course of events for the Financial crisis leads to sovereign debt crisis which leads to the rise of populism which paves the way for a Trump election. There have been hundreds of books written about the financial crisis, but Tooze's new work is the first I have come across that illustrates the path that lead us to where we are today. In the age of global integration, financial markets and political policy walk hand-in-hand, and Tooze does a nice job of showing us how the markets have shaped the course of events for the last decade. It's not a particularly cheerful read, but it is valuable and informative. Recommend it for those who want to understand how we got here, rather than just gnash their teeth and complain about it.

  12. 4 out of 5

    Andrew

    Crashed: How a Decade of Financial Crises Changed the World, by Adam Tooze is an epic look at the financial crisis of 2008 and its aftermath up to the present day. Tooze examines both the 2008 crisis in its origins within the sketchy Mortgage Baked Securities (MBS) trade, and the growth of Asset Backed Commercial Paper (ABCP) and the influence of the repo market in US securities trading. The trade in MBS had some inherent flaws, due to the creation of tranche's of bad debt that was mixed with so Crashed: How a Decade of Financial Crises Changed the World, by Adam Tooze is an epic look at the financial crisis of 2008 and its aftermath up to the present day. Tooze examines both the 2008 crisis in its origins within the sketchy Mortgage Baked Securities (MBS) trade, and the growth of Asset Backed Commercial Paper (ABCP) and the influence of the repo market in US securities trading. The trade in MBS had some inherent flaws, due to the creation of tranche's of bad debt that was mixed with solid real estate debt, given a AAA credit rating by ratings agencies. This high rating on bad debt was due to the the mixing of debt, its backing in commercial paper, and various insurance guarantees that sought to reduce risk and ensure a high rating. Coupled with a climate of Wall Street deregulation within the US and international governments, the increase in international banking and portfolio diversification, and increasing power within the financial community over politics, the 2008 crisis would have a major impact. It shook the fabric of confidence in Capitalism, and to this day has encouraged the growth of populist nationalism, spelling doom for traditional centrist parties, and leading to major policy upheavals across the globe, from Brexit, to Trump's pivot homeward, to the Russian conflicts in Ukraine and Georgia, and the growth of illiberal democracy in Hungary, Poland and Turkey, and the Eurozone Debt Crisis itself. The previous decade has seen major financial upheaval in the Western world. Tooze notes the use of military doctrine in the US as they settled the financial crisis of 2008, partially nationalized numerous institutions, and increased the power of the Fed to act outside democratic traditions, in the name of banking and financial stability. These powers were not permanent, the Fed began to be questioned by populists on both the right and left, culminating in the Trump election. However, the established business interests in the United States have gained much in the way of power and clout, if not in social acceptance. Wall Street has come out ahead in the financial crisis, although things looked dicey in 2008. Banks are larger than ever, interests rates are currently rising, financial regulation from 2008 is slowly being peeled back, and so forth. Even so, Tooze does have a healthy dose of respect for how quickly the US was able to recover from the financial crisis. Although things continue to be tough in the United States, and foreclosures on homes did not peak until years after 2008, the US was able to stabilize its economy and avoid massive social disruption due to its proactive response to the crisis. The use of debt recapitalization, the Quantitative Easing (QE) program run by the Fed, and the bipartisan response from both political parties (at the time) led to a stabilization of the economy, and the avoidance of massive austerity programs and social unrest, as was experienced in Europe. Tooze is critical of the new Trump administration, and the growth of serious partisanism in the US. The Tea Party faction of the Republican Party, for example, held US debt hostage in 2013, and the following shutdown in 2018-2019 (past the publication of this book) show that political parties in the states are so at odds that they are willing to see the government shut down, and funding to social programs cease, just to score points politically. Another issue noted by Tooze is the continuing deregulation of the banking sector and Wall Street. This creates a dangerous precedent where many of the issues that lead to the 2008 crisis are returning to the for - lax regulation, rampant executive bonus schemes, the use of ABCP as a safe alternative to US treasuries, and so on. In the Eurozone the crisis was much more protracted. The Europeans often blame American banking instability and lack of fiscal prudence for the crisis. The crisis did, after all, originate in the US with a US real estate collapse. However, the two main issues with Europe were not America's fault. Banks in Europe were massively overexposed to US ABCP. Due to the use of the US dollar as a reserve currency globally, and a lack of Euro financial regulation (within the EU), banks dealt ABCP in place of US securities as ABCP had a slightly higher return and were hot items on various markets globally. The Eurozone had a higher amount of financial trade with the United States that China did at the time, the butt of many financial rags analysis at the time. This overexposure and alck of European wide financial regulation led to some very silly figures - Ireland for example had banking debt at 7x its GDP. Greece, Spain, Portugal and Italy (dubbed the PIIGS) were also experiencing financial bubbles. Spain and Ireland were experiencing massive real estate booms. Greece and Portugal were poorer EU nations trying to modernize their economies and raise their social mobility and stability. Italy was over leveraged, although not massively, but this did not matter in the face of the financial recession. Suddenly US ABCP were trading at less and less value, and banks were making less and less money off their short sell tactics on the repo markets. This led to many billions of dollars being erased off the books of European banks. It also led to banks in Europe being deemed too risky to deal with. This effected national economies on a grand scale. Ireland toyed with bankruptcy. Greece and Portugal were slowly being recognized as risky investments, affecting their ability to interact with the global market. Spain's real estate bubble collapsed. And Italy began to buckle under the strain. Other European nations were affected too. The UK suffered from a major lose of banking confidence. France's banks were exposed to some bad debt. Switzerland struggled. The European Central Bank (ECB) could not contain it. It was hampered both by its inability to meddle in national sovereignty, and German financial culture. This second bit was a major source of Europe's prolonged crisis. Germany's economy was hot up to and after the crisis. Exports were booming and German banks were doing business across Europe. Germany's good credit was largely keeping the Euro over inflated - Greek bonds were considered as safe as German bonds due to their denomination in Euros. And Germany did not want to foot the bill for others financial "misguidance". Germany espoused a type of tough fiscal prudence - tightening the belt, keeping expenses balanced, and fiscal austerity for the bad actors. This of course did not apply to Germany, which was booming from its export orientated power. Greek sovereign debt? Too bad, German taxpayers won't pay. Angela Merkel strongly resisted any effort to coordinate a financial rescue - instead opting to limit exposure and contagion by imposing harsh terms on the Greek, Portuguese, Spanish and Italian governments. Greek and Italy effectively had their governments removed by the Troika (EU, ECB, IMF) and replaced by technocrats without elections. Wages, benefits, and jobs were slashed to a high degree. The level of austerity was so absurd and ineffective, that Greece's economy was still considered toxic, not due to its bad debt, but to its completely frail economy. The German's went on a rampage of punishment, which did no one good, save for staving off the rise of Germany's far-right AFD and Merkel's survival in the Bundestag. The ECB subscribed largely to this way of thinking. In the US the crisis was largely solved through the use of Fed driven recapitalization schemes, the purchasing of bad bank debt, and large amounts of money promised to restore market confidence. In Europe, the crisis dragged on because the ECB and the EU could not agree on a program of ECB Eurobond issuance. This would infringe on precious national sovereignty, and Germany might be held to account for its exploitative and self-centered economic policies. Eventually, Merkel came around, but only after serious social unrest in Greece, and the election of Far Left parties in Portugal and Greece which subtly (in Portugal) or overtly (in Greece) challenged the Troika. This group came to be seen as monsters for their unflinchingly cold fiscal austerity. Youth unemployment hit record levels in Greece and Spain, and the Italian public lost faith in their technocratic centrists, soon voting in a far right league of parties still in power today. Europe's crisis has left a tainted legacy. The Far Right are on the rise across the Eurozone, with elections in Italy turning in a far right party, and electoral success for nationalists in France, the Netherlands, Austria and more. The UK was largely disappointed with the EU during the crisis. David Cameron and the conservatives sought an exemption from financial transfer taxes for the City of London. When this was denied, they petulantly sought Brexit - an ongoing crisis that may result in the final nail in the City's coffin. In Eastern Europe the crisis also led to serious upheaval. Debt crisis struck outside the Eurozone - Hungary, Poland, the Baltic's (in the Euro-area) and other nations struggled with debt, and sought IMF emergency packages which led to the usual short sighted fiscal austerity. These nations began to rebel. Hungary elected a far right populist turning Hungary into an illiberal democracy (Orban's words). Poland elected the PiS and began to crack down on judicial and legislative independence. Georgia and Ukraine - seeking greater integration into the EU and Atlanticist world, were forgotten. Russia, scorned by the world in the early 2000's, went hard autocrat and began invasions of first Georgia, then Ukraine in territorial seizures that are unknown in the modern world. Georgia was slapped down, and Ukraine continues to struggle with political decay, separatism, and warfare. The Eurozone was heavily leveraged in Eastern Europe, with many banks heavily investing to modernize the former Soviet worlds economics, and buy up valuable assets on the cheap. This exposure particularly effected banks in Sweden, France, Italy and the Netherlands - and the policy decisions were as varied as the countries involved. The legacy of crisis from the Great Recession (so dubbed) continues to this day. China continues to exert more clout on the international stage, and is beginning to further reject Western Liberalism as an ideal. Many other countries (Hungary, the US, Poland, Turkey, and more) seem to be following suit. Hard to blame them. The 2008 crisis had no consequences for those that designed its shoddy system. They walked away with massive bonuses. Many of the politicians that worked on the crisis in the US and Europe now work for major financial institutions like Goldman Sachs. This is a prime example of industry capture, and is the main reason behind growing unrest with systems of globalization, free trade, Liberalism, and so on. Traditionally the avenue of the Left, a transcendence of politics has occurred, with the Democratic left in the states largely supporting copratist government protection of big business at the expense of the tax paying poor, with the Tea Party-nationalist right taking over as the main party of anti-globalization. Funny how things change huh? Tooze's book is fantastic and highly readable. He engages in technical analysis as a way to record history. This fits his thesis, which is politics and economics are intertwined. Clearly, from his account of the crisis, one can see how political motivations (the survival of Merkel's CDP in Germany, the conflict between a growing partisan split in US parties and their inability to resolve conflict effectively etc.) has effected economic decisions (saving the Greek people from crippling austerity, growing the power of the far right, etc.). Discontent continues to be prevalent as we continue to note the predatory nature of the relationship between government and market, and its exploitative effect on individuals and nations across the world. As inequality continues to grow, and we struggle with concepts of secular stagnation, precarious work, roboticization of jobs and so on, Capitals control over every aspect of our lives becomes increasingly clear, and increasingly more unstable. Tooze ponders what would happen if Trump's administration is hit by a financial crisis, noting that it would be much more difficult to come to a bipartisan decision, and that splits within the Republican party could be disastrous. Whatever the case, this is a fantastic read and worthy of the attention of any reader interested in the crisis as history and politics.

  13. 5 out of 5

    Julia Damphouse

    This is a very impressive and exhaustive book, especially given the recentness of the events and relative lack of publicly available sources.Tooze offers a clear, materialist and mostly political history of the crisis, while also taking pains to explain financial and economic concepts. Provided you take the time in chapter two to understand the economic terminology, the book is not a particularly challenging read. The first part of the book deals with the pre-history of the crisis: mainly geopol This is a very impressive and exhaustive book, especially given the recentness of the events and relative lack of publicly available sources.Tooze offers a clear, materialist and mostly political history of the crisis, while also taking pains to explain financial and economic concepts. Provided you take the time in chapter two to understand the economic terminology, the book is not a particularly challenging read. The first part of the book deals with the pre-history of the crisis: mainly geopolitical events that shaped decision makers choices about how to respond to the crisis. The second part deals with the 2008/2009 crisis as it unfolded, the third about the Eurozone crisis in the following years, and the 4th the ‘aftermath’, changes in world politics since 2015. Unless you are undertaking a research project on the crisis was a whole, i see very little reason to read this book cover to cover. The table of contents and index are your friends, as individual chapters are a good place to start if you are interested in beginning to learn about specific topics or periods of the crisis. The final quarter of the book, “aftershocks”, has the least clear connection to the crisis itself and given this was published in 2018 you wouldn’t lose much from skipping it entirely. If there is an over-arching argument to the book it is that ‘simple answers’ about ‘who is to blame’ for the crisis are insufficient or reductive. The point of the book is to meticulously explain what cased the crisis: influence big banks and speculators, political agency of world leaders, short-sighted government policy often governed by ideology, coincidences of geopolitical mis/calculation and so on. The same goes for explaining the varied responses to the crisis. At times this can seem like a somewhat eclectic mix of cause and effect, where at different times it is unclear or unjustified by Tooze why in one place an individual politician’s agency shaped the events, in another an organization's ideology and in another 'structural' factors. For example, in explaining the crisis in the eurozone Tooze says that while the outcome of the response was influenced and drawn out by German fiscal conservativism, the real fault for Europe’s slow and protracted response lies with overlapping sources of power and democratic decision-making institutions which make it structurally difficult to take swift decisive action. Basically: the response to the crisis in Europe was hindered by lethargy and democratic stalemate, not merely by the malicious influence of german finance. The US fed comes away looking more competent than the eurozone simply because of its ability to respond swiftly, even if the action taken was mainly in the interest of banks and not homeowners.

  14. 5 out of 5

    Christine

    Honesty, a very good and scary book. Want to understand where we are today? Read this. Despite its length, it is not a slog. It will make you think.

  15. 5 out of 5

    Ben Edwards

    Was planning on finishing this but now it seems out of date.

  16. 4 out of 5

    Siah

    This is a good book but is suffering from author’s urge to include every single historical event in the book. As a result it’s bloated to become a long, never-ending read. Additionally the author insists on including current events that haven’t been unfolded fully. For example we really don’t know what the impact of Brexit is going to be. Or it is too early to judge the outcome of Trump’s presidency. A better book would have stayed away from including these events. I would have enjoyed this more This is a good book but is suffering from author’s urge to include every single historical event in the book. As a result it’s bloated to become a long, never-ending read. Additionally the author insists on including current events that haven’t been unfolded fully. For example we really don’t know what the impact of Brexit is going to be. Or it is too early to judge the outcome of Trump’s presidency. A better book would have stayed away from including these events. I would have enjoyed this more if I were getting an advanced degree in history of the financial markets. The author also includes minute by minute account of events during the 2008 meltdown and I am not sure I really care about that. And these anecdotes really obscure the big picture. Overall it is not a bad book, but it isn’t a book that I’d be comfortable recommending to everyone. Has it’s own audience.

  17. 5 out of 5

    Keen

    “Let’s hope we are all wealthy and retired by the time this house of cards falters :0)” So said one ratings expert to another in an email back in December 2006. Of course he needn’t have worried, Obama and his buddies on Wall Street would ensure that he looked after all of the money men, way before he even gave a thought to the vast majority of the electorate who voted him in. Tax, regulation, transparency and accountability are four words which terrify all members of the global financial system. “Let’s hope we are all wealthy and retired by the time this house of cards falters :0)” So said one ratings expert to another in an email back in December 2006. Of course he needn’t have worried, Obama and his buddies on Wall Street would ensure that he looked after all of the money men, way before he even gave a thought to the vast majority of the electorate who voted him in. Tax, regulation, transparency and accountability are four words which terrify all members of the global financial system. They prefer words like allowances, opacity, freedom and impunity and that is what they usually get. Tooze’s beastly tome tries to tackle the mess, ten years after it all came down. It is often a cynical and disheartening affair reading about so many egotistical politicians and bankers acting consistently with such naked self-interest, prioritising their own jobs over everything else, but it is certainly an eye-opener. “The 2006 business year generated $60 billion in bonuses for the finance crowd in New York, and 2007 topped that with $66 billion in bonuses.” In 2007 the six top hedge fund managers earned at least a billion dollars each in compensation. We in the West like to laugh with condescension at so called “Russian Democracy”, which is really not a democracy at all, well the same can be said for the circus of billionaires who run “American Democracy”, their bizarre version in reality is actually somewhere between a plutocracy and a kleptocracy, all bought and paid for by big business, before anyone goes anywhere near a polling station. If there ever was any remaining doubt about this then we only have to look at the action taken during the global financial crisis in the States. This was all made possible thanks to Barack Obama. Look at his cabinet and how many men were from Wall Street. Look how much money he took from Wall Street during his campaign, even more than the Republicans, and yet he was charged with “sorting out the banks”. He and his cronies (Hillary Clinton took $600.000 from Goldman Sachs in speaking fees) were guilty of a shameless and blatant case of conflict of interest. What will history say about how Obama fared in comparison to the last people in charge during the last major crash?... Well during the depression of the 30s, Franklin D Roosevelt brought in a number of life- saving and transformative measures under the New Deal. One of the other measures the Democrats implemented was to create the Glass-Steagall legislation of 1933. This created a vital barrier between investment banking and commercial banking. This did a fine job, but it was slowly chipped away in the succeeding decades until Bill Clinton, another Democrat, destroyed it altogether at the end of 1999. So what did Obama do in comparison?...Well he bailed out companies like AIG, who closed its fourth quarter of 2008 with a loss of $61.7 billion, the largest in US corporate history. Though perhaps the most maddening and sickening factor, is while millions of Americans and others in many countries on many continents were losing their jobs, houses, savings and minds, the men responsible for it all, were not only not being prosecuted, but they were still in the same jobs. So not only did they perpetrate the greatest theft in the history of the world, but they got away with it too, as Tooze shows, “The bonus season in 2009 was better than ever, netting $145 billion for the executives at the top investment banks, asset managers and hedge funds, as compared with $117 billion in 2008. Goldman made $13.4 billion in profit for its shareholders and paid its own staff $16.2 billion in compensation and bonuses. Astonishingly, even Citigroup, which had a loss of $1.6 billion in 2009 and survived the year only due to government action, paid out $5 billion in bonuses.” Tooze’s explains at one point that, “All the most severe casualties of the 2008-09 crisis are to be found among the transition economies of the former Eastern bloc.” And apparently for a time in 2009 for the first time in the modern era the movement of the Chinese economy carried the entire world economy. He also elaborates on how countries impact on each other due to the flow of vast amounts of money running through one to another, through trade, borrowing and aid etc, and we see that that money was almost like blood tainted with a virus, which is why so many nations caught it and suffered the horrendous consequences. After a while the sums of money being thrown about begin to lose all meaning once you start getting into trillions it becomes abstract. It also shows us how much money is being kept by these global institutions and makes you wonder where it all comes from and who has to pay to give it to them in the first place. Later on he also gets into the origins and fallout of the Greece crisis, Putin’s invasion of Ukraine, Brexit and Trump as well as many other subjects. I did enjoy this but it was simply too long for my tastes. Although the text was accessible enough I couldn’t really say the same for the many graphs and charts scattered throughout, which I couldn’t always get my head round, though to be fair I did start to lose interest in them after a while. A lot of this has been written about many times before elsewhere. The structure didn’t always seem so assured. Tooze clearly knows his subject in depth and has done a phenomenal amount of research, and I certainly learned a lot, though unfortunately most of it was pretty depressing and merely confirms all the negative stereotypes attributed to leading politicians and the guardians of high finance.

  18. 4 out of 5

    Daniel

    There have been many books about Financial Crisis of 2008, and this is the most comprehensive. 1. Many factors caused the subprime crisis in America. Financial deregulation from faulty ideology, dividing of housing loans into small chunks to be packaged as an investment vehicle and then moving it out of the lending banks, China’s buying of Treasury notes, Bush senior’s push for house ownership, unscrupulous bankers who lies about borrower income, optimism about the Free Market’s ability to solve There have been many books about Financial Crisis of 2008, and this is the most comprehensive. 1. Many factors caused the subprime crisis in America. Financial deregulation from faulty ideology, dividing of housing loans into small chunks to be packaged as an investment vehicle and then moving it out of the lending banks, China’s buying of Treasury notes, Bush senior’s push for house ownership, unscrupulous bankers who lies about borrower income, optimism about the Free Market’s ability to solve all humankind problems, economists who cheered along, all contributed to the crash. 2. Most people were not aware of huge flow of money from Europe into the subprime market. Many middle eastern and some Chinese money go through Europe as well. Thus when the crash came, European banks also failed. After Lehman collapsed, the whole world lost confidence and it was only thanks to the heroic efforts of Paulson, Bernanke and Geithner that the bankers were saved. However, resistance was fierce from some Republicans and in the end Republican leaders with Democrats saved the day. That also meant that helping people who actually lost their homes were politically impossible. Meanwhile bankers continued to award themselves millions of bonus and none were punished. That would come back to haunt the Democrats in 2016. The Fed also extended swap-lines to help its friends in Europe, and some Asian countries including Singapore. That swap line had been extended until now and that is great help because it essentially guarantees that these countries will never run out of the greenback. I am very grateful to the Fed for that. Unfortunately most other countries were not lent this crucial lending hand; Eastern European countries were plunged into severe recession because they had to ask the scary IMF, which had shown devastating to countries that received their aid during the Asian Financial Crisis. It was also telling that when crisis struck, money left countries in trouble and went to America and Treasury. No matter what people say, the American dollar still reigns supreme. 3. When recession struck, at first European countries were oblivious to the swap line that the Fed had extended to their banks. Sarkozy pulled no punches especially. Then the recession pushed a lot of their counties into sovereign crises, Ireland, Greece and Portugal had to be rescued by the dreaded IMF and suffered the punishment of austerity which further increased their debt to GDP ratio. Unemployment in the PIIG countries reached 24%, and youth unemployment doubling that. The more qualified and adventurous youths migrated en mass out of those countries; I remember going to Ireland then and even the fashion magazine was describing the phenomenon of ‘your friends may go out of the country, but hey let’s just have fun anyway!’ This is going to go back to haunt them as well next time when those same working youths are needed to pay for the generous welfare state. Also all these austerity caused people to get angry and vote for extremist parties. Of note also was German insistence of not allowing Greek debt restructuring, even asking Russia and China to back off from helping it. 4. Russia doubled down, and was first saved by the high oil price. When oil price crashed from the fracking evolution, and sanction from America and Europe, Putin asked the oligarchs to help and it pulled through. 5. The Asian countries including China had learnt their lesson and built up loads of reserve so escaped relatively unscathed. 6. British people were also sick of the rich Londoners that was responsible for the crisis, cheated (LIBOR), yet get richer and richer. This together with the fear of mass migration of Eastern Europeans, Brexit happened and it looks like it is going to be a hard exit. Funny that some in the UK now wants to be the ‘Singapore’ of Europe; however Singapore is located at the strategic Strait of Malacca: Not many shipping pass through the UK.... 7. And then there is Trump, who was adept at directing public anger and xenophobia towards his election. He is going to put America first, other countries be damned. We will witness the effects of his tariffs soon enough. 8. China was rocked by the unwinding of the 3 QEs. Money now flows back to America and all the developing countries are under stress as money leaves them back to US. China fortunately managed to severely restrict money flowing out while stimulating the economy and exporting its manufacturing capacity by the Belt and Road initiative. Amazingly Xi now holds the bastion of globalisation and free trade!

  19. 4 out of 5

    Charles

    This is an impressive, must-read account of how financial crisis spread from the US in 2007/2008 to become a worldwide crisis enveloping Europe, Asia, the Middle East and Latin America over the following decade. The world has become financially interdependent in a way that challenges our global institutions and indeed our imagination. The linkages of debt and monetary policy are worldwide in scope but the policy instruments to address problems are parochial and nationalistic. Author Adam Tooze ha This is an impressive, must-read account of how financial crisis spread from the US in 2007/2008 to become a worldwide crisis enveloping Europe, Asia, the Middle East and Latin America over the following decade. The world has become financially interdependent in a way that challenges our global institutions and indeed our imagination. The linkages of debt and monetary policy are worldwide in scope but the policy instruments to address problems are parochial and nationalistic. Author Adam Tooze has chronicled the debates among policy makers at the Fed, the Treasury, the FDIC and the Administration as the US markets came close to collapse in 2008. But what sets this book apart is the sweep and detail as the ripple effects are felt in the next decade around the world. Reviewers, including those who have posted on this site, have been laudatory or critical depending upon their own economic and political views. But this book is worth reading no matter whether or not you agree with Tooze’s economic viewpoint. That’s because the author’s factual account of what did happen provides the basis for a thoughtful debate about what policy makers could have done instead and how we should address the next global crisis that inevitably will arise at some point. As the financial crisis of 2008 rippled out from the US, Tooze provides an insider’s peek at the debates arising among Central bankers, Ministers of Finance, and heads of multilateral organizations charged with preserving financial stability. The book contains numerous tables to illustrate the uneven way that economies around the world were affected, some such as Greece, Spain, Italy, and the Ukraine subject to particular political crisis with unemployment soaring as high as 40%. Overall, the deadlock within the EU drove tens of millions of citizens in the Eurozone into a 1930s style depression. What, if anything, could have been done differently to reduce the impact of this crisis? Tooze has a point of view, which is Keynsian, and he lays out his arguments. At times his rhetoric could have been a good deal less polemical, so as not to derail readers who disagree. That’s because his research into what actually occurred is comprehensive and factual. Some of Tooze’s observations: Common denominator of the crisis globally: an over-leveraged financial system. If the distribution of costs and benefits was “outrageous”, at least American crisis management worked. Unlike the US, where the Fed mandate was price stability and maximum employment, the Europeans (particularly the Germans) focused on price stability alone, creating unnecessary suffering. The Fed had the advantage of the dollar as the world’s reserve currency and its bailout extended to European banks (a fact they kept hidden from US taxpayers). Obama should have instituted a $1.7 trillion program of homeowner relief, but that was judged politically impossible. Yet executive CEO bonuses at US banks and other financial institutions rose to $145 billion in 2010 vs. $117 billion in 2008. Trump voters weren’t so much affected by unemployment during the crisis as made fearful of the future. This influenced their vote in 2016. We now face the global economic risk of an overheated Chinese economy. There is little reason to be complacent about the ability of national and multinational institutions to address the next crisis. This is not an easy book to read, even for those with some economic and financial background. It would have been helpful to have a glossary of the many acronyms used by Tooze throughout the book. It would also have been useful to have a reference list of the individuals who influenced decisions during the decade. Whatever your economic philosophy, there is reason to be concerned about the current US political climate of contempt for national and international institutions that can address financial crises. In Tooze’s telling (and that of Timothy Geithner in his memoir “Stress Test”) central bankers and finance ministers must have the authority to act quickly and to adjust quickly in a true financial crisis. Certainly as the 2008 crisis unfolded, the Fed and Treasury didn’t have time for a lengthy debate with Congress or the White House about specific actions. In our current politically polarized climate, a particular worry is the possibility of Fed and Treasury paralysis during the next crisis. US leadership prevented the global crises of the last decade from becoming worse, and that leadership is now in some doubt going forward.

  20. 5 out of 5

    Wim

    It takes courage to start reading this massive book. It takes more courage to continue in spite of the detailed descriptions of financial instruments en mechanisms, complex for reading lacking in depth financial knowledge as I do. But it is worthwhile: this book is tremendously insightful. I have learned so many things through reading this book. It showed how little I understood before, of the financial crisis and the efforts to containment and stabilisation, on the euro crisis and the painful ro It takes courage to start reading this massive book. It takes more courage to continue in spite of the detailed descriptions of financial instruments en mechanisms, complex for reading lacking in depth financial knowledge as I do. But it is worthwhile: this book is tremendously insightful. I have learned so many things through reading this book. It showed how little I understood before, of the financial crisis and the efforts to containment and stabilisation, on the euro crisis and the painful role Germany played in not wanting to adopt the necessary remedies, on the links between these and other global events and on the political consequences, the rise of 'populism' and the logic behind Brexit and Trump's election. Recommended reading.

  21. 5 out of 5

    Joe Bambridge

    Crashed is a truly monumental intellectual feat, and Tooze deserves great credit for producing what is to date one of the most comprehensive accounts of the financial crisis, it’s causes, and political fall out. It lacks certain aspects to its analysis, particularly in the second half of the book, to call it truly definitive - see here Durand’s review of Crashed in the NLR - but it certainly sets a marker for any future work on the crisis. This is a narrative of a crisis of financial capitalism, Crashed is a truly monumental intellectual feat, and Tooze deserves great credit for producing what is to date one of the most comprehensive accounts of the financial crisis, it’s causes, and political fall out. It lacks certain aspects to its analysis, particularly in the second half of the book, to call it truly definitive - see here Durand’s review of Crashed in the NLR - but it certainly sets a marker for any future work on the crisis. This is a narrative of a crisis of financial capitalism, but if Tooze is seeking to make a point it is that politics - and geopolitics- matter. This may sound obvious, but at the height of the great moderation many prominent elites were arguing that the markets, not politicians, ran the show. Little did they realise that the next crisis would start in financial markets themselves, where banks had come to rely on a highly-leveraged short-term funding model built on instruments derived from the mortgages of millions of American families who had signed up to them under illusion of guaranteed gains. As this system came to a sudden halt, politicians and central bankers were forced to step in and put out the fires. But success depended on who these people were, their ideologies, the political capital they had, and the geopolitical might they had behind them. Elites in the US could capitalise on the Fed’s position as printer of global currency to save their banks and inject stimulus. China too, through its nexus of party, state, and corporate elite, engineered a response. Between these two, a total collapse was averted. But in the E.U., division and conservative dogma among key players, including Merkel and the ECB, delayed a concerted response and saw Eastern Europe and the periphery states abandoned. The book is full of fascinating insights, particularly on the less well known but incredibly damaging role played by Merkel&co and the ECB in prolonging the crisis. And, although it sounds ridiculous to suggest, it’s also a useful corrective to analyses which fail to view current crises in their full historical context: before Brexit, the collapse of the UK’s credit-fuelled, property-based model and the role of experts in bailing out the banks rather than the public; before Trump, the foreclosure of millions of homes across the United States; before Orban, the IMF interventions in Hungary and Poland; a sudden reversal in Russian living standards; China’s massive stimulus programme, which rebuilt its cities and invested in technology and allowed the Communist Party to assert its strength. Tooze also makes reference to some of the revisions in macro-economics that have occurred since the crisis. But he only touches the surface in terms of trying to understand the prolonged malaise of western economies. Obviously, governments which inflicted cutting austerity following the sharpest recession in nearly a century didn’t help. But while Tooze accounts for the dealings between elites that was occurring then with great clarity, he only rarely ventures in to a more structural analysis or attempts to explain how the tensions between the economic and political sphere are transmitted and how they interact with the ‘real economy’ experienced by working class people. This is not an easy read if you don’t have a background in finance or macro economics. But in itself, that says something about the our present historical moment. If Tooze is correct that ‘history’ is increasingly located in the interventions made by political actors on flows of global capital, what does that mean for the orientation of the left? I don’t think MMT is the answer but monetary politics will increasingly be the ground on which we need to fight. Crashed will be essential reading on this front.

  22. 5 out of 5

    Jordan

    This book is extremely dense, but I never thought it was dry, as long as you know what you’re signing yourself up for because it really goes DEEP into the international implications of the recession. Having no library due date would have been helpful because I needed to look up quite a few things while reading to fully understand what was going on, and even then, I’m sure I still missed a lot. Still it was really good, if you’re into this sort of thing! The final questions the book leaves off on This book is extremely dense, but I never thought it was dry, as long as you know what you’re signing yourself up for because it really goes DEEP into the international implications of the recession. Having no library due date would have been helpful because I needed to look up quite a few things while reading to fully understand what was going on, and even then, I’m sure I still missed a lot. Still it was really good, if you’re into this sort of thing! The final questions the book leaves off on are great, and I noted a few other excerpts that I found most interesting: - - - “Did the all-our focus on the financial system really serve the interests of the real economy? Was the inability to borrow causing a failure of investment and thus the ongoing depression? Or were the collapsed housing market and cash-strapped households curtailing economic activity such that there was no incentive to invest and thus no demand for loans? These might seem like academic questions. The bomb was ticketing. The car was hurtling off the bridge. Amid a global catastrophe, did it really matter which way the arrow of causation was pointing? Amid the intensity of the financial crisis, why should anybody care? Because the decision made by the American crisis fighters to take those questions off the table and to give absolute priority to saving the financial system shaped everything else that followed[...] whereas since the 1970s the incessant mantra of the spokespeople of the financial industry had been free markets and light touch regulation, what they were now demanding was the mobilization of all of the resources of the state to save society’s financial infrastructure from a threat of systemic implosion, a threat they likened to a military emergency.” (165) “Clearly, Wall Street enjoyed a privileged connection to government. After 2008 no one could doubt that[...] Silicon Valley was the new cutting edge of American capitalism. Big Pharma continued to take in profits[...] As the recession of 2008-2009 receded, what came ever more to the fore was a tendency toward concentration and oligopoly that went far beyond Wall Street[...] ‘Americans mythologize competition and credit it with saving us from socialist bread lines,” but [Peter] Thiel knew better. As far as he was concerned, ‘[C]apitalism and competition are opposites. Capitalism is premised on the accumulation of capital, but under perfect competition, all profits get competed away. The lesson for entrepreneurs is clear... [c]ompetition is for losers.’” (462) “The political in ‘political economy’ demands to be taken seriously[...] We suspect technocratic preemption and usurpation around every corner and often with good reason. There are ways of describing the operations of these systems that void the presence of politics. But if history such as this has any purpose, it is to reveal the poverty of such accounts. Political choice, ideology and agency are everywhere across this narrative with highly consequential results, not merely disturbing factors but as vital reactions to the huge volatility and contingency generated by the malfunctioning of the giant ‘systems’ and ‘machines’ and apparatuses of financial engineering.” (615)

  23. 5 out of 5

    James Meanwell

    An excellent work of modern political economy. Adam Tooze covers the antecedents, effects, and fallout of the Global Financial Crisis (GFC), through to the electoral turmoil troubling America and Europe in recent years. There is an enormous amount covered in the book, including the US and European response to the crisis; the fallout on smaller countries incidentally exposed to the crises (e.g. Ireland, Greece, Hungary); the political responses sought and required; the centrality of finance to th An excellent work of modern political economy. Adam Tooze covers the antecedents, effects, and fallout of the Global Financial Crisis (GFC), through to the electoral turmoil troubling America and Europe in recent years. There is an enormous amount covered in the book, including the US and European response to the crisis; the fallout on smaller countries incidentally exposed to the crises (e.g. Ireland, Greece, Hungary); the political responses sought and required; the centrality of finance to these political considerations; and the many failures of policy, too (especially on the European’s part). So it’s very hard to summarize, but I’ll briefly discuss what I think is new, and an enormously valuable contribution. Tooze’s goes to an enormous amount of trouble to link the economic/financial and political causes and effects of the GFC across multiple world regions. He explains how global finance has flowed through the US and Europe’s mega-banks, in ways that dragged Europe down in 2008, and contributed to the European sovereign debt crises from 2010. He shows how the emergence of China played a role, and the very different responses and outcomes of policy in that country. He also spends quite some time discussing Russia’s position on the periphery of all of these developments. I was not previously aware of how much of the initial impact of the GFC came from European banks’ reliance on short term dollar funding. The fact that the Crisis emanated from the US, and yet US Treasury bond rates *fell* and the US exchange rate *appreciated* is somewhat puzzling, but this makes perfect sense when one considers how reliant Europe’s (and especially London’s) banking sector was on US dollar borrowing. From 2008, these banks needed *more* US dollars to pay off enormous loans that were quickly coming due. The Federal Reserve System in the US tried to help stabilize the global economy by setting up enormous currency swap lines with those European countries most heavily exposed to the dollar, and these lines were again used throughout the European crisis. These facts help explain that while the US dollar might have seemed on the brink of losing its dominant currency status prior to 2008 (perhaps to the Euro or the Yuan), its position was massively reinforced by continuing need for funding, and the continuing weakness of non-US bank balance sheets. Indeed, Europe might have weaned itself off dollar-dependence at the same time as strengthening the Euro if it had worked co-operatively to recapitalize banks early on. Tooze makes a pretty convincing case that the failure to do this is almost entirely down to Germany’s reluctance to embrace a European banking union or activist monetary policy on behalf of the ECB. Tooze contrasts this with the (relative) success of US government bank bailouts and the massively monetary stimulus provided by the Fed in the form of the quantitative easing programs. Overall, an excellent book. Can not recommend it enough. An absolute must-read for social scientists or any general students of the Global Financial Crisis.

  24. 5 out of 5

    Anders

    This is one of those rare books that genuinely deserves those breathless blurbs slapped onto bestsellers: "Stunning", "monumental", "insights on every page." Most of us have the wrong idea about the financial crises of the past decade, and those responsible for the havoc are completely fine with that. The 2008 global crisis wasn't merely the outcome of Wall Street bankers (deeply irresponsible as they were) unloading American-style 'cowboy capitalism' on the rest of the world, but the product of This is one of those rare books that genuinely deserves those breathless blurbs slapped onto bestsellers: "Stunning", "monumental", "insights on every page." Most of us have the wrong idea about the financial crises of the past decade, and those responsible for the havoc are completely fine with that. The 2008 global crisis wasn't merely the outcome of Wall Street bankers (deeply irresponsible as they were) unloading American-style 'cowboy capitalism' on the rest of the world, but the product of a hugely overgrown, unstable transatlantic system of financial flows in which European financiers and politicians were deeply complicit. The Euro crisis was not the product of 'lazy Greeks' who couldn't pay off their debts, but an ugly, unedifying outgrowth of self-limiting post-Lisbon EU politics, in which Germany was never quite ready to take on leadership, but equally unwilling to let others follow any other path than German-style austerity. Tooze's training and skill as an economic historian allow him to incisively spell out how the economic disasters of the past decade are deeply interwoven with politics as well as national and personal prejudice at every turn. The grace with hich he guides the reader through the intricacies of Chinese provincial budgets, Wall Street machinations in the US Congress, German centre-right politicking, and everything in between is unlike anything I have seen elsewhere. At the same time, he does not shy away from a level of technical detail at which many historians would baulk. Although this would normally make it heavy going for readers with little or no economics background, the clarity, thoroughness and well-founded moral outrage of his argumentation add up to an electrifying read. The combination of 'following the money' through a confusing financialized world with an insistence on the situated, politicized and personalized character of decision-making is the singular strength of this work, which comes highly recommended to anyone who prefers not to be hoodwinked through the next crisis.

  25. 4 out of 5

    Mike Clarke

    Euro bottom dollar: is globalisation beyond politics? Probably not, argues Adam Tooze in this bonkbuster for economists which is by turns, thrilling, terrifying and torrid. Trump, of course, is part of the answer but so too is Bretton-Woods and the great bail-out for which we are all still paying. Money is a political construct. Brexit? Even though he’s a Brit, it’s a sideshow - “the UK’s effort to ‘take back control’ does not mean everyone else has to fall into line” - although there’s a hair-r Euro bottom dollar: is globalisation beyond politics? Probably not, argues Adam Tooze in this bonkbuster for economists which is by turns, thrilling, terrifying and torrid. Trump, of course, is part of the answer but so too is Bretton-Woods and the great bail-out for which we are all still paying. Money is a political construct. Brexit? Even though he’s a Brit, it’s a sideshow - “the UK’s effort to ‘take back control’ does not mean everyone else has to fall into line” - although there’s a hair-raising detour into how it all could go horribly wrong. And the verdict on Boy Georgia and Dave ‘David’ Cameron’s austerity? En passant: “Britain became a darker, dirtier, less civilised and more dangerous place.” Cheers, guys. Ultimately though, you gotta have hope as we would seem to have been here before - time after time. It’d be nice to get off the rollercoaster one day, though....

  26. 4 out of 5

    David Dayen

    I didn't think there was a lot more to say about the financial crisis, but Tooze fills his book with interesting and new insights on practically every page. The historical distance serves him well here. U.S. reviewers have harped on the one thing that makes domestic policymakers look good - the use of currency swap lines to save foreign countries from ruin - but that's a sliver of the book, and much of the rest is a long indictment against those who facilitated the crisis through deregulation, n I didn't think there was a lot more to say about the financial crisis, but Tooze fills his book with interesting and new insights on practically every page. The historical distance serves him well here. U.S. reviewers have harped on the one thing that makes domestic policymakers look good - the use of currency swap lines to save foreign countries from ruin - but that's a sliver of the book, and much of the rest is a long indictment against those who facilitated the crisis through deregulation, never saw its mounting dangers, and determined to protect the banks at all costs at the expense of the rest of the public. The book also sets the stage for how this decision had consequences, both politically and socially. A masterwork.

  27. 4 out of 5

    John Mihelic

    having read dozens of books on the financial crisis, and dozens more that touch on it tangentially, Tooze here puts out one of the best. Many of the books that dealt with the crisis were in the first three or four years, so what Tooze benefits here is from some deep reporting but more from the benefit of time. He is able to link the crisis in the North Atlantic with the Euro crisis of several years later and then draw a line that comes with the Brexit vote and the election of Donald Trump. The h having read dozens of books on the financial crisis, and dozens more that touch on it tangentially, Tooze here puts out one of the best. Many of the books that dealt with the crisis were in the first three or four years, so what Tooze benefits here is from some deep reporting but more from the benefit of time. He is able to link the crisis in the North Atlantic with the Euro crisis of several years later and then draw a line that comes with the Brexit vote and the election of Donald Trump. The hope is that this move to populism is the last chapter in the crisis, but history doesn't end, it keeps moving.

  28. 5 out of 5

    Lance L

    Take some of the points and conclusions of Matt Taibbi, and get to them by way of a very extended Paul Krugman "Wonky" column and you get something close to this book. It should absolutely NOT be the first book one reads on the subject of the 2008 financial crisis and its aftermath - it is far too inside baseball for that. But, it does add a lot of detail, context and some excellent analysis of the interrelation of the Eurozone crisis, the 2008 crisis, and the fallout of Brexit, Trump and (maybe Take some of the points and conclusions of Matt Taibbi, and get to them by way of a very extended Paul Krugman "Wonky" column and you get something close to this book. It should absolutely NOT be the first book one reads on the subject of the 2008 financial crisis and its aftermath - it is far too inside baseball for that. But, it does add a lot of detail, context and some excellent analysis of the interrelation of the Eurozone crisis, the 2008 crisis, and the fallout of Brexit, Trump and (maybe a bit less convincingly) Ukraine. A damn fine addition to the literature of the global financial meltdown.

  29. 4 out of 5

    Frederico

    This was perhaps the best nonfiction book I've read to understand the current times. The author traces an arc from the 2008 financial crisis to Brexit and Trump. If anything, the book encompasses too much - I've learned hot to better understand the politics in the Ukraine, for example. I filled the book with highlights for future reference. And the future looms dire indeed.

  30. 4 out of 5

    Nathan

    It'd be hard not to be a tiny bit repetitive over such a long book. Nevertheless, this is an extremely well written and comprehensive outlining of the financial disaster. Particular emphasis is accorded to the aftermath and how it continues to reverberate and has brought us to this disastrous political situation.

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