Book of the week
Crashed: How a Decade of Financial Crises Changed the World
Ten years on, the global financial crisis that erupted in 2008 is not yet over, said Marc Levinson in The Wall Street Journal. In a book that “rewrites the conventional history of a tumultuous decade,” British historian Adam Tooze argues that the upheaval created by the crash and by various government responses to it is still spreading pain and rattling the global order. “Even people who have followed this story closely will learn a great deal,” said Martin Wolf in the Financial Times. Tooze, who teaches at Columbia University, shows that the crisis was never purely American-made, though the collapse of the U.S. subprime mortgage industry triggered it. Europe’s financial institutions had bet on the same suspect mortgage-backed securities, and though banks on both shores were rescued, citizens’ trust in economic liberalism couldn’t be salvaged. “The crisis has, alas, awoken the sleeping giants of fear and hatred.”
The rescue itself “worked better than almost anyone imagined,” said Fareed Zakaria in The New York Times. Though the global economy nearly stopped dead, no second Great Depression followed, because Washington, largely through the Federal Reserve’s generosity with credit, bailed out banks both here and in Europe. Crashed deftly covers the policy wrangling; “if journalism is the first draft of history, Tooze’s book is the second draft.” The author heaps scorn on the delayed and misguided response of Europe’s leaders, who, rather than blaming reckless banks, blamed government overspending and slapped Greece, Spain, and others with austerity measures that prolonged citizens’ suffering and fueled the rise of far-right movements. Regarding President Obama, Tooze is “quietly scathing,” said Jennifer Szalai, also in the Times. Though Obama’s centrist approach saved the U.S. economy, it, too, privileged bankers, and struggling wage earners saw that. The perceived betrayal tore “a ragged hole” in the social fabric that Donald Trump has since exploited.
Tooze has almost too much to say about the crisis and its aftermath, said Jonathan Kirshner in the Los Angeles Review of Books. “There is a great book lurking within the widely separated covers that hold this one together,” but the 600-page work buries its sharpest insights in “an avalanche of details.” The insights are there, though, and they’re sobering, said The Economist. For one, the finance sector is as highly leveraged and nearly as under-regulated as ever. For another, because the centrists have been chased from office, the cooperation that saved Western economies in 2008 “may not be easy to achieve next time around.”