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- How a Decade of Financial Crises Changed the World
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B+ : impressive, exhaustive look at 2008-18 financial crises
See our review for fuller assessment.
From the Reviews:
- "Tomorrow’s chroniclers will be grateful for Mr Tooze’s assiduous research. He leaves no mortgage-backed security uncovered, no collateralised debt obligation unexamined in his effort to produce the most comprehensive account of this complex and gripping subject. The general reader might find it a bit of a slog. It is not that the author cannot see the wood for the trees, more that the forest is so large and dark that it is easy to get lost." - The Economist
- "Crashed gives readers a detailed and superbly researched account of the origins and consequences of the wave of financial crises that emanated from the core of the global financial system from 2007. The prose is clear. The scholarship remarkable. Even people who have followed this story closely will learn a great deal.
" - Martin Wolf, Financial Times
- "Crashed: How a Decade of Financial Crisis Changed the World combines simple explanations of complex financial concepts with a majestic narrative tracing the prehistory and destructive path of the crisis across the planet (including long, apt and erudite chapters on Russia, the former Soviet satellites, China and south-east Asia). It also offers original insights into the nature of the wounded beast (financialised capitalism)." - Yanis Varoufakis, The Guardian
- "In Crashed, Adam Tooze sets himself the mammoth task of making sense of the Global Financial Crisis (GFC) and its consequences over the last ten years. By and large he succeeds brilliantly. (...) Sometimes the detail Tooze gives of how decisions were made during the crisis is fascinating even to someone familiar with these events. (...) The geopolitical scope of this book is remarkable." - Simon Wren-Lewis, London Review of Books
- "Adam Tooze’s greatest achievement in his new book is to chronicle what actually happened before, during and in the long aftermath of the biggest financial crash of our lifetimes. It sounds simple but it is radical. (...) Crashed is already being described as a "landmark" work. It deserves that accolade and others for its ambition and its construction of a financial-political history. What qualms I have about it lie in its status as a contemporary history." - Aditya Chakrabortty, New Statemsan
- "There have been hundreds of illuminating books on the great financial collapse. Crashed, written to mark its tenth anniversary, will stand for a long time as the authoritative account. In his masterful narrative, the economic historian Adam Tooze achieves several things that no other single author has quite accomplished. (...) Tooze excels at explaining the byzantine political bargaining that led to policy compromises that avoided outright depression but stifled the European economy. (...) Crashed does have some minor blemishes. One is its structure. Tooze generally proceeds chronologically. For the most part, this strategy works. However, because he picks up, drops, and then resumes several important subplots (...) the text occasionally loops back on itself (.....) Conversely, there are some aspects of the story that are omitted or glossed over." - Robert Kuttner, The New York Review of Books
- "Brexit, Trump, Russia’s annexation of Crimea in 2014 and China’s ever-escalating role in the financial system: Tooze covers them all and much more, in a volume that’s as lively as it is long -- which is to say very, on both counts. (...) One of the great virtues of this bravura work of economic history is how much attention it devotes to issues of power." - Jennifer Szalai, The New York Times
- "If journalism is the first rough draft of history, Tooze’s book is the second draft. A distinguished scholar with a deep grasp of financial markets, Tooze knows that it is a challenge to gain perspective on events when they have not yet played out. (...) One of the great strengths of Tooze’s book is to demonstrate the deeply intertwined nature of the European and American financial systems." - Fareed Zakaria, The New York Times Book Review
- "Tooze does a competent job of guiding readers through the toxic alphabet soup of mortgage-based products that Wall Street cooked up: M.B.S.s, C.D.O.s, C.D.S.s, and so on. (...) But the great merit of Tooze’s tome -- it runs to more than seven hundred pages -- is its global perspective." - John Cassidy, The New Yorker
- "(A) sweeping examination of the global effects of America’s enthusiasm for subprime mortgages. In the process, he rewrites the conventional history of a tumultuous decade and reconsiders the roots of a crisis that is still under way. (...) At times, Mr. Tooze lets his outrage get the better of him. (...) Nonetheless, Mr. Tooze has written a valuable book about the challenges of managing a tightly connected world economy." - Marc Levinson, Wall Street Journal
- "Crashed is an impressive narrative history, weaving together events from around the world with a light touch and a great deal of helpful explanation. Sometimes it feels like Tooze has read every official working paper, memoir and substantive news article on macroeconomics and finance over the past decade. Even for readers who have attempted to follow the twists and turns of events, Tooze adds significant value. (...) Tooze moves back and forth across the Atlantic better than anyone, and he is extremely good on how the Europeans constructed large banks and allowed them to become so leveraged (.....) For some readers, this global scope might feel a bit distracting, and sometimes the sequence in Tooze’s rendition can be confusing" - Simon Johnson, The Washington Post
Please note that these ratings solely represent the complete review's biased interpretation and subjective opinion of the actual reviews and do not claim to accurately reflect or represent the views of the reviewers.
Similarly the illustrative quotes chosen here are merely those the complete review subjectively believes represent the tenor and judgment of the review as a whole. We acknowledge (and remind and warn you) that they may, in fact, be entirely unrepresentative of the actual reviews by any other measure.
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The complete review's Review:
In Crashed Adam Tooze looks at the causes and effects of the (US-focused) 2008 financial crisis, and those that followed it, arguing that rather than separate, discrete crises they are all of a (massive) piece in an economic system whose global interconnectedness played a significant role in both their unfolding and how they could be addressed (as to say they were 'fixed' or 'solved' seems an oversimplification ...).
It is a detailed historical-economic chronicle of the events that also pays particular attention to the political forces that influenced and determined many of the (re)actions, as well as the political consequences of the crises and how they were handled (including the coming to power of politicians embracing populist rhetoric -- yes, the penultimate chapter is simply titled (and focuses on): 'Trump').
Tooze's account of the crises and how they unfolded is an impressive balancing act of detail and larger-picture-overview, and particularly helpful in its broad perspective.
The crises are recent enough that most readers likely remember the day-to-day reporting, focused on the flare-up du jour, often very localized; Tooze of course does point to and track these too but consistently also steps back to show the connections to events elsewhere, as well as those previous -- and coming/looming.
Though necessarily localized -- the crises most acute in, and reaction to them led from, the United States and Europe -- Tooze also looks beyond, especially to a China whose role in the international economy has become significantly larger (and which faced some significant economic turmoil of its own during this span); he points out that pre-crisis, American worries already centered on the "Sino-American imbalance" (a huge US deficit coupled by vast Chinese dollar-holdings (in various forms, notably treasuries)), a potential crisis which: "was contained in 2008 because there were deep interest engaged on both side and because it was handled as a matter of top priority by both Washington and Beijing" -- but, as he reminds readers: "Ten years on, the scenario still hangs over the world economy", just one of many examples of dangerous situations that have not been adequately addressed.
He also repeatedly notes how the treatment of especially Europe by the relevant international institutions (specifically the IMF) was of a generosity and deference that countries elsewhere are unlikely to have enjoyed .....
Crashed does usefully track how the crises unfolded and were dealt with, with Tooze largely managing to avoid bogging down his narrative in the day-to-day (mis/)steps.
Still, given the many moving pieces (and actors) and constant (and often extreme) flux, it is a slippery and at times overwhelming narrative.
He does, however, step far enough back to give a good sense of the larger forces at work and longer-term failures -- such as the agonizing inability to confront the relatively tiny Greek situation head-on and just deal with it, opting instead for what he calls the (inevitably hopeless): "extend-and-pretend" approach.
Tooze is very good on how local national politics shaped (re)actions, from a jr. Bush administration that, surprisingly much like Trump, was suspicious of multi-national institutions and reliance on them and preferred dealing with nations directly, to a an Obama administration that was (perhaps overly) cautious in its initial reactions, well aware of the political ramifications, and then hamstrung by a Republican party that allowed its fringe elements outsized influence.
The strong and very independent -- though not as independent as they actually first shot for -- actions of the Fed make for an interesting twin-track reaction by the US.
Meanwhile, there are fascinating portraits of the European actors, especially in how they evolved -- most notably the big survivor, Angela Merkel, but also figures who were at the fore at significant times, like Nicolas Sarkozy (who really liked putting himself at the fore).
As Tooze repeatedly notes, many of the factors that were so significant in the crises were ones of vast amounts of money (or equivalents) sloshing around a very interdependent global banking system.
While the parts that are generally focused on are significant -- America's bad mortgages; an indebted Greek (and Italian, Spanish, Portuguese, etc.) economy -- these were, in a sense, manageable; the real crises were in the spillover effects: a banking system that threatened to choke to a halt because of the domino effects of outstanding liabilities, an incredibly overbanked Europe with liabilities dwarfing national economies -- and no mechanisms in place to deal with potential (and then very real) crises.
As Tooze notes, with private money markets seizing up what saved the day was the Fed's stopgap liquidity flood:
It was historically unprecedented, spectacular in scale and almost entirely unheralded.
It transformed what we imagine to be the relationship between financial systems and national currencies.
Tooze also points to the harm of European delay, specifically in the European Central Bank so long staying out of parts of the fray by claiming powerlessness, its mandate one only of price stability (which held up pretty well throughout ...):
It was a willfully simplistic and conservative interpretation.
It was ruinous for the eurozone.
The crisis would begin to be overcome only when the ECB began to step beyond it.
Yet as he also notes, merely eventually getting one thing right didn't lead to solving some of the other outstanding problems, such as the Greek one:
The perverse effect of the ECB's "liberating" move to QE was that it allowed extend-and-pretend and its concomitant, relentless austerity, to continue.
It's fascinating to see the large-scale economic ramifications, with Tooze usefully noting in particular the role of private institutional actors (rather than just national ones) -- and across borders, as, for example:
The banks most actively involved in QE2 were not American but European, running down their US securities portfolios and building up Fed cash balances.
Tooze constantly follows the flow of money -- so dangerous when it moves too quickly in or out of one specific area, as it can in the contemporary system -- and the pressure it exerts in seeking out returns, including the sometimes perverse incentives this leads to.
In a world awash with money, he also points to failures to take advantage of it for the broader economies: that austerity-policies were misguided seems now largely accepted (even as the practice, in some forms, still continues ...), while for all the American stimulus, for example, the (mis)allocation/prioritization of where the money went has limited the potential larger benefits to the American economy (and population) -- not to mention the failures of the anything-but-trickle-down tax reductions of the jr.Bush and, more recently, Trump administrations (including their dangerous deficit-ballooning consequences).
Finally, Tooze also follows the political changes the crises have contributed to, notably the populist-rhetoric-turn that has proved so successful, especially in eastern Europe and culminating in the disasters of the Brexit vote and the election of Donald Trump.
Devoting a whole chapter to the early Trump administration, Tooze can already point to several actions that seem ... unwise, given recent history, notably the ridiculous tax cut and re-liberalization of the financial industry, but even beyond specific policy actions, the truly terrifying fact remains that so little has been done anywhere -- in the US, Europe, or among international institutions -- to address potential coming crises, whether repeat performances of the recent ones, or entirely new ones.
(He also discusses the in-process Brexit-efforts, noting the obvious problems this unfathomable foolishness presents, now unfolding before our eyes.)
The world sort of got through the latest series of connected financial crises, but seems no better positioned to address future ones.
Crashed is more history-text than policy-argument, but Tooze does, to some extent, suggest what worked and what didn't -- and why --, and, especially, what continues to be worrisome (a lot ...).
At times, the book can seem overwhelming, in the rush of all of that he tries to present, but overall it is remarkably clear and covers a great deal -- including the more peripheral but still significant roles of China and Russia (including how both nations adapted during and after their own crises, as well as their roles in the external ones).
Crashed usefully shows just how interconnected not only the global economy is, but especially the financial system -- and how vulnerable, in many ways, it is, too.
A very good -- and very readable -- account of recent global economics, finance, and politics, with considerable food for thought (and for a great deal of concern ...).
- M.A.Orthofer, 9 August 2018
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Other books by Adam Tooze under review:
Other books of interest under review:
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About the Author:
British historian Adam Tooze teaches at Columbia University.
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© 2018 the complete review
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