One of the author’s previous books, Wages of Destruction previously reviewed, was an outstanding look at the financial world of the Third Reich and how Hitler’s world view and understanding of the strength of the U.S. economy impacted on his decision regarding going to war. In this massive (almost 700 page) work, the author looks at an even more complex problem, the financial crash of 2007-8 and the later one in Europe. As one can imagine, this is not a light work, the excellent descriptions of many of the financial vehicles invented by the banks and regulators can be mind numbing. Not a book to be read lightly, to grasp the complexity of what is written would require a flow chart that would make the invasion of Normandy look like a plaything. It is because of this complexity that no one at any level could understand, regulate or formulate a strategy to contain the forces that had been let lose several years before the crash. It is in this area that this book fails for while being critical of the banks (worldwide) and fawning over President Obama, he manages to cover in a couple of sentences the role of the politicians (especially President Clinton) and the authors favorite financial advisors (Rubin and Summers) for their roles in passing the Financial Services Modernization Act of 1999 and the easy housing policies of HUD and Andrew Cuomo which led to the housing bubble.
Reading between the lines of this book, one sees that:
- U.S. Bankers are not stupid, and they realized that the government encouraged, poor credit bank loans needed to be taken off their books and shoved off onto someone else,
- European bankers were eager to capitalize on the U.S. housing market by over leveraging their assets
- Business and individual greed along with government distortion of the traditional rules of banking led to a disaster
In some ways, this book could easily be titled, “How the U.S. Saved Europe for the Third Time in the Twentieth Century”. While the results of the crash were terrible in some areas of the U.S., we had the ability to survive it; it was not true for Europe and in fact, U.S. taxpayers never realized that over 50% of bank bailout money went to European banks, without which few would have survived the Europe would have gone straight into depression. Although the Europeans like to blame the financial problems on the U.S., the Europeans managed to create many of their own problems by their own rules and regulations which fed into the desire for quick profits and, on the government side, higher taxes. It was the ability of the U.S. to raise and distribute the funds to maintain markets in a timely manner that saved the day.
This book can be an interesting read if you commit to reading it more than once, for the information is as technical and twisted as modern-day economics is today. Brush aside his adoration of Obama (and his blistering attack, in an entire chapter, on Trump who had nothing to do with the crisis) and you have an excellent, in depth analysis of the financial crisis during the period 2007-2012. I recommend this book with the caveat that it requires time, patience and a strong grip to hold this book.
