In Crashed: How a Decade of Financial Crises Changed the World (Amazon,) Adam Tooze gives us a chronological, blow-by-blow account of the 2008 Global Financial Crisis (GFC) and its after-effects.
As a financial history buff, I found the book fascinating, albeit a tad tedious with the details. It also reinforced my belief that you cannot take the politics out of the political-economy – i.e., the study of economics cannot be divorced from politics.
With prices accelerating toward annual increases of 14 percent in 1979, Volcker and the Fed decided that it was time to apply the brakes.
In June 1981 the prime lending rate touched 21 percent.
The result was to send a shuddering shock through both the American and the global economies. The dollar surged, as did unemployment. Inflation collapsed from 14.8 percent in March 1980 to 3 percent by 1983. In Britain this was the crisis with which the Thatcher government began. In Germany it would contribute to Schmidt’s unseating and his replacement by the conservative government of Helmut Kohl. France’s Socialist government under President François Mitterrand would be forced into line in 1983.
Crashed
The Chinese model gets a fair amount of ink and it helped fill some of the gaps I had in my understanding of how the Party, Policy and Politics are intertwined, local vs. central political power, etc.
The book also highlights the all too familiar role of bumbling researchers with errors in the models that unleash large social movements that lasts years after the corrigendum is published. Reinhart and Rogoff’s “Growth in a Time of Debt” lead to painful austerity in England, debt brakes in Germany and birthed the Tea Party in the US. No one wanted to hear later that the analysis was riddled with errors.
Recommendation: Skim.
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