A series of essays by major UK economists was put together following a conference in July 2o10 on the Future of Finance, held at the London School of Economics in London. A downloadable copy of the essays (in unedited form) can be found here. The first essay, by Adair Turner, analyses what banking is for. It is a reminder of how far things have changed in the past 20 years.
The preface to the essays is by Richard Layard, and the work of the group was funded via the Paul Woolley Centre for Capital Market Dysfunctionality at LSE. The essays acknowledge the political context in which there is little likelihood of policial leaders and regulators proving strong enough to take on the banks. Written over a year ago, it forecast the accuracy of what has been happening in Europe, with depressing accuracy.
Books on the credit crunch and banking failures
There have been a series of books published about the credit crunch and banking failures, all of which are well worth reading. Here is a selection:
Aftershock, by Philip Legrain
Includes a perspective on the 2007/8 crisis as well as a more forward looking section on the future, by a former visiting fellow at LSE and current adviser to the European Commission president.
Back from the Brink, 1000 days at Number 11
Alistair Darling’s account of his period as Chancellor. Includes accounts of the collapse of Northern Rock, and of the bailout negotiations with RBS and HBOS in 2008, but these feel curiously lacking in the detail of what Treasury civil servants and the Bank of England were advising at the time. There is no evidence that any alternative option to bailouts was considered in any depth. Nor that the long-term consequences of the bailout for the UK public were weighed in the balance before decisions were made to sign off £50 billion, without any Parliamentary debate. Frightening really.
Masters of Nothing, by Matthew Hancock and Nadhim Zahawi
An unexpected analysis of the causes of the Crash, in that it is written by two Conservative MPs. It discusses the behaviour and actions of the bankers involved, and of the finance industry as a whole, in the context of modern behaviour theory. The book exposes the flaws and failures of the past, and offers a set of proposals to help avoid a repetition in the future.
The Big Short: Inside the Doomsday Machine, by Michael Lewis
Detailed narrative of individuals involved in the US end of the financial collapse, and how ‘a nation lost its financial mind’ (Sunday Times).
Too Big to Fail: Inside the Battle to Save Wall Street, by Andrew Ross Sorkin
The weeks leading up to the collapse of Lehman Bros, and the desperate negotiations between the banks and the US government.
Fool’s Gold: How Unrestrained Greed Corrupted a Dream, Shattered Global Markets and Unleashed a Catastrophe, by Gillian Tett
Account by Gillian Tett (FT journalist) of how a team of derivative experts at J.P. Morgan contributed to the development of complex securities, including credit default swaps and options, which led to the financial crisis.
Meltdown: the end of the age of Greed, by Paul Mason
BBC journalist recounts how the credit crunch became a full-blown financial crisis in the USA and UK, and explores the impact of this development on capitalist ideology and politics.
Reckless: the Rise and Fall of the City, by Philip Auger
Insider’s history of Britain’s financial services sector from 1997 to 2007, by a leading City commentator.
Whoops! Why everyone owes everyone and no one can pay, by John Lanchester
Very readable account of the credit crunch and its long-term implications for society
Them and Us: Changing Britain – why we need a fair society, by Will Hutton
Wide-ranging book covering the economic crisis, politics, the technological revolution and including the reasons and aftermath of the financial crash. Suggests a truth commission on the banking crisis.
The Gods that Failed: How the Financial Elite have Gambled away our Futures, by Larry Elliott and Dan Atkinson
An account of the credit bubble and crash, by the authors of Fantasy Island. Larry Elliott is Economics Editor at the Guardian
Willfull Blindness – why we ignore the obvious at our peril, by Margaret Hefferman
Covers the wider theme why people ignore (or are in denial about) what is in front of their eyes, with examples including Bernie Madoff’s Ponzi scheme and Alan Greenspan ignoring the housing bubble in the US.