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2008 Neoliberalism crashes the state rushes back-- just in time
Format: Kindle
โWhereas since the 1970s the incessant mantra of the spokespeople of the financial industry had been free markets and light touch regulation, what they were now demanding was the mobilization of all of the resources of the state to save societyโs financial infrastructure from a threat of systemic implosion, a threat they likened to a military emergency.โ (Loc. 3172-3174)
Adam Tooze takes the well know Financial Crisis of 2007-08 through its full history of international ramifications and brings it up to the present with the question of whether the large organizations, structures and processes on the one hand; decision, debate, argument and action on the other that managed to fall into place in that crisis period in this and many other countries will develop if needed again. โThe political in โpolitical economyโ demands to be taken seriously.โ (Loc. 11694). That he does.
Tooze is an Economic Historian and Crashed: How a Decade of Financial Crises Changed the World is a wonderfully rich enquiry into causes and effects of the Financial Crisis and how the failing of poorly managed greed motivated practices of a few financial institutions, and their subprime mortgagees, tumbled economies in the developed and developing world, causing events that matched the Great Depressionโs dislocation and could have matched its duration, springing from world wide money markets โinterlocking matrixโ of corporate balance sheetsโ bank to bank.โ
A warning he is not kind to existing political beings, the Republican Party in particular โโฆto judge by the record of the last ten years, it is incapable of legislating or cooperating effectively in government.โ (Loc.11704)
His criticism is, in fairness, based on technical management grounds, and he does find fault as well with the inner core of the Obama advisors and their primary concerns for the financial sectors well being, rather than nationwide happenings where homes and incomes disappeared.
This reviewerโs favorite (not mentioned by Tooze) is the early 2009 comment of Larry Sumners when Christina D. Romer, the chairwoman of President Obamaโs Council of Economic Advisers and leading authority on the Great Depression saw a need for $1.8 trillion stimulus package, โWhat have you been smoking?โ
Sumners, Geithner, and Orszag, who favored transferring $787 billion to the banks to offset possible bank failures and such -- became policy. Tooze mentions that by 2012 Sumners was concerned by the slowness of the U.S. economyโs recovery taking, as it did, 8 years to reach 2008 levels of employment.*
Can an Economic History be an exciting read? Tooze gives us over 700 pages of just that, but much will be familiar as reported news and may be skimmed, and some of the Fedโs expanded international roles very dense in content. His strength is the knowledge of what could have happened, had solutions not been found, and how agreements were reached out of public sight.
โโฆ the world economy is not run by medium-sized โฆ entrepreneurs but by a few thousand massive corporations, with interlocking shareholdings controlled by a tiny group of asset managers. (Loc.418-419).
Add wily politicians and hard driven bankers EU Ukraine and China you have an adventure.
Corporate control is not new -- rich descriptions of its inner connections are.
Adam Tooze does this well a reference work for years to come.
5 stars
*For an in depth critique of that period see: A Crisis Wasted: Barack Obamaโs Defining Decisions by
Reed Hundt
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Reviewed in the United States on August 11, 2018