Excellent overview of the current financial crisis, which ain't over yet, alas. The author's viewpoint is moderately liberal, somewhat pessimistic but quite judicious and knowledgeable, not given to leftist screed or Chicago School boosterism. As of this writing, the book is also surprisingly current. In the later chapters the acronyms of the credit default swaps and all those new whirligig financial instruments fly by, but you get the idea. It's confusing because it was indeed confusing, even to bankers. Which was part of the problem. You will especially enjoy this book if, like me, you read Greenspan's book and were horrified to hear the man in charge of our monetary machine enthuse over Ayn Rand and gush like a neocon junior staffer over the magic power of markets. Well, we are all neck deep in the "magic of markets" now and will be digging ourselves out for years. Oh, be advised this book is general, in the best sense. More forest than trees. Not a book of details, inside stories, or personalities, which is fine by me. Hope Audible will get more on this topic.
Even if you have read every previous book about the financial crisis, you should (actually, it is your patriotic duty to) read this one and then tell your friends to. Ferguson, a fellow at the Council on Foreign Relations and the producer of the Academy-Award-winning movie "Inside Job" has massive credibility, an even-handed, deadly serious temperament, and an overwhelmingly convincing argument. It is very simple. For the last thirty years, in the lead up to the 2008 financial crisis, America's financial industry has become systematically criminal. Not just greedy, not just unethical. Criminal.
Ferguson marshals overwhelming evidence of repeated criminal violations by the banks and others. Fraud, insider trading, money laundering, bribery, perjury, assisting drug gangs and other criminals, tax evasion, on and on. Day in and day out. A basic business model. He provides evidence that the same violations committed twenty years ago or by people outside of banking have produced serious criminal charges and convictions (remember Michael Milken and Martha Stuart?). Yet even after the financial collapse that has wrecked millions of lives and is now toppling Western democracies, there have been zero criminal prosecutions of major bankers, ratings agencies, hedge fund managers, or other financial players. None. At most the banks have paid trifling fines, admitted nothing, and then repeated the same crimes over and over.
Why? Because they pay off both political parties and because they now belong to a corrupt, entrenched American oligarchy similar to those in Russia or Mexico. They are quite literally too big to prosecute. The banks have succeeded in gutting the regulatory agencies, intimidating opponents, and buying political influence. As in Zola's famous book, "J'accuse," Ferguson does not so much raise new evidence as simply state the obvious. He provides an excellent overview of the financial industry since 1980 and the 2008 crisis. But his main contribution is to simply point out that all this was, in fact, criminal. And nothing has been done. The same large-scale criminality simply continues, the same crimes committed, the same apologies, the same fines, the same promises, then back to business. As long as the actors themselves are not convicted and can retire wealthy in good social standing, nothing will change.
Ferguson goes so far as to name names and provide the government with the evidence and the laws violated. He hands it to the Justice Department on a silver platter, as have many others. Yet nothing happens. Being more of a leftist, I would go further than Ferguson and say that, under a fiat money system, the banks have effectively privatized tax collection. By a complex, yet blatant three-step process, our tax money that should be going to social security, for example, is going to a tiny, wealthy, criminal elite and their inside "shareholders." Ferguson argues for mass criminal prosecutions of the sort that happens outside of banking. I would also argue for nationalization of major banking functions. Either we nationalize banks or the banks continue to privatize national fiscal policy. In any case, this book is lucid, illuminating, important. No "vampire squids" or screechy moralizing. Just a serious civic polemic. And by the way, the reading is also excellent.
While reductive by the standards of scholarly argument, this powerful polemic tempts me to "must-read" hyperbole. Klein uses the analogy of psychological shock therapy to chronicle the rise, since the 1970s, of the economic "shock therapy" (their phrase!) advocated by Milton Friedman and the Chicago School. Sounds contrived and conspiricist, but isn't. This is well reported and argued. Klein's first point is that the Chicago School's free market "counter-revolution" has never arisen naturally by democratic means. It has been foisted upon countries, from Chile to Russia, only at opportune moments of disaster, then sustained through violent state action, usually abeted by the same inner ring of U.S. contractors and advisors. Her evidence, while not comprehensive by academic standards, is wholly convincing in its demonstration of repeated patterns and key players. In every case, the result has been a disaster made deadlier by economic ideology, ground-level mismanagement, and high-level corporate looting. This grim market logic culminates in Iraq with the Bush administration's systematic dismantling of government functions to be replaced by corporations and start-ups free to operate outside of legislative, judicial, or even market constraints. Work that local companies might have done, American companies utterly fail to do at ten times the cost, then pocket their billions, shrug, and move on. This is the economic analysis of the Iraq war that has been frustratingly absent in public debate. It is made all the more coherent by Klein's larger historical context. Worse, under Bush all of this is becoming deeply institutionalized. Large sectors of our economy are coming to depend on a "new frontier" of political and natural catastrophes, terror security chief among them. This important, eye-opening work is is also very well narrated here. One of the most worthwhile audio book I've bought. And no, I am neither friend nor relative nor ideologue, just newly won admirer.
I have read many of the recently published books on the financial crises over the past few years in an effort to better understand what happened. This book is by far the best that I have read to date. It details not only what happened and how the crises was created but also who was behind it and how they benefited. The most interesting chapters discuss the many laws that were broken by the large financial institutions and complete absence of prosecution by any law enforcement agency in the US.