Å·±¦ÓéÀÖ

Interesting and holistic view on the build up and aftermath of the 2008 financial crisis, deftly combining geopolitics, macroeconomic developments and corporate trends in a wider narrative
How he voted did not matter, (Alan) Greenspan declared, because we are fortunate that, thanks to globalization, policy decisions in the US have largely been replaced by global market forces. National security aside, it hardly makes any difference who is the next president, the world is governed by market forces

Adam Tooze shows 2008 not just as a financial crisis, but as an inflection point from a globalizing world, dominated by free market homogenous thinking under the Aegis of the West to a multipolar world with populism, inequality, illiberalism and voter rebellions and fatigue nearly everywhere. The insights are interesting, but certainly closer to the current age speculation and personal opinion start weighing in more, while the account of the 2008 financial crisis is very well sketched.

In general it is crazy how much we lived through since the early 2000’s, from 9/11 onwards. The author’s note that at least this time 10 year after a financial crisis the situation is not as worse as in 1939, seems optimistic with a pandemic and war again on the European continent.

Build up to the 2008 financial crisis
- The first securitisation being done by an US state backed company, Ginny Mae in the 70’s.
- Splitting origination and holders of loans leading to a lack of understanding of credit risk.
- Love it, a Chicago Booth professor of whom I read a book (Raghuram G. Rajan) who is the sole critic on Alan Greenspan at the brink of the credit crisis of 2007-2008
- Quarter of all mortgages of the US being held by foreign investors, with the lowest quality RMBS being financed over 1/3 by European banks
- European banks UBS, Deutsche and Barclays hitting 50/1 leverage
- Bazel II "regulation" leading to 22% reduction in own funds
- AIG credit default swaps leading to a $16b reduction in required capital for the counterparts
- Regulatory drive to the bottom, headed by London
- Interesting that the Maastricht treaty and the stability pact is seen as effective by the author
- How hard it is to slow down a boom/bubble is the general message of Crashed: How a Decade of Financial Crises Changed the World
- RBS, BNP Paribas and Deutsche Bank being the largest banks in term of assets in 2007, nowadays that is unthinkable, what a fall European banks have made due to softer, less coordinated responses to the 2008 crisis in the EU.
- Russian shock to the economy after the fall of the Soviet Union, with default and Dollarisation of the economy in the late 90’s
- Eastern Europe production being taken over for 50% by Western European investors

Crisis response
- AIG making more losses on its derivatives ($125b) than it earned on its products during the 20 years before
- Take capital from the US government. Or realise that you are sitting across of your regulator and that they will declare tomorrow that you are undercapitalised
- More than 2 trillion mismatch in European bank financing, leading to a enormous shortage of dollars, with the Bank of England having only a few billion of dollars versus the enormous London banking sector.
- Between 40% and 50% of Fed liquidity actions going to foreign banks
- Bank of England, ECB, Bank of Japan and Swiss Central Bank gaining an unlimited access to USD from the Fed and in December 2008 representing 35% of the Fed balance sheet but being repaid in full
- China responding to slow down of the economy with large social investments, for instance raising healthcare insurance from 30% of the population to 90% and building high speed rail lines. Investment equalling 50% of GDP and realising a 9% growth in 2009
- South Korean Won depreciating by 60% versus the dollar, hitting USD lenders in the country
- Only 1/3 of the US budget is discretionary due to automatic stabilisation measures in the budget, with Defence spending taking up a large chunk of the "discretionary" part
- In 2005 68% of mortgages in Detroit were subprime
- The Fed absorbing duration mismatch on its balance sheet, leading to enormous risks to be returned to the market when tapering starts
- Bank of Japan offering dollar swap lines to India, Thailand, Singapore and South Korea, backed by its own swap line with the Fed

Eurozone spillover
- Elections can not be allowed to change economic policies - Finance minister Schauble of Germany
- 248 laws being passed by Greece after the Troika takeover, 3 per workday
- 60% of Eurozone rise in unemployment being attributable to Spain
- Passing the hot potato, and misguided belief in austerity dominate part 3, about the Eurozone crisis
- The brunt of economic decline being centred in the middle and lower class, leading to resentment against the elite all over the world
- China offering to lease farmland as large as Belgium to finance Ukraine’s corrupt regime before 2014
- For us you belong to the sphere of influence of Berlin, in which we will not interfere - Finance minister of the USA to Greece
The EU will be unsellable - project Fear tagline, in the Brexit campaign

Conclusions
A lot of the book is about the (rightly) rise of disenfranchisement and disappointment about the neoliberal market mantra, but what has the rise of nationalists and populist done to help the ordinary citizen? Is the only half of French electorate turning up to vote in the national parliamentary elections 2022 a sign of general lack of belief in democracy as a mechanism as a whole?

Political choice and agency are very much topics touched by the book, but hard to get a real grasp on.
In general one gets the feel that economics is constantly walking from crisises to overabundance, again and again.