No Return: Adam Tooze on the Crises that Changed the World

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Ask any American of a certain generation where they were when they heard the news of President John F. Kennedy’s assassination, and chances are they will recall the moment with remarkable acuity. The same might be said for anyone working in finance or investing — or writing about it — if you asked them: Where were you when you learned Lehman Brothers had filed for bankruptcy?

The fateful day was Sunday, 15 September, 2008. Within a week, the entire American financial system was on the brink. Lehman’s collapse, as many have noted, is “portrayed as the pivotal event that converted severe — but familiar — disruptions in financial markets into a full-blown panic.”

The 10th anniversary of Lehman’s collapse occurred on 15 September 2018. There is no shortage of books covering the global financial crisis, also known as The Great Recession, and its aftermath, from “a blow-by-blow story of the events of the crisis when Lehman crashed,” to former Treasury Secretary Tim Geithner’s memoir of his experiences during the crisis. The number of articles is even larger.

One tome, published a decade after the crisis, has prompted a chorus of praise from critics: Adam Tooze’s Crashed: How a Decade of Financial Crises Changed the World (2018).

“’Crashed’ is an impressive narrative history, weaving together events from around the world with a light touch and a great deal of helpful explanation,” wrote the Washington Post. “Masterful,” said the Guardian. The New York Times, meanwhile, hailed it as “an intelligent explanation of the mechanisms that produced the crisis and the response to it” and called it a “nuanced and often counterintuitive narrative.” And Crashed recently scooped up the prestigious 2019 Lionel Gelber Prize.

In awarding the Lionel Gelber Prize, jury chair Janice Stein noted the monumental events precipitated by the events covered in the book: “The global financial crisis of 2007–2009 undermined global capitalism, exposed the failures of banks to manage their risks, almost broke the Eurozone and played a role in the Ukrainian conflict, Brexit and the election of Donald Trump,” Stein said.

Stein hailed Crashed as “a bold work of extraordinary range and ambition,” adding Tooze had “written the standard work on the crisis and its aftermath.” This is “a big picture book, covering developments in the United States, China and Europe, but Tooze never loses sight of the role of key individuals and the political context in which vital economic decisions were taken,” she said.

One of the central claims of the book is that “the financial crisis and the economic political and geopolitical responses to the crisis of 2008 are essential to understanding the changing face of the world today.”

Tooze, An economic historian and professor at Columbia University, framed the consequences of the financial crisis during a conversation with James M. Lindsay of the Council of Foreign Relations:

“Like any other shock like this, it has an enormous hangover. Things I just don’t think are ever going to be quite the same again. If you look at central bank balance sheets, for instance, they’re still at these extraordinarily inflated levels. And even if they managed to get them down, the act of so-called normalization will itself have huge ripple effect. So, we never really get back to the pre-crisis state.”

Taking the metaphor a little further, Tooze added: “To me the financial crisis is a bit like an earthquake and then, of course, that will knock some houses down, but others will remain perfectly intact. So, it crucially depends on, as it were, the underlying architecture and robustness of your political system.”

In its review of Crashed, the Guardian reminded readers that “the world is in spasm, and has been for years; so long, in fact, that it appears to have been going on for ever”. That is why, the writer noted, “you need to read Crashed.”

Better yet, hear from Tooze in person during his session at the 72nd CFA Institute Annual Conference in London.


All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

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