I.O.U.: Why Everyone Owes Everyone and No One Can Pay [Hardcover]

John Lanchester (Author)

Book Description

Publication Date: January 5, 2010

John Lanchester's brilliant survey of the current financial crisis explains how the booming global economy collapsed seemingly overnight.

Editorial Reviews

From Publishers Weekly

Starred Review. With clarity and a conversational style often (sometimes deliberately) lacking in the financial industry and its coverage, British journalist Lanchester (The Debt to Pleasure) takes readers on a comprehensive global tour of 2008's economic meltdown, focusing on each guilty parties' contributions to-and missed opportunities to halt-the worldwide crisis. Starting with the political buildup and then marching through the field of "banksters," regulators, mortgage companies and everyone else in a position to know better, Lanchester illustrates exactly how loans from predatory and incompetent players wound up being sold as triple-A investments, and how a subsequent housing market dip toppled the financial system. By prioritizing the financial sector and tenets of laissez-faire capitalism (to the point that it "became a kind of secular religion"), those in charge of the markets failed to identify the growing systemic dangers; meanwhile, those responsible to the public acted as if benefits for financial institutions also benefited every economic participant, no matter how small. Laypeople seeking to understand the crisis, and what it means for their own bank account, will find Lanchester's volume an oasis of understanding in a sea of partisan spin and convoluted financial language.

Review

"I.O.U. is the map to the crazed world of contemporary finance we have all been waiting for. John Lanchester's superb book is everything its subject, the 2008 crash, was not: namely lucid, beautifully contrived, comprehensible to the reader with no specialist knowledge—and most of all devastatingly funny. I urge you to read it." —Will Self, author of Liver

"Warning to bankers everywhere in the world. You better buy every single copy of I.O.U. because Lanchester's painted the target on you that the rest of us so desperately wanted to see. My prediction: bankers may be an endangered species once I.O.U. gets out, and from this read, I can tell you, while I hate to rush Darwin, it can't happen fast enough." —James J. Cramer, host of CNBC's Mad Money and author of Jim Cramer's Getting Back to Even

“I.O.U. is so clear and funny and cleverly written. I love the personal asides and observations and jokes and bits of autobiography that make it seem human and not text-book like. And the more and more improbable analogies for the ups and downs of the markets (a bride's nightie...a gorilla on a pogo stick). But what I like most is that it makes me feel intelligent, because I can now understand all this stuff.” —Marina Lewycka, author of A Short History of Tractors in Ukrainian

“In I.O.U., the only truly entertaining book I've read on the subject, the British writer John Lanchester theorizes that after the Cold War, capitalism could go wild because Western governments no longer had to worry about competing with communism. This is a fascinating idea...” —Jacob Weisberg, Newsweek

“The novelist John Lanchester's short book on the finance crisis, I.O.U....is literary and profound...But this is not just finance-for-poets. Lanchester...is a master explainer with an excellent grasp of sophisticated finance. His book is a gem.” —Christopher Caldwell, The Daily Beast

“Witty, lucid, solicitous of the average person's difficulty in grasping the conceptual underpinnings of international finance...Lanchester manages to know enough to explain the terrain clearly and yet he never loses his perspective...Lanchester had me in the palm of his hand...” —Salon.com

“[A] writer with literary bona fides...[Lanchester] has the intellectual heft and the chops, as a jazz musician might say, to deliver a resounding book about the crisis...An elegant and wonderfully witty writer, Mr. Lanchester approaches his subject with a newcomer's verve. It's infectious...frame[s] the Great Recession in startlingly original terms.” —Devin Leonard, The New York Times, Sunday Business

“[H]ere's a prediction: Few if any of these [finance] books will be as pleasurable—and by that I mean as literate or as wickedly funny—as John Lanchester's I.O.U...Mr. Lanchester explains these things methodically, with mathematical rigor, but he is also, crucially, guided as much by perception and feel...history lesson is peppered with dead-on references to everything, including “Annie Hall,” “The Simpsons,” “The Wire,” Hemingway and Jacques Derrida...Before you begin to cry, pick up a copy of I.O.U. Good humor and good company will be the things that'll get us through.” —Dwight Garner, The New York Times

“[John Lanchester has] leaped into nonfiction, combining prodigious research and reporting with his storytelling gift. The result is this elegantly crafted little book-equal parts history, economic primer, and social commentary-that manages to be, by turns, acidic, frightening, and sharply funny. What it is not is boring. In fact, this is a better book about the global meltdown than any other to date-and some of our best financial and business writers have weighed in on the subject...He explains everything so lucidly, so simply, refracted through the lens of history for perspective, that it all makes perfect sense. A” —Tina Jordan, Entertainment Weekly

“[Lanchester] brings his mischievous wit to bear on the Great Credit Crackup in his boisterous primer...His method: to boil complex instruments and linkages down to anecdotes, outlandish images and acerbic asides that strip away those layers of bank jargon. The result is the perfect read for anyone still wondering what went wrong and why.” —Bloomberg News

See all Editorial Reviews

Product Details

• Hardcover: 272 pages
• Publisher: Simon & Schuster; 1 edition (January 5, 2010)
• Language: English
• ISBN-10: 1439169845
• ISBN-13: 978-1439169841
• Product Dimensions: 8.5 x 5.6 x 1.1 inches
• Shipping Weight: 13.6 ounces
• Average Customer Review: 4.5 out of 5 stars  See all reviews (40 customer reviews)
• Amazon Best Sellers Rank: #91,915 in Books (See Top 100 in Books)

More About the Author

John Lanchester is the author of the novels The Debt to Pleasure, Mr. Phillips, and Fragrant Harbor; and a memoir, Family Romance. He is a contributing editor at the London Review of Books and his work has appeared in The New York Times, The New Yorker, The Observer, and The Daily Telegraph, among others. Among several other prizes, including the Whitbread and Hawthornden Awards, Lanchester was awarded the 2008 E.M. Forster Award by the American Academy of Arts and Letters. He lives in London.

Customer Reviews

Most Helpful Customer Reviews

46 of 47 people found the following review helpful:

5.0 out of 5 stars A brilliant, crystal clear, explanation of the financial meltdown, January 25, 2010

By 

David M. Giltinan (San Francisco) - See all my reviews
(REAL NAME)   

This review is from: I.O.U.: Why Everyone Owes Everyone and No One Can Pay (Hardcover)

John Lanchester's explanation of the economic meltdown of 2008-2009 gets my 5-star rating for a number of reasons:

* it's short, but comprehensive - in just over 200 pages, he tells you not just what happened, but how and why
* it's brilliantly written - Lanchester, a novelist and regular contributor to "The New Yorker" and "London Review of Books", hits the ideal combination of explanation and analysis. When he started his research from the book, he did so as a smart, intelligent outsider, with the curiosity and bulls**t-detecting skills of a keen reporter, all of which makes him an ideal guide.
* the author's ability to explain complicated technical material in a way that is succinct, but crystal clear
* even though some of the book's implications are pretty depressing, Lanchester is authoritative, clear-sighted, and extremely funny
* his ability to place events in the relevant historical and cultural perspective is impressive

Before reading "I.O.U.", the only other work by Lanchester that I had read was his debut novel "The Debt to Pleasure" (which won the Whitbread award, among other prizes). That book had a certain appeal, but was also quite disturbing. This latest book is a terrific accomplishment, and I have no reservations about giving it my highest rating.

One of Lanchester's concluding metaphors is borrowed from climate scientist James Lovelock, who observed, about 20 years ago, that what the planet needed was the equivalent of a small heart attack. Such an episode, in an individual's life, is often beneficial, because it forces the person to fact unpleasant facts and to adopt a healthier lifestyle. In Lanchester's view, the recent economic crisis, is the equivalent of laissez-faire capitalism's small heart attack. We have the chance to insist that our governments change the rules to make sure that it truly can never happen again, because even if there is only the ghost of a chance that it can, it will; that's the nature of modern markets. Failure to make the needed changes at this point is the equivalent of celebrating our release from hospital with a carton of Rothmans, a bottle of tequila, and a supersized Big Mac with jumbo fries.

In other words, it's time to abandon the hedonic treadmill and hop on a real one.

24 of 28 people found the following review helpful:

5.0 out of 5 stars Brilliant, January 23, 2010

By 

R. Ward (Boston, MA) - See all my reviews
(REAL NAME)   

Amazon Verified Purchase

This review is from: I.O.U.: Why Everyone Owes Everyone and No One Can Pay (Hardcover)

This should be required reading for every politician in the world and everyone who ever plans to vote. Lanchester is absolutely right that the world of finance is too much of a mystery to almost everyone. This is a remarkably accessible guide to that world, the people who live in it, and its mystifying laws and practices. A great read. Buy it -- read it -- send it to your friends.

BTW, I read the Kindle edition, which unlike some Kindle books is PROPERLY PROOFREAD. What a relief.

5 of 5 people found the following review helpful:

5.0 out of 5 stars Good, understandable analysis of a very complex situation, April 6, 2010

By 

Dave Kuhlman "interested reader" (Sacramento, CA USA) - See all my reviews
(REAL NAME)   

This review is from: I.O.U.: Why Everyone Owes Everyone and No One Can Pay (Hardcover)

What you will learn:

* A reasonably clear and understandable explanation of financial
derivatives and instruments.
* A short history of the latest boom and bust, how it happened in the
U.K. and the U.S., and some of the devastating effects in Detroit and
Baltimore.
* Why and how we (humans) can't judge risk and shouldn't be trusted with
our own money. Also, why risk analysis models and programs help us to
take on even more risk than we should have and to make even worse
decisions than we would have.
* How things that were wrong were not detected by the people that should
have and why.
* A short history of financial deregulation and of regulatory failure in
both the U.K. and the U.S.

What's wrong:

* The values, both theirs and ours. After all, many of us were the ones
who maxed our credit cards and took on the mortgages we couldn't repay
and consolidated our loans so we could borrow more and ...
* The system -- It's not just a few bad people in the system (though we
had enough of those, too), it's the people that make up the system and
the power that they have and way the system responds to those people.
* The influence -- Our government responds to pressure (a democracy
should); but increasingly our government, in the U.S. responds to
pressure from those that have money or power or both. We are,
according to Lanchester, like a banana republic, 3rd world country in
that respect.
* The incentives - The pay and financial rewords for executives and for
those working in the financial industry are misaligned. Specifically,
the financial sector gave huge rewords to those who took extreme
risks, and it did not punish or give dis-incentives when those risks
went wrong.

What to do about it -- Saying that we all should become better people does
not seem very helpful. Voting the rascals out is likely to produce another
set of rascals. And, better regulation, which we are unlikely to get, only
works when you have better people to do the regulating, and vice versa. We
can hope that the next crash will be bad enough to cause a change, though
we'd really be foolish to wish for a next time. Perhaps "next time really
will be different".

You'll get all this and more from Lanchester's book.