Enter your mobile number or email address below and we'll send you a link to download the free Kindle App. Then you can start reading Kindle books on your smartphone, tablet, or computer - no Kindle device required.
To get the free app, enter your mobile phone number.
Other Sellers on Amazon
+ $3.99 shipping
+ $3.99 shipping
+ $3.99 shipping
Lords of Finance: The Bankers Who Broke the World Paperback – December 29, 2009
|New from||Used from|
The Amazon Book Review
Author interviews, book reviews, editors picks, and more. Read it now
Frequently bought together
Customers who bought this item also bought
Amazon Exclusive: Liaquat Ahamed on the Economic Climate
In December 1930, the great economist Maynard Keynes published an article in which he described the world as living in “the shadows of one of the greatest economic catastrophes in modern history.” The world was then 18 months into what would become the Great Depression. The stock market was down about 60%, profits had fallen in half and unemployed had climbed from 4% to about 10%.
If you take our present situation, 16 months into the current recession, we're about at the same place. The stock market is down 50 to 60 percent, profits are down 50 percent, unemployment is up from 4.5% to over 8%.
Over the next 18 months between January 1930 and July 1932 the bottom fell out of the world economy. It did so because the authorities applied the wrong medicine to what was a very sick economy. They let the banking system go under, they tried to cut the budget deficit by curbing government expenditure and raising taxes, they refused to assist the European banking system, and they even raised interest rates. It was no wonder the global economy crumbled.
Luckily with the benefit of those lessons, we now know what not to do. This time the authorities are applying the right medicine: they have cut interest rates to zero and are keeping them there, they have saved the banking system from collapse and they have introduced the largest stimulus package in history.
And yet I cannot help worrying that the world economy may yet spiral downwards. There are two areas in particular that keep me up at night.
The first is the U.S. banking system. Back in the fall, the authorities managed to prevent a financial meltdown. People are not pulling money out of banks anymore—in fact, they are putting money in. The problem is that as a consequence of past bad loans, the banking system has lost a good part of its capital. There is no way that the economy can recover unless the banking system is recapitalized. While there are many technical issues about the best way to do this, most experts agree that it will not be done without a massive injection of public money, possibly as much as $1 trillion from you and me, the taxpayer.
At the moment tax payers are so furious at the irresponsibility of the bankers who got us into this mess that they are in no mood to support yet more money to bail out banks. It is going to take an extraordinary act of political leadership to persuade the American public that unfortunately more money is necessary to solve this crisis.
The second area that keeps me up at night is Europe. During the real estate bubble years, the 13 countries of Eastern Europe that were once part of the Soviet empire had their own bubble. They now owe a gigantic $1.3 trillion dollars, much of which they won’t be able to pay. The burden will have to fall on the tax payers of Western Europe, especially Germany and France.
In the U.S. we at least have the national cohesion and the political machinery to get New Yorkers and Midwesterners to pay for the mistakes of Californian and Floridian homeowners or to bail out a bank based in North Carolina. There is no such mechanism in Europe. It is going to require political leadership of the highest order from the leaders of Germany and France to persuade their thrifty and prudent taxpayers to bail out foolhardy Austrian banks or Hungarian homeowners.
The Great Depression was largely caused by a failure of intellectual will—the men in charge simply did not understand how the economy worked. The risk this time round is that a failure of political will leads us into an economic cataclysm.
--This text refers to an out of print or unavailable edition of this title.
From Bookmarks Magazine
Almost all critics praised Lords of Finance for its command of economic history and engaging, lucid prose. Ahamed, noted the New York Times, illuminates wise parallels between the misplaced confidence that spawned the global depression in the 1930s and the illusory calculations of risk that led to the current financial crisis. His compelling biographies also personalize economic history. While critics disagreed about whether lay readers will, in a century's time, care about Norman, Moreau, and Schact, the only negative words came from the Wall Street Journal, which criticized Lords of Finance for an imprecise understanding of the gold standard: "Harrumphing about the ‚Äògold standard,' Mr. Ahamed reminds me of the fellow who condemned ‚Äòpainting' because he had no use for Andy Warhol."Copyright 2009 Bookmarks Publishing LLC --This text refers to an out of print or unavailable edition of this title.
Top customer reviews
There was a problem filtering reviews right now. Please try again later.
The four men who are the prime focus of this book were bankers for the central banks of England, Germany, France, and the United States. They spent a decade or more working with one another, sometimes in agreement, and sometimes miles apart in how they thought the world of money might best work. Insisting on war reparations from Germany after the close of World War I, was a point of contention that nobody could ever brush aside, as it had to do with national pride and unwillingness to negotiate a healthy way out of the dilemma for Germany.
The other obstacle for these power-hungry men was a loyalty to the gold standard that they would not give up--this idea that the value of a nation's currency must be tied to how much gold they had stashed away in vaults in a building in New York. Finally, in one simple sentence in the middle of the book, Ahamed states that when times are prosperous and running on an even keel is when greed moves in and upsets the equanimity. When financial times are unpredictable or slightly unstable, the greedy are less likely to go out on a limb with wild, highly-leveraged investment schemes that will later bring down other markets.
The book is more about biography and history than it is about economic theory, which is what I had expected to read, and it was an enjoyable ride to follow the careers of these four men who bumbled their way through the times, causing much trouble for the rest of the world that is yet to be forgotten. A few parallels with our modern circumstances are made, but for the most part, the worst mistakes these four men made have taught our modern money masters some lessons that should now be easy to avoid.
I try to go out of my boundary ever-so-often and read a book or two about a subject of which I know nothing about, hoping that I will find the material interesting enough to hold my attention. I would say that this book does that for me. One other point that struck me was that Ahamed is very careful to demonstrate or illustrate, rather than preach. I read very little of any prescription, which allowed me to sort through the facts on my own, and pull together my own instincts and perceptions. I love a book that will allow me to do this!
Oh, I bought a soft copy used from Amazon.