Wednesday, March 3, 2010

Book: I.O.U.: why everyone owes everyone and no one can pay by John Lanchester.

The story of what went wrong and caused the financial collapse.

Basically: too much leverage, fucked up incentive structures, poor or non-existent regulation. Not much new here, other than interesting parallels with the UK and other European countries.

I think the author (possibly to insulate himself from charges of being anti-capitalist) misses two important issues. He cheerleads for consumer capitalism without giving more than lip service to inequality. He also doesn;t have much in terms of a solution, other than bank nationalization. He gives a few reasons why that's unlikely, but misses the main one: that the banksters have too much political influence to let that happen.

He does make one important point, though. When there was a "socialist" world and a capitalist one, the former was forced to rein in the worst aspects of capitalism, so as not to lose what he calls "the beauty contest". I think this is true, and it's a point that does not get made often enough.

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