NYT hails history of the financial crisis of 2008 by Columbia’s Adam Tooze

The Columbia professor Adam Tooze might be expected to have precious little in common with Stephen K. Bannon, the shambolic former chief strategist to President Donald J. Trump. Tooze is a self-described “left‑liberal historian whose personal loyalties are divided among England, Germany, the ‘Island of Manhattan’ and the E.U.”; Bannon is a brawling, right-wing connoisseur of nationalist resentment. In “Crashed: How a Decade of Financial Crises Changed the World,” Tooze, with his Oxbridge-trained ear for a withering epithet, calls Bannon “the sulfurous impresario of Breitbart.”

There is, however, a significant point on which they both agree: The financial crisis of 2008, along with the bailouts that followed, exposed the seamy underbelly of a global economic system that was supposed to be so finely calibrated that political wrangling (unseemly, inefficient) was beside the point. As Alan Greenspan, the former chairman of the Federal Reserve, told a Swiss newspaper just a year before the crisis, the world of 2007 was a central bankers’ paradise: “We are fortunate that, thanks to globalization, policy decisions in the U.S. have been largely replaced by global market forces.”

Needless to say, the nonagenarian Greenspan has spent the last decade like a wide-eyed ingénue, declaring himself flabbergastedby events, while Bannon has ridden a populist-nationalist wave to the White House and beyond.

In “Crashed,” Tooze shows how the upheaval of 2008 radiated outward, shaping not only the new economic order but the political free-for-all that stumped conventional pundits and scrambled traditional allegiances. He connects the mortgage crisis to the American banking crisis to the European debt crisis to the crisis of liberalism. Brexit, Trump, Russia’s annexation of Crimea in 2014 and China’s ever-escalating role in the financial system: Tooze covers them all and much more, in a volume that’s as lively as it is long — which is to say very, on both counts.

Having published previous books on the turbulent post-World War I era and the economic policies of Nazi Germany, Tooze has made a specialty of financial collapse and historical disaster. He also understands the language of corporate balance sheets and sovereign debt deeply enough to know that he ought to use it sparingly, translating some of the most byzantine gibberish into elegant English.

“The sort of thing that you could do in London but not in New York is exemplified by ‘collateral rehypothecation,’” he writes, rather menacingly, before nimbly breaking down what that means and why it matters. Several lucid sentences later, you’ll have learned, perhaps despite yourself, how the financial wizards of New York competed with the financial wizards of London, and how a worldwide daisy chain of banks turned into a ticking bomb.

Of course, the story of “Crashed” isn’t just a panoply of transactions and statistics. Tooze regales us with character sketches while recounting the “freak show of outsize personalities” at the G-20 summit in London in 2009 — a pageant of the world’s leaders pledging to boost cratering trade and quell panicking markets. ...