I.O.U.: Why Everyone Owes Everyone and No One Can Pay was suggested to me by Nick when I asked if he'd read any good books on the financial crisis. So when I spotted it at the library I grabbed it and read it in about ten days, which was extremely fast for me. It's fair to say that it was very satisfying, because when I was done I felt I had a much better grasp of what happened. The trick, of course, is in the remembering.
Lanchester has a way with words, and the way he explains things makes complicated financial products described in acronyms like CDO and CDS and SPV something navegable. His analysis is spot-on, but American-centric readers (like myself) will probably find issue with his Britain-centrism. No matter--he does a splendid job of explaining the compounding of errors, mistakes, oversights and climates that contributed to the crisis, and at slightly over 200 pages this makes an excellent primer for anyone.
A popular saying goes, never underestimate the power of denial. A corollary could be added: Denial is safety, and with acceptance comes risk. For risk is not merely the ancilla of denial; it is its raison d'être.
To properly understand the reasons the financial crisis occurred, it helps, as in Economics, to comprehend both the micro and macro views. Lanchester provides, as do many other authors, a very good, concise, and well-written macro perspective. But you would be hard-pressed to find in the rest of today's popular literature a better micro analysis than that in Andrew Ross Sorkin's magnificent Too Big to Fail.
Sorkin spins an excellent yarn, and the result is astounding. By reconstructing, bit by bit, the many characters and conversations before, during and after the financial crisis, Sorkin gives a vivid voice to the people involved in rescuing the financial system, from government figures to industry magnates and the many people who were sacrificed on the altar of stability and investor confidence. The level of detail the author delves into is quite mind-boggling and the fact that this book came out mere months after the financial crisis was "over" doubles the impressive. Sorkin's finely honed narrative style commands great attention; my sclerotic reading habits nonwithstanding, I felt comfortable picking up right where I left off every time.
The story is fascinating, and the actual persons involved in the deals are stunning. These people were, after all, rewriting history. Sorkin picks up in the debris of Bear Stearns, guides us through the months leading up to Lehman's collapse, and finally shares the radical rethinking that led to TARP, the bailout of AIG, the psychopathic megamerger that saved Merrill, and the frantic dealmaking at Morgan Stanley that culminated in a fantastical nine-billion-dollar check from Mitsubishi. You can't make this stuff up.
Reading general books about the crisis is all well and good if one wants to understand the underpinnings and infrastructure of the collapse. But to read about the actual personalities that shaped the outcome gives the reader a totally different, much broader, and much more complete perspective of why what happened happened. To anyone interested in the mechanics of those fateful days in 2008, I highly recommend this excellent tome. In fact, my only gripe is that--at over 500 pages--it was not more detailed.
Monday, November 1, 2010
Monday, May 10, 2010
First as Tragedy, then as Farce
I recently finished reading Slavoj Zizek's book First as Tragedy, Then as Farce, which I received as a Christmas gift. This is the first of Zizek's books that I read, but I suspect not the last (in part because I was also gifted several others). This is a difficult book to review. Zizek's writing style is erudite, and obviously sometimes this makes certain passages unparsable. However, beneath the densely worded and implicitly referenced philosophical ideas in texts I've never read by authors I've never heard of, there are very many interesting ideas and a fascinating argument to be considered.
Zizek takes his cue from the currently ongoing «privatisation of the commons» of «the shared substance of our social being»--namely, the commons of culture; the commons of external nature; and the commons of internal nature. These three are interrelated because they are all major antagonisms raging within modern capitalism, along with a fourth antagonism, the creation of new forms of apartheid. Together, these four antagonisms are tearing at the fabric of democracy from within, because as capitalism is allowed to continue unfettered, there arises an inevitable struggle to enclose any potential rent-producing activity, which is subsequently commodified for consumption. So just as things like copyright law are eroding the commons of culture, pollution is eroding the commons of external nature, and our internal nature--i.e. our genes and chromosomes--is increasingly patented and handled.
It is illuminating to think of Zizek's point as a counterpoint to the Right's claim that free markets are the ultimate good and that government regulation is the ultimate evil. AS Zizek states, «new domains, hitherto excluded from the market, are now commodified. . . . we are in the midst of a new process of privatization of the social . . . of the privatization of the "general intellect" itself--and this is what lies at the core of the struggle over "intellectual property".» Nowadays, therefore, increasingly direct legal regulatory authority is required in order to impose the arbitrary legal conditions for extracting rents from activities which are now easy to obtain for free, such as music. It is here, Zizek notes, that the fundamental contradiction of modern capitalism lays: «while its logic is de-regulatory [and] anti-statal», the present-day application of regulatory law to preserve rents that modern technology has made obsolete «signals a strengthening of the role of the state whose regulatory function is ever more omnipresent. . . . far from disappearing, the state is today gathering strength.»
To counter this path, Zizek offers Communism, and suggests that it will be pure voluntarism, the mobilization of individuals, which will make the difference and provide the grassroots impetus that will impede the enclosure of the commons and show the way forward. Of course, he is right, at least in the medium term. More concrete solutions, though, would have been much appreciated. Zizek is however a philosopher, not an engineer.
I overall enjoyed the book very much, at least until it became abstruse and inaccesible with references to Badiou and Foucault and Kant and Hegel. This is not Zizek's fault, though, it is mine. As you can see from this list, I have not read anything any of these people have written. I liked that I was able to read most of the book with relative ease, though, and I liked that it make me think quite a lot. In fact, I liked the book so much that I reread parts of it immediately after finishing so that I could annotate them. I have not done that since college. I highly recommend this book.
Zizek takes his cue from the currently ongoing «privatisation of the commons» of «the shared substance of our social being»--namely, the commons of culture; the commons of external nature; and the commons of internal nature. These three are interrelated because they are all major antagonisms raging within modern capitalism, along with a fourth antagonism, the creation of new forms of apartheid. Together, these four antagonisms are tearing at the fabric of democracy from within, because as capitalism is allowed to continue unfettered, there arises an inevitable struggle to enclose any potential rent-producing activity, which is subsequently commodified for consumption. So just as things like copyright law are eroding the commons of culture, pollution is eroding the commons of external nature, and our internal nature--i.e. our genes and chromosomes--is increasingly patented and handled.
It is illuminating to think of Zizek's point as a counterpoint to the Right's claim that free markets are the ultimate good and that government regulation is the ultimate evil. AS Zizek states, «new domains, hitherto excluded from the market, are now commodified. . . . we are in the midst of a new process of privatization of the social . . . of the privatization of the "general intellect" itself--and this is what lies at the core of the struggle over "intellectual property".» Nowadays, therefore, increasingly direct legal regulatory authority is required in order to impose the arbitrary legal conditions for extracting rents from activities which are now easy to obtain for free, such as music. It is here, Zizek notes, that the fundamental contradiction of modern capitalism lays: «while its logic is de-regulatory [and] anti-statal», the present-day application of regulatory law to preserve rents that modern technology has made obsolete «signals a strengthening of the role of the state whose regulatory function is ever more omnipresent. . . . far from disappearing, the state is today gathering strength.»
To counter this path, Zizek offers Communism, and suggests that it will be pure voluntarism, the mobilization of individuals, which will make the difference and provide the grassroots impetus that will impede the enclosure of the commons and show the way forward. Of course, he is right, at least in the medium term. More concrete solutions, though, would have been much appreciated. Zizek is however a philosopher, not an engineer.
I overall enjoyed the book very much, at least until it became abstruse and inaccesible with references to Badiou and Foucault and Kant and Hegel. This is not Zizek's fault, though, it is mine. As you can see from this list, I have not read anything any of these people have written. I liked that I was able to read most of the book with relative ease, though, and I liked that it make me think quite a lot. In fact, I liked the book so much that I reread parts of it immediately after finishing so that I could annotate them. I have not done that since college. I highly recommend this book.
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