"I.O.U.: Why Everyone Owes Everyone and No One Can Pay" by John Lanchester

For most people, the reasons for the sudden collapse of our economy remain obscure. I.O.U. is the story of how we came to experience such a complete and devastating financial implosion, and how the decisions and actions of a select group of individuals had profound consequences for America, Europe, and the global economy overall. John Lanchester begins with "The ATM Moment," that seemingly magical proliferation of cheap credit that led to an explosion of lending, and then deftly outlines the global and local landscapes of banking and finance. Viewing the crisis through the lens of politics, culture, and contemporary history - from the invention and widespread misuse of financial instruments to the culpability of subprime mortgages - Lanchester draws perceptive conclusions on the limitations of financial and governmental regulation, capitalism's deepest flaw, and , most important, on the plain and simple facts of human nature where cash is concerned. Weaving together firsthand research and superbly written reportage, Lanchester delivers a shrewd perspective and a digestible, comprehensive analysis that connects the dots for the expert and casual reader alike. I.O.U. is an eye-opener of a book - it may well provoke anger, amazement, or rueful disbelief - and, as the author clearly reveals, we've only just begun to get ourselves back on track.

I never thought I'd really want to read a book about the recent financial meltdown that most of the world has recently experienced. Why bother reading about it when I've been living it for the last two years? But this book looked a bit different. It purported to show the "how it all happened" on a fairly grand scale without necessarily pointing fingers at political parties. And some of the bits and pieces I read seemed slanted to the funny side, which would be a welcome relief - a book that didn't take everything super-seriously. I think the author really had me though when he quoted someone saying "we're rubbish at thinking about risk". Because we really are - we always want something for nothing. And a big something for nothing is even better.
The book turned out to be very well written and very informative. I learned a great deal about the financial world, including how a select few put together the now-infamous sort of loans that really sunk everything. Loans that were so complicated that a lot of bankers didn't even understand what it was they were selling. And Lanchester very wisely points fingers at everyone - including us. Many of us wanted these loans that seemed to hold no risk, even though we knew they were too good to be true. Regulators relaxed rules because they wanted the economy to keep growing. Basically, we stuck our collective heads in the sand and hoped that if we didn't see anything, then nothing bad could ever happen.

We all know how well that strategy worked, don't we?

I would definitely recommend this book, and not just to people that have been affected by the economic downturn of the last two years or so. I think everyone could benefit from reading it; it makes a great lesson in history, and as Winston Churchill said "Those that fail to learn from history, are doomed to repeat it". I don't know about you, but I don't want to repeat this financial fiasco - ever.