Thursday, October 21, 2010
"I.O.U.: Why Everyone Owes Everyone and No One Can Pay" by John Lanchester
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.