Books of the Year: Gems among a string of credit-crunch tomes

Three years ago, it was painfully difficult to publish a book about high finance in the mainstream media world.

by Gillian Tett
Last Updated: 31 Aug 2010

I know from personal experience: when I decided in early 2007 to write a book about credit derivatives, my US literary agent recoiled in horror at such a seemingly obscure topic.

But 2008's financial crisis turned the literary Zeitgeist on its head. This year, a string of books about high finance have tumbled out, trying to make sense of the credit crisis (of which mine is just one). And although these have tackled a host of topics once considered arcane, this tsunami of credit-crunch works has produced some gems.

One of the best of this pile is Too Big to Fail: Inside the battle to save Wall Street by Andrew Ross Sorkin, a leading reporter with the New York Times. It's an extraordinarily detailed and lively account of the financial crisis that beset the Wall Street banks last year. For a European reader, the work can feel irritatingly US-centric, and at 600 pages, the book has been dubbed 'Too Big to Read' by critics. Nevertheless, this is a stunningly good read that, with a wealth of fly-on-the-wall detail about the events, has left fellow journalists - myself included - impressed and envious.

Check out, for example, the breathless dance that took place in the days after the Lehman Brothers collapse, when Timothy Geithner, the US treasury secretary, frantically tried to organise mergers with a recalcitrant and terrified group of Wall Street executives; or the sequence where US policymakers pleaded with the UK Government to help Barclays buy Lehmans. Ross Sorkin paints deft character portraits, and his storytelling will keep you reading - even though we know the ending.

In a different vein, In Fed We Trust: Ben Bernanke's war on the Great Panic by David Wessel - a respected economics writer at the Wall Street Journal - is another must. Wessel tells the tale through the prism of the US Federal Reserve and characters such as Ben Bernanke, governor, and Geithner, formerly head of the Federal Reserve Bank of New York.

Like almost anybody who has spent a large amount of time interviewing sources, Wessel can be too kind to his key characters. Bernanke and Geithner are portrayed as decent, savvy individuals who tried their best to avert financial disaster. The book doesn't overtly criticise the mistakes they made during the credit boom, when they failed to prick the bubble, or their tardiness in reacting to the downturn.

Yet the account is well researched and provides a fascinating guide to central bank thinking, which will be crucial in the coming years, as the Fed - and others - try to tighten policy again.

For an alternative perspective on last year's events, I recommend Liquidated: An ethnography of Wall Street. The author is Karen Ho, an anthropology professor who has spent several years analysing the culture of Wall Street (and, by extension, the City of London). It is an academic, not popular, work and was written before the recent crisis, yet the insights are highly pertinent to the events of 2008, since this ethnography provides a wider cultural context and analysis than most journalistic books.

Last on my list is a non-financial book: SuperFreakonomics by Steven Levitt and Stephen Dubner. This is essentially a sequel to the best-selling Freakonomics, and, like the original, it sets out to analyse society from an irreverent economics perspective. However, the sequel is even better than the original, partly because the two authors have assembled another powerful collection of case studies, ranging from the sex trade to car seat-belts.

Another key factor, though, is that they wrote it just when the entire economics industry was facing mounting criticism. They set out to show why economics matters not by resorting to crude models or rigid theories but by demonstrating the power of incentives.

It's a convincing and absorbing read. The pity is that more bankers and policymakers didn't read its predecessor, and consider the question of incentives three years ago; if they had, we might not have experienced financial disaster.

- Gillian Tett is an assistant editor of the Financial Times. Her book, Fool's Gold (Little, Brown), was published in April

Too Big To Fail - Andrew Ross Sorkin, Allen Lane, £14.99
In Fed We Trust - David Wessel, Potter Style, £30.00
Liquidated - Karen Ho, Duke University Press, £15.99
Super-Freakonomics - Steven Levitt and Stephen Dubner, Allen Lane,

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