Sunday, April 05, 2009

Great crisis reading

From Michael Lewis (who also wrote the best-ever book about sport):

"The End", Portfolio.Com

"To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue."

"Wall Street on the Tundra", Vanity Fair

"Just after October 6, 2008, when Iceland effectively went bust, I spoke to a man at the International Monetary Fund who had been flown in to Reykjavík to determine if money might responsibly be lent to such a spectacularly bankrupt nation. He’d never been to Iceland, knew nothing about the place, and said he needed a map to find it. He has spent his life dealing with famously distressed countries, usually in Africa, perpetually in one kind of financial trouble or another. Iceland was entirely new to his experience: a nation of extremely well-to-do (No. 1 in the United Nations’ 2008 Human Development Index), well-educated, historically rational human beings who had organized themselves to commit one of the single greatest acts of madness in financial history. “You have to understand,” he told me, “Iceland is no longer a country. It is a hedge fund.”

Note: Icelanders quibble about several of Lewis's points.

And from Will Hutton:

"The trillion dollar question: will banks now join the rest of us in the real world?", The Observer

"The National Health Service couldn't have been founded at any other time except immediately after the war. The BBC was the child of the 1920s. Mrs Thatcher could not have taken on the unions except in the aftermath of the winter of the discontent. The City of London, whose short-term attitudes, carelessness about the responsibilities of ownership and amoral attitude to profit and personal reward have undermined the British economy for so long, is now ripe for intervention and reform in the same way. Perhaps the most important consequence of last week's G20 meeting in London was the death rites administered to the injustices and inefficiencies of top-heavy, Anglo-Saxon financial capitalism."