The near-collapse of the global banking system was not supposed to happen. In an era of financial globalisation and sophisticated modelling of risk, the manias, panics and crashes of the past had apparently become historical curiosities. Financial derivatives were based on the idea that parcelling up loans and selling them to a wide range of investors across the globe would spread risk: Alan Greenspan said so. Instead, these instruments amplified such risk and produced the biggest collapse of financial confidence in the modern era.The apparent ushering in of a new and more uncertain era which looks set to last beyond the immediate crisis has created a sense of panic. And just as there is nothing new in the nature of the panic, except for its scale and global reach, so there is little new in these kinds of shifts in the economic environment. In this bold and cohesive book, David Smith probes the causes and implications of the 2009 financial crisis.
David Smith is economics editor of the Sunday Times and regularly comments on the radio and television on economics. He is the author of Free Lunch and The Dragon and the Elephant (both Profile).