Adam Tooze – An experts’s review of ten years of global economic crisis

Recently (on 14 August) I had the good fortune to follow an interview with the British historian Adam Tooze on Austrian Radio. I was so impressed that I immediately took to reading his book “Crashed. How a Decade of Financial Crises Changed the World” (Allen Lane 2018) ) – and so an important work finally reached me with a two-year delay. These are my comments:

When an author combines an immense range of detailed knowledge with the ability to see things in their context and interdependence, he constantly presents the reader with eureka moments. This is how I would describe the exciting experience of reading the great monograph by Adam Tooze “Crashed. How a Decade of Financial Crises Changed the World”, Allen Lane 2018. Of course, the study of history is inconceivable without value judgments. Natural science may talk about clockworks, chemical compounds or a virus without subjective valuation, but historians cannot deal in this manner with world economy. We should, therefore, right at the beginning take note of the position taken by the historian.

Tooze leaves no doubt that he feels close to the left wing of American politics. The reader is therefore confronted with the full extent of economic and social destruction caused by the 2008 crisis and the subsequent euro crisis. There is no glossing over the fact that, according to Tooze, these crises were even more devastating than the Great Depression of 1929.*1* This is true for the US, *2* but even more so for the rest of the world, especially southern Europe.*3*

The subprime crisis originated in the United States, and in particular in the leading American financial institutions that served the greed of wealthy investors through blatant fraud in both the United States and Europe.*4* The major rating agencies also actively supported fraud through incorrect ratings.*5*

So far the British historian’s observations on the crisis are not new, but they become quite interesting when Tooze analyses its mechanism, namely credit creation by a handful of large investment banks.*6* These institutions, he states, are by no means dependent on the money of savers. As central banks have always done when creating money, they can produce money and credit in exchange for real values (real estate playing a special role in this case).*7* A crisis erupts when the money created either has no counterpart in real assets (in which case the result will be inflation without “sterilisation” of the ensuing surplus) – or when, conversely, existing real assets lose their value (this was the case with the collapse of subprime real estate).*8* In this new and modern type of financial crisis, there is no run on the banks; instead, there is a freeze on internal banking transactions. No bank can be sure anymore that the securities of other banks still have any value. These findings are important because they confirm that the creation of money and credit – whether by central banks or by large private financial institutions – never occurs out of nothing, but in accordance with material values. At the moment when confidence in these values is lost (as was the case with subprime real estate), the modern banking system is thrown off course, just as the classic system is thrown off course by the run of savers on their house banks. After subprime securities had lost all their value, American government bonds remained the last anchor of stability still unchallenged.*9*

The convincing main thesis of Adam Tooze states that we should understand the euro crisis as a mere continuation of its predecessor of 2008, which in turn was brought about by neoliberal deregulation.*10* At this point, the British historian assumes the role of an outspoken critic. While the Americans had taken the right measures to make the American banking system functional again in a surprisingly short time,*11* the Europeans had great pains in doing so.*12* It was only when the ECB led by Mario Draghi took over the American therapy that the danger of the eurozone’s disintegration was finally averted.*13* Prof. Tooze is an expert on Europe and especially Germany, where he studied for quite a time. If he accuses German provincialism and its incorrigible and hegemonic behavior towards the rest of Europe,*14* then that should be taken very seriously.

At this point I feel entitled not to contradict the expert’s account – nobody knows the facts as well as he does – but to make a different assessment that to me seems to be equally compatible with the facts. Tooze sings a hymn to the expertise of the American financial and political elite (that belongs to both major parties and easily switches from the private to the public sector and vice versa as if through a revolving door)*15*. It was precisely this elite, I would like to add, that led the world into the abyss twice. It was its ruthlessness and greed that had produced the crisis of 1929. As another eminent historian, Eric Hobsbawm, explicitly pointed out, the Great Depression constituted the most important cause of Hitler’s rise and the outbreak of the Second World War.*16* And it was again – as proven by Tooze himself – the greed of this elite that made the 2008 crisis possible in both the USA and Europe.*17*

It is therefore somewhat surprising to see the British historian praise the achievement of that very elite that bears responsibility for the disaster in the first place – contrasting it with the inability of Europeans.*18* I think that Franklin D. Roosevelt may rightly be praised for starting the fight against monopoly and growing inequality with his famous New Deal.*19* But what did the American financial-political elite when it defeated the 2008 crisis? It had first of all created the existing monopolies and oligopolies and deepened inequality,*20* but when dealing with the crisis, it did not diminish these evils, but on the contrary further increased them! In other words, it eliminated the symptoms of the crisis but not its causes. Certainly, the financial jugglers who were responsible for the crisis have successfully ensured that there was no collapse or even – as in the 1930s – the rise of a dictator and the outbreak of war. This is a tremendous achievement – economic science has learned the lesson from the Great Depression. The cardinal mistake of deflationary policy was avoided. But the next major crisis can happen at any time, because only the symptoms have been eliminated. Shouldn’t it be the proper task of an elite to eliminate the roots of such crises – oligopolies and growing inequality? Should we call it progress if arsonists become firemen?*21*

At the very least, we should have expected the US elite responsible for the crisis to admit their own mistakes. But until today this did not happen. That’s why Trump the Terrible is to a certain extent right when, on the same day that Joe Biden made his glittering appearance as presidential candidate in his inaugural speech, he chose Biden’s birthplace in Pennsylvania for quite a different speech where he deftly exposed the weak point of his opponent. “Biden pledged to serve the American people every hour of his tenure as president. What did he do for the last half century when your jobs were transferred to Asia?”

Unless the elite acknowledges its mistakes, it does not regain its credibility. This is also true, I believe, of one of its most eminent representatives, the economist and former Clinton Secretary of Labor, Robert Reich, who in his book “The Work of Nations” provided the “scientific” justification for the outsourcing of American industries, but has since become a critic of inequality and monopolies *22* – however, without admitting his part in this development. Reich wanted to transform Americans into “symbol analysts”. He succeeded – the entire financial sector where the big money is made is populated by them, but the average American has lost his once well-paid job to the Chinese.

Tooze seems to be fascinated by the high technical skill of the US financial experts, and he laughs at the provincial stubbornness of the Germans, who still imagined they had to lecture the Americans, even though they have done just about everything wrong – especially when dealing with Greece. *23* It should have been clear to everyone from the start that Greece could not service its debts and that therefore a partial or even complete debt cancellation (restructuring, haircut at the expense of private creditors), as finally demanded by the IMF, was the only right solution from the outset. Instead, Schäuble and Merkel had pedantically insisted on debt repayment, only then Germany was ready to authorize aid funds. But that was absurd from the outset, because the billions in aid money from the IMF and the Eurogroup did not benefit the Greeks but were almost exclusively passed on to creditor banks in Germany and France. The people of Greece were subjected to an ordeal in order to set a warning example to all other potential exit candidates: “Look, this is the price to be paid by anyone who breaks the rules of the eurozone!

The monumental monograph of Adam Tooze demonstrates how closely the financial and economic interdependence of the leading global currency power, the USA, with the rest of the world has already become.*24* In concrete terms, this means that crisis shocks to the leading global power (and indeed to every leading power, not just the USA – I would add) inevitably spill over to the rest of the world. When American securities (the subprime bonds) started to falter, interbank traffic in Europe froze. Subsequently, it was also the FED as lender of last resort, which alone was able to put an end to this petrification by printing dollars. Those who make themselves dependent on the center, whether they like it or not, are also subject to the rules of the center. Tooze has demonstrated this elementary truth for the world’s dependence on the US and its dollar reserve currency. The same dependence, however, applies – and I think this is just as inevitable – to the dependence of the euro zone on Germany, the leading economic power in the region – regardless of whether Germany intends to do so or not.

Tooze’s question of whether Merkel and Schäuble acted correctly at the time when they subjected Greece to such a murderous ordeal remains unanswered. Total debt cancellation, i.e. an official state bankruptcy, as Hans-Werner Sinn, if I remember correctly, demanded early on, would probably have cost far fewer victims. Greece would have had to leave the euro zone for a limited period, its creditworthiness would have been shaken for at least a decade – that fact alone should sufficiently deter all other eurosceptics. But Greece would then rely on its own strength to overcome the crisis and realize that its misfortune was caused by nobody but itself. In any case, this alternative would have spared the people of Greece the additional humiliation of the ordeal imposed on them by the troika of IMF, ECB and the European Commission. I even think that, in this case, the rest of Europe, and Germany in particular, would have cut a much better figure, because they could have voluntarily bestowed a modicum of aid and help on poor Greece. Since Greece was unable to pay its debts anyway and will never repay them (as the IMF recognized early on), debt restructuring or complete debt cancellation, i.e. state bankruptcy, would have been the more honest and probably the much better solution. After all Greece’s economy was far too small to pull the whole of Europe into the maelstrom.

In his analysis of the decade between 2008 and 2018, Adam Tooze speaks exclusively about acute crises – not about those that have been smoldering underground for at least half a century. For this reason, one searches in vain for words like “ecology” or “ecological sustainability” in his 700-page monograph. This is somewhat surprising as the awareness of an impending environmental crisis originated in the United States and that it was an American president too – Jimmy Carter – who had commissioned the major environmental study “Global 2000”. Moreover, it was Vice President Al Gore who saw the destruction of the environment as the greatest and most momentous challenge of our time, and it was President Obama who followed him in this assessment. Why do we find only five incidental references to “climate change” in the otherwise comprehensive book by Adam Tooze?

Unfortunately, Tooze proves to be a realist who faithfully reflects global political and economic reality. During the world financial crisis of 2008 and the euro crisis that followed, the environment was simply forgotten – and the same is true today of our reaction to Covid-19. All we then thought and now think about is how to get the stuttering fossil fuel engine going again – as quickly as possible or even faster than before. In other words, for the biggest crisis of all the elites are by no means prepared. Their motto is: Let everything just be as it was before (including growing inequality and environmental destruction)! I assume that Prof. Adam Tooze would without hesitation subscribe to this truth.

All quotes are taken from the ebook version of “Crashed” with the position indicated:

*1* On a global level, industrial output, stock markets and trade were all falling at least as fast in 2008-2009 as they had in 1929 (3456).

*2*  Across the country, class, not race, was the most important determinant of an American’s life chances, and the big story of his second term as president was rural white working-class despair. It was Appalachia—West Virginia and Kentucky—held back by structural change, educational failure and immobility, that lurched into the headlines (9176). Among white Americans, deaths from /drug/ overdose increased by 297 percent between 2010 and 2014 alone. Unlike in any other developed society, life expectancy among working-class white Americans had been decreasing since the early 2000s. In modern history the only obvious parallel was with Russia in the desperate aftermath of the fall of the Soviet Union (9181)…by 2013 the population of the urban core of Detroit had shrunk to 688,000, of whom 550,000 were African American. They were left behind in a city that was literally falling into ruin, burdened with debts running into the tens of billions of dollars (9067). As the crisis cut a swath across America, 65,000 homes in Detroit were foreclosed. Of those, 36,400 were considered of so little value that they were simply abandoned, joining a total stock of 140,000 blighted properties (9075). While the banks and lenders were bailed out, 9.3 million American families lost their homes to foreclosure, surrendered their home to a lender or were forced to resort to a distress sale (5938). As 2010 began, 3.7 million families were more than ninety days past due on their mortgage payments. Millions more were struggling to make ends meet, one or two months behind on their payments. Over the next twelve months 1.178 million homes would slide into foreclosure, the worst year of the crisis… The contrast in fortunes between Wall Street and Main Street was increasingly intolerable. The big banks had been bailed out. Some of the most unscrupulous bosses might face legal action, but they were not facing personal ruin. They retired to lifestyles of wealth and comfort.46 None had gone to jail… The bonus season in 2009 was better than ever, netting $145 billion for the executives at the top (6385). As 2010 began, 3.7 million families were more than ninety days past due on their mortgage payments. Millions more were struggling to make ends meet, one or two months behind on their payments. Over the next twelve months 1.178 million homes would slide into foreclosure, the worst year of the crisis… The contrast in fortunes between Wall Street and Main Street was increasingly intolerable. The big banks had been bailed out. Some of the most unscrupulous bosses might face legal action, but they were not facing personal ruin. They retired to lifestyles of wealth and comfort.46 None had gone to jail… The bonus season in 2009 was better than ever, netting $145 billion for the executives at the top (6385). The financial crisis of 2008 had revealed how in extremis national economic policy was subordinated to the needs of a cluster of giant transnational banks. Now, in the face of a dismal recovery, the correspondence between economic growth and the progress of a national society was being challenged from the bottom up. Could the national economy any longer be plausibly presented as a project common to all Americans? (9158). Obama insisted, there must be no more evasion, “this increasing inequality is most pronounced in our country …. [S]tatistics show … that our levels of income inequality rank near countries like Jamaica and Argentina” (9170).

*3*  Greece, Portugal, Ireland and Spain were driven into depressions the likes of which had not been seen since the 1930s (6608). In 2008 Greek unemployment had been 8 percent. Four years later it was rising inexorably toward 25 percent. Half of young Greeks were without jobs. In a nation of ten million, a quarter of a million people were fed daily at church-run food banks and soup kitchens (8717). As the housing market collapsed, Spain’s unemployment rate shot up. Of the 6.6 million increase in unemployment in the eurozone between 2007 and 2012, 3.9 million was accounted for by Spain—60 percent of that grim total. As bad as Greece’s situation was, it was small by comparison and accounted for only 12 percent of the increase in eurozone unemployment. Most catastrophic of all was Spain’s youth unemployment rate, which by the summer of 2012 had surged to 55 percent (8769).

*4*  The crisis… was… fully native to Western capitalism /genauer den USA/- a meltdown on Wall Street driven by toxic securitized subprime mortgages that threatened to take Europe down with it (Tooze 2018, 975). The competitive race for profit and market share among the banks… unleashed a regulatory race to the bottom (1821). The idea that social Europe” had deviated in any essential way from the logic of turbocharged financial capitalism” as exemplified by America was an illusion. In fact, Europe’s financial capitalism was even more spectacularly overgrown and it owed a large part of its growth to its deep entanglement in the American boom (2666). …every member of the eurozone was at least three times more overbanked” than the United States (2559).

*5*  … S&P had delivered just one more demonstration of how broken the ratings agencies were. It was their AAA certifications, handed out to hundreds of billions of subprime MBS /mortgage-backed securities/, that had helped to precipitate the crisis in 2008. It was their serial downgrades that were setting the pace of the crisis in the eurozone (8003). The regulators were utterly subservient to the logic of the businesses they were supposed to be regulating (1861). 

*6*  The overwhelming majority of private credit creation is done by a tight-knit corporate oligarchy… At a global level twenty to thirty banks matter. Allowing for nationally significant banks, the number worldwide is perhaps a hundred big financial firms (500).

*7*  Investment banks don’t have deposits. They borrow the money they lend on wholesale markets from other banks or institutional funds (1165). In modern finance, credit is not a fixed sum constrained by the ‘fundamentals’ of the ‘real economy’. It is an elastic quantity, which in an asset price boom can easily become self-expanding on a transnational scale (2436). Real estate is not only the largest single form of wealth, it is also the most important form of collateral for borrowing (998). Almost all human history can be written as the search for and the production of different forms of safe assets (1261). Without valuation the assets could not be used as collateral. Without collateral there was no funding. And if there was no funding all the banks were in trouble, no matter how large their exposure to real estate. In a general liquidity freeze, the equivalent of a giant bank run, no bank was safe (3150).

*8*  By the magic of independent probabilities, the worse the quality of the debt that entered into the tranching and pooling process, the more dramatic the effect. Substantial portions of undocumented, low-rated, high-yield debt emerged as AAA. In any boom, irresponsible, near criminal or outright fraudulent behavior is to be expected (1413). It was a bank run without deposit withdrawals. There had been no deposits. There was nothing to withdraw. For banks to find themselves a trillion dollars short, all that needed to happen was for major providers of funding to withdraw from the money markets (3190).

*9*  On a global scale over the next five years, the United States would be the only source of safe, Treasury-grade assets for investors worldwide. Whatever you might think of the Trump administration, if you needed to park a large volume of funds in safe government debt, there was no alternative to US Treasurys (11511). A huge class of AAA-rated private label securities had shown itself to be far from safe, so the demand for Treasurys was huge (6018).

*10*  It wasn’t the sovereign debt crisis of 2010 that halted Europe’s growth, it was the transatlantic banking crisis of 2008 (3351). America’s securitized mortgage system had been designed from the outset to suck foreign capital into US financial markets and foreign banks had not been slow to see the opportunity (1583). …foreigners owned a large portion of America’s houses. By 2008 roughly a quarter of all securitized mortgages were held by foreign investors (1586). …by far the largest purchasers of US assets, by far the largest foreign lenders to the United States prior to the crisis, were not Asian but European (1673). By the early 1980s both Britain and the United States had abolished all restrictions on capital movements and this was followed in October 1986 by Thatcher’s Big Bang” deregulation (1743). …the competitive race for profit and market share among the banks in turn unleashed a regulatory race to the bottom (1821).

*11*  Never before outside wartime had states intervened on such a scale and with such speed. It was a devastating blow to the complacent belief in the great moderation, a shocking overturning of prevailing laissez-faire ideology (3529).

*12*  In the United States and the UK the central banks were pushing liquidity into the banking system. By contrast, in the eurozone, it was the balance sheets of the banks that absorbed the sovereign debt (6037). … the failure to build new capital would leave the European banks in no position to absorb any further shocks. While the United States began to stabilize, in Europe the banking crisis of 2008 would merge a year later with a new crisis: a panic in the eurozone public debt market. The connecting thread between the crisis of subprime and the crisis of the eurozone was the fragility of Europe’s bank balance sheets (6573). As the Financial Times put it, the failure of the eurozone to restore stability on its own terms meant that by April 2010, the ‘rescue’ of the euro, ‘the ultimate expression of European integration’, depended on outsiders in international institutions and the US administration” (7037). Whereas tiny Latvia had needed only a few billion euros, now the IMF pledged 250 billion. It was by far the largest commitment the IMF had ever made to any program. The $1 trillion pledged to the IMF at the London G20 that was supposed to mark the advent of a new age of global firefighting would be deployed to rescue Europe (7115)

*13*  In retrospect, Draghi’s whatever it takes” speech has come to be seen as the turning point of the eurozone crisis. In the aftermath, markets immediately calmed (8910). ‘Whatever it takes’ was, in fact, a form of surrender. The eurozone was finally giving in to what Anglophone economic commentators had been calling for all along. If only the ECB had moved to the Fed model earlier, as Obama had spelled out at Cannes, the worst of the eurozone crisis might have been avoided. What Draghi now promised was what Geithner, Bernanke and Obama had been preaching to the Europeans since 2010: Do it our way.”… The eurozone was saved by its belated Americanization (8989). Though the ECB did not purchase newly issued government debt, what it did do was to repo sovereign euro bonds.27 As the eurozone deficits ballooned, the ECB operated what was known informally as the “grand bargain.”28 It supplied hundreds of billions of euros in cheap liquidity to Europe’s banks in the form of the socalled Long-Term Refinancing Operation initiated in May 2009.29 The banks then bought sovereign bonds” (6028).

*14*  In the spring of 2009 France and Germany had lectured the UK and the United States about financial stability. A year later they were reduced to calling on the IMF to help not just Greece but the eurozone as a whole (6611). In the space of barely three weeks, the German chancellor managed to tell the press that politicians should be responsible to markets and to tell the pope that politicians should make policy for the people” regardless of those markets (8064).

*15*  The revolving door that feeds government in America regularly rotates between public service and the corporate world (11398). Both the number one and number two positions at the Treasury were to be filled by men—Steve Mnuchin and Jim Donovan—with Goldman Sachs pedigree. Dina Powell, who moved to the influential assistant position at the White House, had formerly headed the bank’s philanthropic efforts. National Economic Council director Gary Cohn was formerly Goldman’s president.

*16* But for it /the Great Slump / there would certainly have been no Hitler”… “Would fascism have become very significant in world history but for the Great Slump? Probably not. Italy alone was not a promising base from which to shake the world…. It was patently the Great Slump which turned Hitler from a phenomenon of the political fringe into the potential, and eventually the actual, master of the country (Hobsbawm (1996), p. 86, 130).

*17*  Political choice, ideology and agency are everywhere across this narrative with highly consequential results, not merely as disturbing factors but as vital reactions to the huge volatility and contingency generated by the malfunctioning of the giant systems” and machines” and apparatuses of financial engineering (11989). The idea that ‘social Europe’ had deviated in any essential way from the logic of turbocharged ‘financial capitalism’ as exemplified by America was an illusion. In fact, Europe’s financial capitalism was even more spectacularly overgrown and it owed a large part of its growth to its deep entanglement in the American boom (2666).

*18*  In the spring of 2010, Schäuble’s scheme was shot down, by friendly fire.23 Chancellor Merkel was no European federalist. She had no desire to reopen the terms of the Lisbon Treaty for which she had fought so hard and which was only just coming into operation (6923). She /Merkel/ was not about to endow Brussels with its own monetary fund. She was far too skeptical of Europe’s capacity for self-discipline (6925). A committee of the EU, the ECB and the IMF would make up the soon to be infamous “troika,” dictating policy to Greece and the other “program countries.” What was ruled out was restructuring. On that Washington sided with the French and the ECB. Existing Greek debt would be paid off with new loans from the troika, whether or not the result was sustainable (6997).

*19* Throughout the Nation, opportunity was limited by monopoly… For too many of us the political equality we once had won was meaningless in the face of economic inequality… A small group had concentrated into their own hands an almost complete control over other people’s property, other people’s money, other people’s labor – other people’s lives. For too many of us life was no longer free, liberty no longer real… Franklin D. Roosevelt 1932

*20*  Globalization had pushed top incomes up and lower incomes down. Since the 1990s, the impact of these factors had only increased. Imports of cheap manufacturers opened up by NAFTA and Chinese accession to the WTO benefited consumers, but depressed wages and robbed blue-collar Americans of secure manufacturing jobs and the health and retirement benefits that went with them. By 2013, experts close to the American labor movement estimated that the trade deficit with China had cost 3.2 million jobs and the competition of low-wage foreign labor had depressed the wages of the 100 million American workers without college education by $180 billion (9187). Between 1977 and 2014 the share of national income going to the top 1 percent before taxes and benefits had risen by 88.8 percent. After fiscal redistribution their share increased by 81.4 percent. Nor did the tax and welfare state prevent the share of the bottom 50 percent from declining from 25.6 to 19.4 percent (9202).

*21*  The arsonists from Goldman Sachs: On April 16, 2010, the SEC announced that it would be bringing charges against Goldman Sachs for misleading the investors to whom it had sold inferior quality mortgage-backed securities (6402). The revolving door that feeds government in America regularly rotates between public service and the corporate world (11398). The firefighters from Goldman Sachs: In his early days as Treasury secretary, Geithner was quite commonly described as being formerly of Goldman Sachs (6216). In 1993 /Robert/ Rubin had moved from his position at the top of Wall Street, as cochairman at Goldman Sachs, to serve as the first head of the National Economic Council, which Bill Clinton had called into existence as a counterpart to the National Security Council. Two years later Rubin was appointed Treasury secretary (690). Hank Paulson, like Rubin, moved to the Treasury from the CEO job at Goldman Sachs. (948) It was surely more than coincidence that MontiDraghi and Otmar Issing, Merkel’s favorite economic adviser, had all worked for Goldman. (8401) It was Draghi—an American-trained economist; a Goldman Sachs associate; a paid-up member of the global financial community; a “friend of Ben” /Bernanke/; an internationalized, urbane Italian, not a provincial German—who delivered this conclusion to the agonizing story of the eurozone crisis (8992). Both the number one and number two positions at the Treasury were to be filled by men—Steve Mnuchin and Jim Donovan—with Goldman Sachs pedigree. Dina Powell, who moved to the influential assistant position at the White House, had formerly headed the bank’s philanthropic efforts. National Economic Council director Gary Cohn was formerly Goldman’s president (11382).

Harald Schumann had already spoken of “plutocratic nepotism” (Global Countdown, 2008, p. 121).

*22*  What Reich now recognized was that much of this was “insufficient,” if not “beside the point,” because it overlooked a “critically important phenomenon: the increasing concentration of political power in a corporate and financial elite that has been able to influence the rules by which the economy runs …. The problem is not the size of government but whom the government is for” (9236)

*23*  If there was any justification for the protracted torture of Greece, it was the fear that an immediate debt restructuring would unleash contagion to other sovereign debtors across the eurozone and destabilize Europe’s banks, thus causing a far wider crisis (7372). Restructuring would have had immediate and devastating implications for the Greek banking system, not to mention broader spillover effects.” This was what was ultimately decisive (7159). …restructuring was an unpopular option with the creditors. As recently as 2007 Greece’s bonds had traded at virtually the same yield as Germany’s. They were widely held. At the end of 2009, of Greece’s 293 billion euros in public debt outstanding, 206 billion were foreign owned, 90 billion were held by European banks and roughly the same amount by pension and insurance funds (6644).

*24*  What drives global trade are not the relationships between national economies but multinational corporations coordinating far-flung value chains (424). … the world economy is not run by medium-sized “Mittelstand” entrepreneurs but by a few thousand massive corporations, with interlocking shareholdings controlled by a tiny group of asset managers (562). In 2008 that flow of dollars grew to such proportions that it rendered any effort to write a separate history of the American and European crises anachronistic and profoundly misleading” (4333). Obama was left to remark: “We now live in a global economy where everything is interconnected, and that means that when you have problems in Europe and in Spain and in Italy and in Greece, those problems wash over into our shores” (8016). Greenspan declared, because “(we) are fortunate that, thanks to globalization, policy decisions in the US have been largely replaced by global market forces. National security aside, it hardly makes any difference who will be the next president. The world is governed by market forces.”… As Fed chair he had made the markets into the ultimate arbiter of American economic policy” (11293).

I would like to add that the book is also rich in information about Asia and Russia, which I could not include in this brief review.