In 2008 the world was plunged into financial and economic crisis. This book explores the multiple roots of the crisis, including the build-up of global economic imbalances, the explosion in the
use of novel financial instruments, the mismanagement of risk, and the specific roles played by housing and debt. It reviews the evidence that, on the eve of the crisis, all was not well and
that many policy makers and finance industry leaders ignored the dangers.
The book examines in depth the measures taken to rescue the financial system and to stabilise the global economy. It strives to be fair in judgement, bearing in mind what policy makers knew at
the time and the fast-changing nature of the problems they faced. It pays particular attention to the short-term impacts and longer-term consequences of the measures taken, and investigates why
some approaches were favoured over others, who will ultimately bear the costs, what political constraints shaped outcomes, and to what degree new risks were created and problems only delayed.
The book describes the many difficulties that lie ahead when rescue measures - such as quantitative easing, large government deficits, and bank rescue schemes - are unwound. It explores the
continuing challenges of achieving a more balanced global economy, the often painful balance-sheet adjustments that will need to be made in both the private and the public sectors, the options
for financial reform, and the hazards that financial bubbles will continue to pose.
The book's arguments take on added authority given that the author had identified, and called attention to, key features of the crisis before it unfolded. It is a very timely analysis of how
policy makers arrived where they are now and of the many hurdles that still lie ahead. It provides a lively and accessible account that will appeal to a wide audience and contribute to an
informed public debate about the lessons to be learnt and about future policy options.
