6 Books to Help Understand the Economic 'Reset'
A definitive analysis of this current economic 'reset' is unlikely to appear for some time yet, but in the meantime there are a number of books that provide useful insight into what is going on, and what might happen next.
(Click on any image or title to see the Amazon entry for each book.)
The Two Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash by Charles R Morris
When it was first published (in early 2008 - seems such a long time ago, now!), this book was one of the few truly insightful and prophetic analyses of the coming sub-prime meltdown. Since updated (it was originally called 'The Trillion-Dollar Meltdown', but one trillion proved too small an estimate), it is not an easy read - Morris has worked in the industry for years and rolls the jargon out without hesitation, and sometimes without adequate explanation - but there is a moment of blinding insight in every chapter.
House of Cards: A Tale of Hubris and Wretched Excess on Wall Street by William D. Cohan
Cohan is a journalist - and a good one - mostly writing for Fortune magazine, and unlike Morris' book, this is an entertaining read. A detailed analysis of the downfall of Bear Stearns, 'House of Cards' is a great behind-the-scenes insider's look at how the credit crisis began to unwind in one veritable institution.
Cohan was fortunate that many of the main players obviously wanted to save face by dishing the dirt on their colleagues, and the result is an exceptionally colorful portrait of the Bear Stearns senior management - incredible characters with incredible hubris. But the main benefit is in seeing how the Fed's decision-making processes played out, and how they may do so in the future.
Lords of Finance: The Bankers Who Broke the World by Liaquat Ahamed
From an amazingly dull precept - a portrait of the four central bankers of the US, the UK, France and Germany after the First world War - Ahamed has written an intriguing tour d'horizon of the economic revolution of the 1920's and 30's, in which he shows clearly how economics first become a major tool for political and public policy in the west.
Set in the time when 20th century economic thinking was first evolving, 'Lords of Finance' demonstrates just how fundamental an effect economic events can have on social order, western political thinking and social mores, and although he resists making direct comparisons to the current economic environment, there are fearful lessons to be drawn from every chapter. Any book in which John Maynard Keynes, Winston Churchill and Franklin Roosevelt play bit parts is a daring piece of work, and Ahamed pulls off a triumph of great writing and solid analysis.
Traitor to His Class: The Privileged Life and Radical Presidency of Franklin Delano Roosevelt by H.W. Brands
There's much more to this book than an analysis of Roosevelt's famous 100 days and how he handled the Great Depression, but the book is worth reading for those sections alone. Brands does a yeoman's job of sifting through the enormous challenges facing Roosevelt when he came to power, and his portrayal of the decision-making process in the White House and on Capitol Hill in the face of those challenges is compelling.
It is said that this book was on President Obama's reading list during his candidacy, and if so, it must have read like an orientation manual - the challenges facing a new administration inheriting a rapidly collapsing economy have never been so grippingly portrayed.
The End of Laissez-Faire: The Economic Consequences of the Peace by John Maynard Keynes
'We are all Keynesians now' is a phrase that's been puled out of the woodshed a lot recently (in fact, it was first used in an article in Time magazine in - wait for it - 1965, and Richard Nixon famously used it again in 1971). Whether or not we are all Keynesians, it's undoubtedly true that the general precepts of economic management set out in Keynes magnum opus 'The General Theory of Employment, Interest and Money' are much more in vogue today than they were a decade ago.
Written some years earlier, 'The Economic Consequences of the Peace' is the book in which Keynes first tried out his thinking (it was also the book that made him famous - and temporarily rich). His analysis of the economic knock-on effect of the First world War led in turn to his theory of government stimulation of the economy through deficit spending (this of course strongly influenced Roosevelt's 'New Deal', though Roosevelt was no particular fan of Keynes).
If you're trying to get your head around where government assistance and intervention in the economy might start, and where it should end, there's no better place to begin that Keynes's first, and most insightful tilt at the topic.
Predictable Success: Getting Your Organization Back On the Growth Track - and Keeping It There by Les McKeown. Available October 15.
Well, you wouldn't expect me to leave it out, would you? I'll not review my own book, if that's OK - but you can read full details here.
Have You Read a Good Book Lately?
Have you read anything particularly insightful about doing business in the current economic environment?
If so, why not share?
If you've read something recently that you've found particularly helpful, why not share the details using the simple form below - we'll collate your submissions with everyone else's and publish a list later in the month: