Are Today's Lords of Finance Better than Those of Yesteryear?
Joe Nocera has an excellent, concise review of the The Lords of Finance in Flying Blind in the New York Times. "Lords of Finance," by Liaquat Ahamed, looks at the policy decisions of the four most important bankers in the post World War I era, and chronicles how these four were unable to overcome the ill effect of reparations upon Germany's economy. Nocera starts with a quote about the economy from John Maynard Keynes,
We have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand.Then he leads us, in spare, clear prose, to the present day:
As you learn how the world spiraled into depression, about the interconnectedness of the banking system, where a failure in one country led to problems in other countries, about the way economic orthodoxy caused brilliant central bankers to make mistake after mistake, and on and on -- you can't help thinking about the economic crisis we're living through now.Nocera calls the book "magisterial.... A grand, sweeping narrative of immense scope and power." But in the end, the book leaves him with no new answers, only questions:
Here at this critical moment, with a new administration having just taken office, and with so much riding on its policy responses to the current crisis, "Lords of Finance" poses an unsettling question. Do we really understand the workings of that delicate machine any better than our forebears did? Or do we only think we do?