Summary: I’m usually not reading finance stuff. I don’t own stocks, I don’t wake up every morning checking how the Dow Jones did over night and neither read press/books about finance. I was an ignorant until a few weeks ago regarding how and why things could have gotten so bad. “Why everyone owes everyone and no one can pay” by John Lanchester narrates the story behind the global financial crisis with a very simple but efficient perspective. A must read.
How I came to this book?
While catching up with an old neighbor in Taipei, we ended up talking about money, international entrepreneurship, financial crisis and things like that. Within the talks, David remembered about this book he hadn’t read yet but heard of “Why everyone owes everyone and no one can pay”. This book written by John Lanchester aims at explaining from A to Z the story behind the global financial crisis. How, why it happened and who picks up the bill (and why this is going to be you).
That’s it! This talk awakened my curiosity as I realized that I didn’t knew much about finance – and trust me, having seen the wolf of wall street with DiCaprio isn’t helping. I also knew that I had a long flight ahead for my return from Shanghai, so why not learning something, right?
By the way, you can grab yourself a copy of the book over here.
Enlightenment to finance
For a novice in finance like me, this book was a revelation. I knew about the crisis and had read randomly about some of the specifics of it in the press. I even have seen some movies … but still. I never really had gotten hold of something that was both educative and serious on the topic.
This was the first time that I finally got explanations from the start to the end. In a chronological order, the author takes elements that made history of finance one after the other in a simple analysis leading to the global financial crisis of this century. It all started with the stock market as you can guess. At the start, everything was “rolling” until deregulation under the pressure of financial lobbies made its way on the financial places. From that point, things kept getting worse. Sub-primes, bonds, insurance on bonds, credits, defaults and default swaps. Ingredients of a cocktail to lead to what we know to be as the largest financial debacle of all time!
What I enjoyed while reading this book were the many practical examples given by the author to explain complex financial mechanism and vocabulary which as you can see: doesn’t mean much. In the end, we are the ones paying the bill (the taxpayers). Without a choice, our governments and us have to pay for the excesses and frauds orchestrated by banks that were and still are considered to be “to big to fail”.
Should you read this book?
If you have an slight interest in regards to what banks are doing with you money, then my answer is yes! If not, then this book might not be the right fit for you this time.
In todays economy, we’ve all been hit (more or less) by the effects of the GFC. What do you think of the banking system? What needs to change?