On the Brink: Inside the Race to Stop the Collapse of the Global Financial System [Paperback]

Disclosure: The author was once my boss, although there is no prospect he'd ever have known that. I was a mere halfling among 25,000. Consequent additional disclosure: by dint of said employment, once upon a time I suppose I helped, in a small way, "the Vampire Squid jam its blood funnel into anything that smelled like money", as it was so enchantingly put in a celebrated Rolling Stone article. It didn't feel like that's what I was doing at the time. Honestly.

Now: seeing as it is perhaps the defining socio-economic and political sequence of events since the Second World War: the-near-collapse-of-the-Western-Capitalist-system-as-we-know-it; the horrifying few months triggered by (but not really including) 2007's "Credit Crunch", which brought down Bear Stearns, Lehman Brothers, Merrill Lynch, AIG, Washington Mutual and ran such veritable institutions as Morgan Stanley and even the dear old Vampire Squid itself close, it's odd that it doesn't have a convenient label. So let's call it "The Meltdown".

There have been many - and are sure to be many more - rip-snorter accounts of The Meltdown (my favourite, present company excepted, being Andrew Sorkin's Too Big to Fail) but most suffer, at the limit, from the need for well-intended guesswork. For this was a crisis of momentous actions taken by a few individuals and went on largely discreetly and behind securely closed doors. Any journalist, no matter how good her sources, is forced into educated speculation or must rely on hearsay for the vital exchanges. After all, who said what to whom is the real story of our Close Brush With Apocalypse.

I say most accounts of the Meltdown suffer this failing; this one doesn't: If ever someone were placed to write the definitive account of the near-detonation of the capitalist system as we know it, it is Henry J. Paulson Jnr., 74th secretary to the U.S. Treasury.

In pretty much every significant exchange, Paulson was there; in most cases creating it. Prior to assuming that role in 1996, Hank Paulson was CEO of the good old Vampire Squid (did I say Vampire Squid? I meant "Pre-Eminent Global Investment Bank"), Goldman Sachs for a decade leading up to The Meltdown. As is the habit of Goldman high executives, on 2006 - when all was peachy - Paulson did the decent thing in the name of "public service", stopped poaching and turned game keeper. If he had had any inkling of what was coming down I dare say he would have run for the hills. As it was, he accepted the role only reluctantly. Though it seems odd to say it, we should all be thankful that he didn't, and therefore didn't. Paulson's unique expertise, integrity and idiosyncratic personality may just have made the difference. It was a pretty scary couple of months. It really could have gone thermonuclear.

About that idiosyncratic personality. For a certified Master of the Universe (and a boss, as a matter of fact), Hank Paulson was - and is - a singular and peculiarly likeable man, and this book is very much in keeping with his bluff demeanour: not cut from anything like the same schmoove-schmoozing lounge suit cloth as his contemporaries, Paulson, a gruff, hoarse, angular figure who wears a Casio watch, eschews medicine on faith grounds (other than an obligatory plastic cup of diet coke at breakfast), genuinely cares about the environment (resorting to "birding" with his wife at all conceivable opportunities, including for a half hour before dinner at Camp David, which makes for (unintended) comic relief in an otherwise pretty grim book). He's no politician, either - his lifelong blunt directness often ruffling the carefully coiffured plumages of the political classes. Charm being so important on Wall Street and Capitol Hill, it does make you wonder how Paulson got anywhere near as far as he did, but his social cack-handedness is charming in its way, and on at least three other vital scores Paulson has a very long suit: integrity, intelligence and experience. Paulson's candid assessment of his own social awkwardness navigating the tricky waters of Capitol Hill is disarming.

This is a great account of The Meltdown and in the abstract it has much to recommend it. Were it not for the competition, I'd recommend it unhesitatingly. Its misfortune is to pale, as a piece of writing and narrative, in comparison with the excellent Too Big To Fail. So, if you were going to read one (and only the truly dedicated would need more than that), I would read Sorkin's book. The irony is that (seeing that Paulson largely validates Sorkin's narrative) only by Paulson's book's existence is Sorkin's rendered fully credible.

Now I'm confused, but I think I know what I mean, and hope you do too.

Olly Buxton

It might very well have been the smartest career move he ever did. By his own admission, he did not see the credit crunch arriving, and Goldman Sachs didn't start hedging against a mortgage-based collapse until after his departure.

The entire book is a description of attempting to fix an endless line of symptoms - the cause of artificially low interest rates is mentioned in one single line. The storytelling is fast-paced, and the chapters around Lehman's collapse are particularly engrossing.

As can be expected, all controversies are ignored, and explanation of why rather key decisions were made, is kept light - AIG stands out. He also claims to be "opposed to the incentive structure of Wall St" - despite receiving $700m in compensation during his 7 years in charge of Goldman Sachs.

The book seems slightly overproduced, in the sense that some chapters feels as if they were written by committee - to protect everyone's interests.

Ross Sorkin's book 'Too Big To Fail' was the supreme journalistic account of the Bush Administrations fervid attempts to stave off a collapse of the US economy which would have had disastrous consequences for the Global economy. Financial mayhem, of a severity perhaps not encountered before would have ensued. Depression level unemployment, virtual lack of confidence in all financial institutions, runs on national currencies, and a substantial rise in those falling under the poverty line. All of these factors would have contributed to general discontent and even perhaps civil unrest. It would be difficult to provide a better chronicled narrative of these events than Sorkin's book.

However, whereas Sorkin is on the outside looking in, Hank Paulson was on the inside, at the very epicentre of the Government's frantic efforts to find solutions for a seemingly impossible and fast moving series of catastrophic losses in almost every major financial institution and many Blue Chip corporations. Mr Paulson is able to provide a 'fly on the wall' account of not only the fiscal machinations but also an insight into the feverish bi-party negotiations on Capitol Hill for new legislation to facilitate his rescue plans. In fact the two books compliment each other and together provide an excellent rounded account of one of the most critical moments we are likely never to see again - it is hoped.

Along with Ben Bernanke, Chairman of the Federal Reserve, Tim Geithner, President Reserve Bank of New York, Sheila Blair, Chairman of the FDIC and their departmental teams, Hank Paulson worked literally day and night, 7 days a week,for 6 months in 2008 to avert the threatening financial armageddon. And succeed they did but not without quite a few hiccups, confrontations, arguments and near meltdowns. That they succeeded was a tribute to those involved, which should be universally lauded and also an endorsement of the US characteristic that guarantees bi-partisanship in the face of trouble. God Bless America.

This book also details the very important role played by President Bush in recognising and understanding the severity of this very complex set of economic woes, and despite the correctional remedies being contrary to his political beliefs and policies, nevertheless gave his full support and authority to bringing about the urgently required solutions.

Through his writings Hank Paulson comes over as an likeable person, good family man, outstanding Banker, inspirational leader, and exemplary Servant of his country. Without his dogged resolve and gritty determination it is highly probable that global economy would now be in a sorry state.

A must buy book.