Mitch Feierstein is a successful hedge-fund manager based in New York. This book is a scorching attack on greedy bankers and useless venal politicians. It tells the story of `how politicians in Washington and the bankers on Wall Street jointly created the largest Ponzi scheme in history'. What is a Ponzi scheme? It involves huge amounts of rapidly mounting debt, poor, nonexistent or inadequate assets, deceitful or nonexistent accounting, feeble, inert, or toothless regulators, a get-rich-quick culture, ignorant, lazy, greedy investors and an astonishing capacity for self-delusion. And it caused the present crisis.
Then governments force cuts on the public, not on the 1 per cent who caused the crisis. Between 1998 and 2010 Wall Street and insurance companies added just 4.3 per cent to US output, yet took 28.9 per cent of all US profits.
US politicians blew $3 trillion on the Iraq war and $1 trillion on the Afghanistan war. The US Federal Reserve secretly lent $7.7 trillion to the bankers - RBS got $1.2 billion. In 2008-9 the US government bailed out AIG. Goldman Sachs, Merrill Lynch, Société Générale, Deutsche Bank and UBS got $32.7 billion. Goldman Sachs paid out $16.2 billions in bonuses in 2009. Gordon Brown also borrowed to bail out banks and bank creditors, many of them foreign.
The total US bailout has cost taxpayers $23.5 trillion so far, a loss which equals 170 per cent of national income. By contrast, Sweden is 15 per cent to the good, because when it had a bank bust in the early 1990s, it made the shareholders bear the costs.
But Ponzi schemes are not limited to the USA. Feierstein writes, "The euro was misconceived from the first, its flaws baked into the design: no central treasury, no credible penalties for the profligate, no central political guidance, and no orderly exit mechanism." British banks are exposed to the eurozone's debt. They lent to French banks and to German banks which are over-committed to France.
Yet Feierstein is all at sea when he writes about Britain. One minute he absurdly claims that the government will `restrain the banks', the next he concedes that "the Conservative Party is essentially the City of London's lapdog." (As of course Labour and the LibDems are too.) He embraces the City's big lie that we must cut public spending (so cutting growth and adding to the deficit).
And he writes, "Firm action would have involved facing up to the crisis. Forcing creditors to take losses. Making shareholders lose everything." But the government has done none of this; instead it has made taxpayers take all the losses.
Feierstein warns us, "We are still in the middle of a massive Ponzi scheme. ... The debts are still there. The bad assets are still there. The same corrupt incentives are still in place. The same degree of profiteering. The same blindness to risk. The same astonishing tolerance for ever-increasing debt." So we face another crisis, if we allow it.