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166 of 167 people found the following review helpful
5.0 out of 5 stars John Lanchester for Head of the Financial Services Authority
An immensely readable account of the credit crunch by an informed observer rather than a participant with an axe to grind.

Nobody could avoid being totally bemused by the shenanigins of the financial institutions who brought about the credit crunch in 2008 - 2009. I certainly could not nor could I grasp the scale - what does $ trillions mean? How do sane...
Published on 7 Feb. 2010 by M. Hillmann

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3 of 3 people found the following review helpful
3.0 out of 5 stars The Hindsight Primer
IOU is a breezy overview of the financial crisis. It's great for anyone with no financial background and who somehow was unable to see a tv news report or read a magazine since 2007. With hindsight, it pulls together all the elements of the blowup, as if it were obvious, foreseeable, and inevitable. That is the benefit of hindsight, and Lanchester weaves it together as a...
Published on 27 Dec. 2012 by David Wineberg


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3 of 3 people found the following review helpful
3.0 out of 5 stars The Hindsight Primer, 27 Dec. 2012
By 
David Wineberg "David Wineberg" (New York, NY USA) - See all my reviews
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IOU is a breezy overview of the financial crisis. It's great for anyone with no financial background and who somehow was unable to see a tv news report or read a magazine since 2007. With hindsight, it pulls together all the elements of the blowup, as if it were obvious, foreseeable, and inevitable. That is the benefit of hindsight, and Lanchester weaves it together as a coherent story that fits my description, with drama, with impact and with colour.

He explains beautifully how banking is bogus, from the very basic perversion of balance sheets on through to new formulas for new products that don't work, even in theory. The most damning revelation is statistical - that the masters of the universe actually believed their own theories that such a blowup was not statistically possible, for a period of time longer than the universe has been in existence.

I was very concerned that there was no mention of the ratings agencies - but he came through, a little weakly, and very late, after page 208 (of 232), but hardly gave them the tonguelashing he gave others and which they richly deserve. They blessed these bogus products, for the money they received, and took down the entire world economy for their 40 pieces of silver. You must not minimize the role of the ratings agencies. They've gotten away with it utterly and completely.

One point missed was Alan Greenspan's overlooking of bank balance sheets. Of all people, the detail-obsessed Greenspan should have noticed that banks' balance sheets were ballooning outside of all proportion to their actual state of affairs. Dangerously, disastrously. That was after all, his very business. No one has ever called him on that one.

There is also an overriding theme that I got from IOU that the author didn't. That is debt. It seems that all efforts in investment banking, mortgage banking - banking in general - is to put customers in debt. The more they can put people in debt, the richer the bankers become - and of course, that's all that matters. So ways were found to make subprime loans, and then bundle them to make them more creditworthy than quality loans. The Thatcher government was all about getting people out of rentals into private homes they could not afford the way she ran the country. In the USA, no-docs loans, liar loans and the rest were all ways to get people into debt. If you read David Graeber's book Debt, you will see how powerfully crippling this is. It's not a zero sum game; you don't get rich by the amount you put someone else in debt. Leverage makes it far worse than that. And IOU dances all around that fact without ever recognizing it.

So while IOU is an easy, breezy overview, it really is just an good overview of a very deep flaw.
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3 of 3 people found the following review helpful
5.0 out of 5 stars Superb, 2 May 2011
A great explanation of the financial disaster. Lanchester takes you through all the major elements that led us up to this catastrophe, explaining many of the technical economic details and all the financial shenanigans in clear, lively, and vivid detail. At times, this read more like a page turner than an economic tract (that's a good thing) and while there may be a couple of places where he overeggs the fruitiness of his language (see what I did there?), overall, this is a book you can learn a lot from while still having a jolly good time.

But what I also liked is that Lanchester isn't afraid to shy away from the interesting moral, social and philosophical issues surrounding the collapse. Again - this makes it sound heavy - but it's not. It's not just a matter of the big bad bogeymen (the Banks) running a corrupt Ponzi-esqye scheme (though that is, of course, a large part of it) but how politicians and the public too (that's us. Well... it's you. Me? I'm a paragon!:)) all conspired to give the banks their head in pursuit of cheap and easy money and lazy economic growth.

You may not agree with everything here, and you may want to follow this book with something weightier, drier, and academic on the causes of the financial collapse. But as an excellent and brilliant and thrilling introduction to these issues which won't insult your intelligence, I doubt you'll find anything better.
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4 of 4 people found the following review helpful
5.0 out of 5 stars Enjoyable and in depth, 8 July 2011
This review is from: Whoops!: Why everyone owes everyone and no one can pay (Paperback)
As a 16 year old wanting to know more about the recent economic crisis, it was paramount that I found a book that kept me interested as well as offering an in depth analysis. This book gave me both. It's simple, doesn't trail through years and years of economic history, focuses on the question and offers some kind of solution at the end. This took me 10 days to read because I found it so enthralling. A really useful read to anyone who wants to know why the why the credit system "crunched".
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2 of 2 people found the following review helpful
5.0 out of 5 stars After the Fall., 9 Jun. 2013
By 
Mr. G. Morgan "wes" (Haywards Heath, England) - See all my reviews
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This review is from: Whoops!: Why everyone owes everyone and no one can pay (Paperback)
Following the 2007 crash, a disaster whose true cost has yet to be realised by most (indeed we "ain't seen nuthin' yet' as one cowboy liked to say) this is not 'just' a vastly entertaining it's a very important book. From the introduction and the car analogy, I knew I was in for a treat, as it happened a sustained one. Plainly the subject is especially important now, in the early 2010's, but worth it at any time as humans are perennially liable to lose their heads where markets are concerned, from South Sea Bubble to Dot Com kerthump.
Although endowment mortgage selling is a subject outside Lanchester's purview, I have had the nasty experience of quite enough financial 'management' and wheezes not to be sniffy about anything that might better inform the layperson. And whilst he would not pretend to be an economist, through his father's job as a banker in Hong Kong he has picked up quite a fair amount of knowledge about the world of Big Money; he seems au fait with the subject, certainly enough to withstand some of the criticism from the more intransigent in the industry. (They are unwise to whine; many have got off far too lightly).
It should be no surprise to anyone that Lanchester is a novelist (read 'The Debt to Pleasure', a treat) and a good one; he has written here an admirable book that ought to be read by everyone. You don't have to believe every word he says - I do - but as a way into this vital topic, being forewarned is absolutely vital.
Oh and pace a critic or two, if something MIGHT be wrong, that does not necessarily make it nonsensical; too often one finds something thought wrong, as in factually incorrect, called 'absurd'. No, no, no. Very sloppy 'thinking'. (This is what the philosopher Gilbert Ryle called a Category Error and Rather Important). You know who I mean!
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2 of 2 people found the following review helpful
5.0 out of 5 stars Financiers paid ten times the rest of us, for being ten per cent as competent, 30 Jan. 2011
I just have to tell the world this book is brilliant. It is so amazingly brilliantly well written. You feel the writer really caring whether you the reader have got the story and narrative he's giving you - just like a parent on a one to one with a motivated child struggling over homework. Not just simple definitions of economics words you hear bandied about, but the 'now I understand it' penny drops moments that come from a brilliant teacher. He is patient and he really cares that you follow him.
I know Gillian Tett (brilliant journo, nice person, senior writer on the FT, and an anthropologist by training) also summed up the crisis brilliantly in her earlier book, but Lanchester has read her book and incorporated some of her stuff.
Critics say this book's patchy, and it's bad on solutions. Well, regulations as a result of the crisis are going through Brussels all the time now (the UK media chooses not to tell us), given that the only sensible future solutions to experiencing another crisis are international. The the bankers and the rest of them are in cloud cuckoo land thinking they can once again be paid ten times the rest of us, for being ten per cent as competent - it ain't gonna happen, fellahs and lassies.
Lanchester's also neither a loony Trot full of irrational, blinkered and ill-founded hate, nor is he in any way part of the smug grossly overpaid world of finance where you start believing that there are a 'few teething problems' but that 'most of us are just doing our job'. (This reviewer spent a few months in the financial world and most of them have no understanding that they are not exceptionally well talented, just exceptionally well paid).
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77 of 86 people found the following review helpful
3.0 out of 5 stars 20-20 hindsight--almost, 25 April 2010
By 
T. Burkard (Norwich, England) - See all my reviews
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On the plus side, Lanchester writes well and he's done a lot of research. He is spot on when he argues against over-reliance on the mathematical models used by bankers--had any of our 'masters of the universe' troubled to acquaint themselves with the real-estate shysters who prey on blacks in America's ghettos, they would never have touched a CDO or any 'securitized' asset with a bargepole. There is a great over-supply of houses in these areas, and now you can't give away a house in my native Detroit--not even in one of the neighbourhoods where most of the houses are still standing. The sad truth is that most urban blacks go to schools run by unions, and their pupils are lucky if they even learn to read--let alone how to figure out a percentage. Having worked in Detroit real estate, I know all too well the kind of hustler who preys on them, and they are evil. No other word for it.

For the most part, I suspect Lanchester understands the mechanics and even the dynamics of the modern banking industry--not being a banker, I have to take his word for it. However, when he crossed my special subject--the emergence of Britain as the world's leading power in the 18th and 19th century--that faith was shaken. Preposterously, he claims that our present prosperity dates back to 1580, when Elizabeth supposedly used her share of Drake's plunder to pay off the national debt, and invested the surplus in a fund which just grew and grew. In truth, the Tudors and Stuarts were always broke because their rents didn't keep pace with inflation, and the Crown had to sell land to survive. The 17th century, and the civil war, were all driven by the Crown's deperate need for funds. Once Parliament effectively controlled the nation's finances, Britian was able to borrow the vast sums needed to build the Royal Navy. By the close of the Napoleonic wars, the national debt stood at 3 times GDP--vastly higher than it is now. But the debt was held by the same political class that ruled Britain, so there was never any question but that it would be repaid without the resort to 'quantative easing'.

Although I suspect that Lanchester's narrative is largely accurate, his interpretation falls apart on his ideological obsessions. He claims that Western democracies have forgotten the poor since the fall of communism, because our rulers no longer have to demonstrate their concern for the poor. But ironically, that's just what brought about the sub-prime crisis: Federal regulations which forced banks to loan to people living in inner cities. True, shysters of every description made fortunes in doing so, but this regulations were a result of well-meaning (if stupendously naive) efforts to help American blacks become a part of a 'property-owning democracy'. Perhaps even more tellingly, the Greek debacle had very little to do with greedy bankers: rather, it was the result of greedy public sector employees.

Lanchester's solution is more and better regulation, but he admits that existing regulatory bodies in Britain and the US are just poodles of the banking industry. He has no useful ideas on how effective regulatory bodies can be conjured up. For all of his insistence that bubbles have to burst, he shies away from what should have been the only real solution to the crisis, which was to let banks fail. Now, they really do think they are too big to fail, and they're paying themselves bonuses again like nothing ever happened. Letting banks fail would have been extremely painful--but it would have lanced the boil. One phrase which Lanchester studiously avoids is 'moral hazard'; more's the pity.
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2 of 2 people found the following review helpful
5.0 out of 5 stars Whoops !, 4 Nov. 2010
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This review is from: Whoops!: Why everyone owes everyone and no one can pay (Paperback)
This is an excellent book on the causes of the recent catastrophic events in the financial services industry. It is wittily and engagingly written.
You can read it quite quickly and easily but it gives some very clear explanations of those terms which people outside financial services can easily find impenetrable; things like Collateralised Debt Obligations, Credit Default Swaps etc.
It is a wise book which identifies clearly the flimsy basis of many of the mathematical tools that were used to predict risk. It is depressingly frank about the likelihood of a repeat in the near future because so little has changed in the nature of the financial services (or "disservices," as some describe it) industry.
I've read several books on this crisis. This is the sharpest and clearest, in my opinion. Perhaps the topic doesn't sound very exciting but John Lanchester makes it feel that way. You will be lost in shocked surprise at some of the techniques that were used and which, infuriatingly, some people made £Billions from. David Stallard
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24 of 27 people found the following review helpful
4.0 out of 5 stars the best guide to the crunch, 1 Feb. 2010
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A more accurate subtitle of this book would be, "How to destroy the economy for dummies". The question which the actual subtitle title raises, namely who owes what to whom and whether it can actually ever be paid off, is not even touched on in this book. What Lanchester does do, as other reviews suggest, is break down the financial crisis we are all still reeling from, in terms that everybody can understand. I haven't studied finance or economics, but I now feel, incredibly, that I could do a fair job of explaining the generalities of the crisis if I were called upon to do so. More importantly, I feel that I have a solid basis for further reading on the subject and might even, who knows, one day be able to form my own opinions. Lanchester is a brilliant journalist and has the gift of being able to write about any subject intelligently, and with great humour. His outsider's perspective on the practices and philosophies leading up to the crash are a tremendous advantage, as he never gets bogged down in dogma or detail. Every single chapter is so admirably explained that an idiot could understand it.
I do (as usual) have minor quibbles: I scratched my head over "liabilities match assets plus equities" (p25) for a while and wished the book had been proofread by an accountant. More seriously, Lanchester tries to write as simply as possible, but at times one does feel a little patronised, such as on page 160, where he is still referring to investment banks as 'casinos' and commercial banks as 'piggy banks.' Got it, thanks. Or sometimes you feel that he is trying to make up for what he feels may be a dry topic by inserting unnecessarily jocular expressions. The market goes up and down "like a bride's nightie" at one point, or "like a gorilla on a pogo stick" at another; a company director is usually referred to as a 'head honcho', and so on. It can sometimes feel embarrassingly like a relief teacher trying to get down with the kids. Lanchester is an engaging enough writer without these quirks. The other thing that doesn't work for me is the end of the book. After Lanchester explains all the causes of the crisis: the CDOs and CDS's, the toxic assets and risky loans etc., it would have been a natural climax to describe exactly how it all unravelled so dramatically over just a few days. But the author doesn't allow himself this punchline. Instead, the long second-to-last chapter of the book is a critique of the regulatory systems and attitude to risk of the financial sector generally, interspersed with the author's own views, such as how Britain doesn't have a manufacturing based economy anymore, unlike brilliant Germany, and how city people know the price of everything and the value of nothing. I don't necessarily disagree with his views, but I just think they would have been better kept separate from the indisputable facts.
But don't worry. These flaws are actually very minor. They don't really detract very much from an excellent read, by far the most entertaining and informative thing I've ever read on the subject. If you know nothing about finance and want to know why we are where we are now, then this is the book for you.
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2 of 2 people found the following review helpful
5.0 out of 5 stars A clear minded view!, 13 Nov. 2010
By 
Mr. A. Lopez (Wales, UK) - See all my reviews
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This review is from: Whoops!: Why everyone owes everyone and no one can pay (Paperback)
For anyone interested in learning about contemporary economics and the credit crisis this is a must read! Lanchester writes in an engaging and informative way, and makes even some of the more complex financial systems and instruments understandable. "Whoops" really highlights the crazy irregularities and the undesired complexities that have evolved in our globalised economy. It also covers other key issues such as the numerous deregulations that in part paved the way for the numerous out of control $ chasing schemes, products, and events that have culminated in the tax payer footing an astronomical bill; whilst the architects continue business as usual. Lanchester also focuses on risk management, an area which has proven to be fatally floored and makes reference to the brilliant Nassim Nicholas Taleb who's thoroughly taken apart economic predictive models and the bogus metrics used to manage risk. This is a great little book, I hope he produces more non-fiction in the future to go with this cracker!!
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2 of 2 people found the following review helpful
5.0 out of 5 stars Readable, informative and accurate, 18 Feb. 2012
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This review is from: Whoops!: Why everyone owes everyone and no one can pay (Paperback)
The whole credit crunch and the ensuing aftermath is one of the most important events since the 2nd World War. This excellent book gives a step by step guide to the philosophical, financial and frankly criminal underpinnings of this momentous event. It does it all in an engaging style with wry sense of humour. And you need a sense of humour to read about the hubris and greed which has led a small coterie of very wealthy people to leave us in this situation. One of the things which really riles is that these people are not entrepreneurs they are functionaries in PLC's who have seen that they can take bigger and bigger risks which will pay off for them and when they lose the tax payer will bail them out. I particularly agree with the thoughts in the epilogue - we have wasted the opportunity the credit crunch gave to reform the banking sector. When the next crash comes the cupboard will be bare but the righteous anger against the masters of the universe will overwhelming.
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Whoops!: Why everyone owes everyone and no one can pay
Whoops!: Why everyone owes everyone and no one can pay by John Lanchester (Paperback - 7 Oct. 2010)
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