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A WELL RESEARCHED AND FASCINATING ANALYSIS OF THE RECENT FINANCIAL CRISIS
on 30 July 2012
I bought the Kindle version of this book as a "daily deal offer" without having heard of the film, which I have now bought (but not yet watched).
I previously had a fairly vague idea of the reasons behind the crisis, and tended to the view that yes the bankers were overpaid and greedy, but that we had all participated in borrowing and spending "easy money". I thought that the crisis was simply an unforseeable accident.
The book soon wiped away this view. Ferguson writes well and describes in easily understandable language just what was behind the crisis. He explains sub-prime mortgages, structured products, derivatives and hedge funds, CDOs and other exotic financial instuments. I now feel that I understand what these things are. Ferguson's writing style is clear and pleasurable to read, his only failing in this respect is that he often repeats things later on, but this is a minor irritation.
The book is well researched and backed up with extensive citations and references - the last 20% of the Kindle edition. What really opened my eyes was his detailed account of how the entire finance industry, banks, investment banks,mortgage lenders, ratings agencies, academics, regulators (in the USA) and insureres are all in each others pockets, with a common goal of self-enrichment at all costs. It is truly horrifying to learn that even when the property bubble was deflating, investment banks and insurers were offloading toxic assets onto unsuspecting investors, even betting (via "shorts") that these investment funds, sold to inexperienced or non-savvy institutions, would fail.
This book is a biting indictment of a system which rewards insiders by huge salaries and bonuses, while allows failure and fraud to go unpunished. The recent revelations of LIBOR rate fixing and HSBC's involvement in money laundering are not in fact very new, Ferguson points to them in the book.
Ferguson broadens his analysis to the current structures (and woes)of the US economic and social systems. I strongly recommend Inside Job as essential reading to anyone who wants to understand what happened in this crisis, and to the lack of any coherent political response to the dominance and rapacity of finance in the US (and the UK).