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Doom Loop (UK Edition)

by | January 4th, 2010 | 01:54 pm
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In the Sunday Times (of London), Peter Boone and I address what the British authorities can do to break their version of the boom-bust-bailout cycle.

There is a certain amount of fatalism about these issues in Europe. This is misplaced. In the short-term, European policymakers have an important opportunity to diminish the political power of big banks, particularly because peer review—through the European Commission, the G-20, and even the IMF—is more likely to have impact there than in the United States.

It’s an open question whether the degree of ideological capture by finance was stronger over the past decade in the United States or the UK. But at least leading UK policymakers have started to push back against their banks; in the United States, Paul Volcker remains a relatively lonely quasi-official voice.

Has Wall Street Learned Any Lessons? Not According to these Books (December 27)

In the Washington Post Book World, I review Andrew Ross Sorkin’s Too Big To Fail and two related books: Duff McDonald’s biography of Jamie Dimon (Last Man Standing), and Peter Goodman’s broader retrospective on the political origins and social impact of the crisis (Past Due).

If you think the crisis of 2008–09 was an aberration, or top Wall Street executives have learned their lessons, or our financial system is no longer dangerous, take a look at these books. Each of them separately explains part of how the people running our biggest banks have done so well; taken together, these books describe a pattern of corporate and government behavior which—in the aftermath of the Great Bailout of 2009—points to serious trouble ahead.

Also posted on Simon Johnson’s blog, Baseline Scenario.

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