Crisis: One Central Bank Governor & the Global Financial Collapse

by Alan Bollard, Sarah Gaitanos

Written from the perspective of the governor of the Reserve Bank of New Zealand, this informative chronicle is a firsthand account of the global financial and economic meltdown. This well-researched and dynamic study captures the drama of the events—from the overheated markets of 2007 through the collapse of investment banks and crises in multiple economies to the fragile recovery in New Zealand and the world in 2010—as politicians, bankers, and government officials struggled to deal with the worst financial crisis since the Great Depression.

Genres: Economics

216 pages, Paperback

First published November 1, 2010

Reviews

[Elruin Elmsroot · Rating 3 out of 5]

Alan Bollard’s Crisis is best read as an insider account of the Global Financial Crisis rather than another conventional history of 2008. As Governor of the Reserve Bank of New Zealand, Bollard offers a valuable perspective from a small, open economy caught in a global liquidity and confidence shock despite being far from the epicentre of the US subprime crisis. The 2012 updated edition follows the crisis from international banking stress and recession into the European sovereign-debt crisis, while also covering the Christchurch earthquakes. Its greatest strength is the institutional perspective: the book captures what happens when information is incomplete, markets move faster than policy processes, and decisions have to be made under extraordinary uncertainty.

The New Zealand experience also highlights how financial instability travels across borders. Wholesale funding dependence, international financial linkages, foreign-currency liquidity and changes in global risk perception meant that a relatively distant financial system could still become highly exposed to developments elsewhere.

Bollard’s account makes the importance of contagion particularly clear: institutions that appear individually sound can become vulnerable when system-wide confidence deteriorates. The crisis therefore emerges not simply as a failure of individual banks, but as a problem of interconnected balance sheets, liquidity and confidence.

The main weakness is analytical depth. The narrative is frequently descriptive and chronological, while the deeper architecture behind the crisis receives less attention than expected. Maturity transformation, collateral chains, shadow banking, regulatory arbitrage, implicit guarantees, cross-border exposures and the political economy of intervention are present more as background than as subjects of sustained analysis. The book explains considerably more about how policymakers responded than why the financial system became so fragile despite sophisticated regulation, risk management and monetary policy.

Overall, Crisis is valuable primary-source material because of Bollard’s proximity to the events and decisions that shaped New Zealand’s response. Its strongest contribution is showing the limits of models and institutional confidence when nonlinear contagion emerges, while demonstrating why financial resilience depends on much more than interest rates alone.

[Richard · Rating 4 out of 5]

There are many books about the GFC, but for a New Zealander this is definitely an important one to read. For the most part it alternates paragraph by paragraph in explaining what happened from 2007 through 2012 on a worldwide basis, followed by what was happening in New Zealand at the same time.

The global perspective paragraphs I found to be almost like reading a textbook. It is all well explained, but it comes across more of a list of things that happened, which doesn't make for gripping reading. Compare that to The Alchemists by Irwin, who makes the events of the GFC very personal and memorable by describing the personalities behind the decisions. Bollard's account seems very dry by comparison.

However if you treat these paragraphs as required reading for the passages of the book describing the events in New Zealand, then they are completely forgivable. The stories behind the staff working at RBNZ, difficult decisions being made by the governor and hearing about some of the slightly less important details (lawyers convening at midnight with pizza to draft the deposit guarantee scheme etc) were parts that I found fascinating, and make the book worth reading.

The Eurozone crisis is also explained in the expanded edition. Again, while well explained, this can be read in more entertaining and interesting books. With little impact in New Zealand I didn't find the NZ chapters particularly interesting. An exception would be the reaction to the Christchurch earthquakes which happened in the same years.

All in all while parts can be a little dry when compared to some of the other bestsellers on the GFC (of which there are no shortage), this is definitely worth reading for the colourful New Zealand passages, which I thoroughly enjoyed. I wish more books were published like this in New Zealand.

[Ange · Rating 4 out of 5]

This book is surprisingly accessible and readable. An interesting over view of the NZ economy at a challenging time, with the foucs on banking. Good information on NZ interest rates.

[R · Rating 3 out of 5]

Interesting but if you are looking for answers or detail, you won't find anything new here.