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Bust: Greece, the Euro and the Sovereign Debt Crisis (Bloomberg
In 2001, Greece saw its application for membership into the Eurozone accepted, and the country sat down to the greatest free lunch in economic history. However, the coming years of global economic prosperity would lead to unrestrained spending, cheap borrowing, and a failure to implement financial reform, leaving the country massively exposed to a financial crisis—which duly struck.
In Bust: Greece, the Euro, and the Sovereign Debt Crisis, Bloomberg columnist Matthew Lynn explores Greece's spectacular rise and fall from grace and the global repercussions of its financial disaster. Page by page, he provides a thrilling account of the Greek financial crisis, drawing out its origins, how it escalated, and its implications for a fragile global economy. Along the way, Lynn looks at how the Greek contagion has spread like wildfire throughout Europe and explores how government ineptitude as well as financial speculators compounded the problem.
Blending financial history, politics, and current affairs, Lynn skillfully tells the story of how one nation rode the wave of economic prosperity and brought a continent, a currency, and, potentially, the global financial system to its knees. Lively, engaging, and thought provoking, Bust reminds us just how interconnected the world really is.
- GenresNonfiction
293 pages, Kindle Edition
First published December 21, 2010
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November 12, 2012
High Points and Shortcomings in Matthew Lynn’s Bust
The Western world has been doing it for years: spending money it simply does not have. As Matthew Lynn steadily repeats throughout his explanatory book on the Eurozone crisis, this nasty habit is the reason for the biggest global financial disaster the world has seen since the Great Depression. Too much borrowing and too much spending by governments lacking proper fiscal responsibility has allowed for the build-up of enough debt over the past few decades to bring the market to its knees. In his book Bust: Greece, the Euro, and the Sovereign Debt Crisis, Matthew Lynn argues that although Greece became the major target for blame in the wake of Europe’s sovereign debt crisis, the market was doomed before Greece’s financial problems spiraled out of control.
Lynn, a business and economics commentator for Bloomberg, explains that the downward slope of the world market towards the Global Financial Crisis began with the collapse of Lehman Brothers in the United States. He argues that if the Lehman Brothers situation had been contained immediately, the U.S. government would have spent only a fraction of what it later dispensed to rescue banks all over the world after the single bank’s crash. Instead of shelling out a few billion dollars to save one bank, the U.S. government was forced to spend several times that amount to prevent the world market from imminent peril once these banks began collapsing. Lynn contends that Europe failed similarly with Greece. The European Union waited and waited, turning a blind eye to Greece’s outrageous public spending and fallacious bookkeeping, before it finally threw together a messy, last-minute plan to bail out the Greeks. In constructing and delivering a rescue package for Greece, Lynn notes, the entire foundation of the E.U. began to crack. The E.U., founded on a strict no bail-out policy, blew its founding tenets to smithereens by accepting to come to Greece’s aid. However, the package did manage to stop the entire E.U. system from crumbling entirely. In the end though, the reader is left under the impression that there is little light at the end of the tunnel for the Euro, and that it will inevitably fail as a currency.
Lynn is not an academic writer, and he does not write for an academic audience. He writes, instead, for the common man. He does assume that his audience is familiar with a certain degree of economic jargon, but mostly he writes in a way that the general English-speaking public can understand and digest. Despite the fact that his book is laced with grammatical errors, misspellings, and word omissions, Lynn writes in a way that turns mundane economic narrative into an energetic, fast-paced drama. In a style typical of a journalist, he aims to keep readers engaged and curious. It is as close to a page-turner as a book about bond trading and economic policy-making can be. From the start, the author seems to promise the reader a thorough explanation of how the crisis in Greece spread like a virus through Europe, ringing in a period of financial unrest that would eventually lead to the break-up of the euro. Lynn attempts to illustrate the steps leading up to the peak of Greece’s economic hardship and the subsequent bail out by the E.U. in a way that laypeople can grasp. He is largely successful in carrying out his mission. He provides readers with a detailed description of the way the Greek government’s historically reckless financial handling and unwillingness to make severe but necessary budget cuts puts Greece head-to-head with Germany, who would ultimately wield the power to save the nation or let it sink into the Mediterranean Sea.
Lynn praises Germany throughout the entire book, making the frugal, self-sufficient country out as the most violated victim of Greece’s financial misconduct. He even suggests by the end that Germany would be better off abandoning the euro altogether in favor of restoring the deutschmark. Writing from a clearly Eurosceptic perspective, Lynn does not give any commentary as to how the euro may be able to survive the coming years. To him, the euro was simply “doomed from the start” (Lynn 260). This negative approach is multifaceted in that he gives several forecasts as to exactly how the euro will fail, but he does not provide any hope for the currency’s resurgence. He underestimates the power of the E.U. as a united force, preferring to highlight differences of interest between nations and creating an image of the E.U. as a face-off between rich nations in the north and poor nations in the south. He boldly contends that “[t]he debate over the Greek rescue package has crystallized German doubts about the single currency, and shifted it, perhaps decisively, in a more anti-EU direction” (Lynn 249). This cannot serve as an entirely true statement, since Germany plays a key role to this day in fighting to maintain European unity. The people of Germany, quite naturally, reacted negatively to the prospect of their economically careful nation having to shoulder the burden of Greek debt. However, that situation did not motivate them to throw in the towel just yet. Taking on countless risks and obligations of its own, Germany has worked hard and continues to work hard to hold the union together. The progress of the Union and beyond depends on each nation pulling its own weight. A mutual support system in which the E.U. nations can rely on each other in times of hardship is required for the survival of the euro. This means that a restructuring of not only economic but also political policy is necessary. All countries involved have to play by the rules for the euro to work out, and before this can happen, the economies of each individual nation must be sound. Lynn’s main argument holds true in this sense: Until the nations of the E.U. and throughout the rest of the world stop spending money that they do not really have, the global market will remain radioactive. The Greek financial virus will just keep spreading.
Lynn ends his book with predictions of shifting economic power from the West to the East. He give his predictions from the angle of a post-euro world, in which the currency has already broken apart and each nation has resurrected their old currencies. New economic powers, such as the BRIC nations along South Korea and Taiwan, will steadily eclipse the current economic powers. Unable to borrow their way out of debt any longer, the current economic powers will have to step down and, “like all bankrupts, they will have to slowly and sometimes painfully pay down their debts and find new ways of making a living” (Lynn 262).
Overall, Lynn poses a strong argument that modern, industrialized nations have been living a debt-fueled existence for far too long. It’s logical to see that, at some point, there is simply no money left. If a country is spending more than it is taking in, through exports and taxes, then it is only rational that it will go “bust” sooner or later. This could take hundreds of years, or it could take just a few years. Ultimately, policies promoting frugality and a focus on domestic industrial growth appear key to economic safety within a nation. It is not so easy, though, to see such policies through. As resources are growing more and more scarce on this planet, the population of industrialized nations must be willing to accept a new kind of lifestyle that it never had to think about in the late nineties and early 2000s. National debt, in both the U.S. and the E.U., must be curbed or both will be surpassed in world power.
The Western world has been doing it for years: spending money it simply does not have. As Matthew Lynn steadily repeats throughout his explanatory book on the Eurozone crisis, this nasty habit is the reason for the biggest global financial disaster the world has seen since the Great Depression. Too much borrowing and too much spending by governments lacking proper fiscal responsibility has allowed for the build-up of enough debt over the past few decades to bring the market to its knees. In his book Bust: Greece, the Euro, and the Sovereign Debt Crisis, Matthew Lynn argues that although Greece became the major target for blame in the wake of Europe’s sovereign debt crisis, the market was doomed before Greece’s financial problems spiraled out of control.
Lynn, a business and economics commentator for Bloomberg, explains that the downward slope of the world market towards the Global Financial Crisis began with the collapse of Lehman Brothers in the United States. He argues that if the Lehman Brothers situation had been contained immediately, the U.S. government would have spent only a fraction of what it later dispensed to rescue banks all over the world after the single bank’s crash. Instead of shelling out a few billion dollars to save one bank, the U.S. government was forced to spend several times that amount to prevent the world market from imminent peril once these banks began collapsing. Lynn contends that Europe failed similarly with Greece. The European Union waited and waited, turning a blind eye to Greece’s outrageous public spending and fallacious bookkeeping, before it finally threw together a messy, last-minute plan to bail out the Greeks. In constructing and delivering a rescue package for Greece, Lynn notes, the entire foundation of the E.U. began to crack. The E.U., founded on a strict no bail-out policy, blew its founding tenets to smithereens by accepting to come to Greece’s aid. However, the package did manage to stop the entire E.U. system from crumbling entirely. In the end though, the reader is left under the impression that there is little light at the end of the tunnel for the Euro, and that it will inevitably fail as a currency.
Lynn is not an academic writer, and he does not write for an academic audience. He writes, instead, for the common man. He does assume that his audience is familiar with a certain degree of economic jargon, but mostly he writes in a way that the general English-speaking public can understand and digest. Despite the fact that his book is laced with grammatical errors, misspellings, and word omissions, Lynn writes in a way that turns mundane economic narrative into an energetic, fast-paced drama. In a style typical of a journalist, he aims to keep readers engaged and curious. It is as close to a page-turner as a book about bond trading and economic policy-making can be. From the start, the author seems to promise the reader a thorough explanation of how the crisis in Greece spread like a virus through Europe, ringing in a period of financial unrest that would eventually lead to the break-up of the euro. Lynn attempts to illustrate the steps leading up to the peak of Greece’s economic hardship and the subsequent bail out by the E.U. in a way that laypeople can grasp. He is largely successful in carrying out his mission. He provides readers with a detailed description of the way the Greek government’s historically reckless financial handling and unwillingness to make severe but necessary budget cuts puts Greece head-to-head with Germany, who would ultimately wield the power to save the nation or let it sink into the Mediterranean Sea.
Lynn praises Germany throughout the entire book, making the frugal, self-sufficient country out as the most violated victim of Greece’s financial misconduct. He even suggests by the end that Germany would be better off abandoning the euro altogether in favor of restoring the deutschmark. Writing from a clearly Eurosceptic perspective, Lynn does not give any commentary as to how the euro may be able to survive the coming years. To him, the euro was simply “doomed from the start” (Lynn 260). This negative approach is multifaceted in that he gives several forecasts as to exactly how the euro will fail, but he does not provide any hope for the currency’s resurgence. He underestimates the power of the E.U. as a united force, preferring to highlight differences of interest between nations and creating an image of the E.U. as a face-off between rich nations in the north and poor nations in the south. He boldly contends that “[t]he debate over the Greek rescue package has crystallized German doubts about the single currency, and shifted it, perhaps decisively, in a more anti-EU direction” (Lynn 249). This cannot serve as an entirely true statement, since Germany plays a key role to this day in fighting to maintain European unity. The people of Germany, quite naturally, reacted negatively to the prospect of their economically careful nation having to shoulder the burden of Greek debt. However, that situation did not motivate them to throw in the towel just yet. Taking on countless risks and obligations of its own, Germany has worked hard and continues to work hard to hold the union together. The progress of the Union and beyond depends on each nation pulling its own weight. A mutual support system in which the E.U. nations can rely on each other in times of hardship is required for the survival of the euro. This means that a restructuring of not only economic but also political policy is necessary. All countries involved have to play by the rules for the euro to work out, and before this can happen, the economies of each individual nation must be sound. Lynn’s main argument holds true in this sense: Until the nations of the E.U. and throughout the rest of the world stop spending money that they do not really have, the global market will remain radioactive. The Greek financial virus will just keep spreading.
Lynn ends his book with predictions of shifting economic power from the West to the East. He give his predictions from the angle of a post-euro world, in which the currency has already broken apart and each nation has resurrected their old currencies. New economic powers, such as the BRIC nations along South Korea and Taiwan, will steadily eclipse the current economic powers. Unable to borrow their way out of debt any longer, the current economic powers will have to step down and, “like all bankrupts, they will have to slowly and sometimes painfully pay down their debts and find new ways of making a living” (Lynn 262).
Overall, Lynn poses a strong argument that modern, industrialized nations have been living a debt-fueled existence for far too long. It’s logical to see that, at some point, there is simply no money left. If a country is spending more than it is taking in, through exports and taxes, then it is only rational that it will go “bust” sooner or later. This could take hundreds of years, or it could take just a few years. Ultimately, policies promoting frugality and a focus on domestic industrial growth appear key to economic safety within a nation. It is not so easy, though, to see such policies through. As resources are growing more and more scarce on this planet, the population of industrialized nations must be willing to accept a new kind of lifestyle that it never had to think about in the late nineties and early 2000s. National debt, in both the U.S. and the E.U., must be curbed or both will be surpassed in world power.
March 3, 2018
This book is written in a colloquial action style. I find it also fundamentally and at times subtly anti-EU, like many British pre-Brexit sources. It starts well with all the cheating by the Greeks and the somnambulist responses by the EU authorities. Much of the latter half of the book is given to speculation on how the Euro crisis can be solved and nothing on why the issue has slipped out of the news.
Displaying 1 - 2 of 2 reviews