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The Meltdown Years: The Unfolding of the Global Economic Crisis
The Meltdown Years offers the most lucid and useful explanation to date about why home values, life savings, job security, and investments around the world are in peril. Rather than focus on who is to blame, though, author Wolfgang Münchau takes the more practical approach of focusing on what is to blame. The fact that individuals were stupid, greedy, and corrupt should come as no surprise. What’s remarkable is that our world’s financial systems―put in place to help stave off such a crisis―failed so miserably. What is inherently wrong with the global monetary system? What happened to the regulatory process? What role did the credit market, hedge funds, and investment banks play? These are the types of questions one must answer in order to truly comprehend what caused the meltdown and, more importantly, to understand what must be done to repair it. Münchau dissects the global financial system, exposing its flaws and weaknesses in the context of the crisis. A decidedly global perspective of the greatest financial crisis of our time, The Meltdown Years examines
272 pages, Hardcover
First published September 9, 2009
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Displaying 1 - 4 of 4 reviews
August 1, 2024
A EUROPEAN ECONOMIST LOOKS "GLOBALLY" AT THE 2008-2009 FISCAL CRISIS
Wolfgang Münchau is considered one of the world's foremost experts on the Eurozone. He writes the European economic column of the Financial Times. He wrote in the Prologue to this 2010 book, "[The book] takes the reader on a journey starting in the early 1970s and ends in 2009, in the hope of presenting a broader picture of our crisis... [it] aims to furnish the reader with sufficient background knowledge to understand what happened, and to follow the present debate about the economic recovery, how to rescue the banking sector, and what consequences to draw for the future of financial capitalism." (Pg. 2-3)
He notes, "The buyers of these loans are the Special Purpose Vehicles (SPVs) mentioned earlier... The important thing is that the SPV does not appear on the bank's balance sheet. An SPV is therefore a nonbank, but part of the shadow banking sector. An SPV performs the function of a bank, and yet it is not regulated as a bank." (Pg. 67)
He observes, "Most economists, central bankers, and finance professionals looked the other way. And as for the general public, they had no idea that the credit market even existed. They certainly had no idea that it would soon blow up and so greatly affect their lives." (Pg. 94) He adds, "After the collapse of the credit markets in 2007, the blame game began... The rating system was completely discredited... the question arises as to whether a system that consists of the ratings and valuations of a small group of private companies is optimal." (Pg. 113-114)
He states, "When the big banks and insurance companies got bailed out by their governments... the top executives nevertheless insisted on their bonus payments... Bankers were so incompetent that they had to be bailed out by the government, and then they rewarded themselves for their failure. It is no surprise that this outrageous behavior has greatly contributed to what I call regulatory outrage." (Pg. 170)
He concludes, "the really good news is that the best talent of the next generation will no longer be devoted to moving wealth from one corner of the globe to another. There are more important things to do in the twenty-first century. Nobler tasks will emerge." (Pg. 222-223)
This "european" perspective on the fiscal crisis is very interesting, and will be of great value to anyone studying the crisis of 2008-2009.
Wolfgang Münchau is considered one of the world's foremost experts on the Eurozone. He writes the European economic column of the Financial Times. He wrote in the Prologue to this 2010 book, "[The book] takes the reader on a journey starting in the early 1970s and ends in 2009, in the hope of presenting a broader picture of our crisis... [it] aims to furnish the reader with sufficient background knowledge to understand what happened, and to follow the present debate about the economic recovery, how to rescue the banking sector, and what consequences to draw for the future of financial capitalism." (Pg. 2-3)
He notes, "The buyers of these loans are the Special Purpose Vehicles (SPVs) mentioned earlier... The important thing is that the SPV does not appear on the bank's balance sheet. An SPV is therefore a nonbank, but part of the shadow banking sector. An SPV performs the function of a bank, and yet it is not regulated as a bank." (Pg. 67)
He observes, "Most economists, central bankers, and finance professionals looked the other way. And as for the general public, they had no idea that the credit market even existed. They certainly had no idea that it would soon blow up and so greatly affect their lives." (Pg. 94) He adds, "After the collapse of the credit markets in 2007, the blame game began... The rating system was completely discredited... the question arises as to whether a system that consists of the ratings and valuations of a small group of private companies is optimal." (Pg. 113-114)
He states, "When the big banks and insurance companies got bailed out by their governments... the top executives nevertheless insisted on their bonus payments... Bankers were so incompetent that they had to be bailed out by the government, and then they rewarded themselves for their failure. It is no surprise that this outrageous behavior has greatly contributed to what I call regulatory outrage." (Pg. 170)
He concludes, "the really good news is that the best talent of the next generation will no longer be devoted to moving wealth from one corner of the globe to another. There are more important things to do in the twenty-first century. Nobler tasks will emerge." (Pg. 222-223)
This "european" perspective on the fiscal crisis is very interesting, and will be of great value to anyone studying the crisis of 2008-2009.
May 6, 2012
There are many books and even more pundits attempting to explain how the financial crisis happened.
This book does have an explanation, which makes perfect sense. In a nutshell, the USA spent too much money, the Chinese (and Japanese) benefited from much of this and put the money back into the USA, whereupon it was spent again.
The author - who is clearly a credible and level headed figure - also explains some of the timeline of the crises and how it came to be in different countries.
Unfortunately, the books roots in Germany are all too clear and so the UK is not mentioned much - despite London being central to many of the problems.
Instead, the narrative switches between the US and Germany with occasional mentions of other countries.
Overall, a helpful, well written and eminently readable book which, I feel, just misses the mark.
This book does have an explanation, which makes perfect sense. In a nutshell, the USA spent too much money, the Chinese (and Japanese) benefited from much of this and put the money back into the USA, whereupon it was spent again.
The author - who is clearly a credible and level headed figure - also explains some of the timeline of the crises and how it came to be in different countries.
Unfortunately, the books roots in Germany are all too clear and so the UK is not mentioned much - despite London being central to many of the problems.
Instead, the narrative switches between the US and Germany with occasional mentions of other countries.
Overall, a helpful, well written and eminently readable book which, I feel, just misses the mark.
August 31, 2011
It was a little tough for me to understand because I have just only started studying about Economics. I applaud Munchau for making my life easier by breaking it down one by one the meaning of some economic terms. Although it is still a little hard for a student like me to understand, I appreciate his thoughts and point of view.
November 22, 2014
author proposes questions but does a lot of beating around the bush with amy blame.
Displaying 1 - 4 of 4 reviews