Book reviews
# See No Evil: Uncovering the Truth Behind the Financial Crisis
Erik Banks, Palgrave Macmillan, November 2010
We are doomed to experience further financial crises in the future, because money is powerful, bankers clever, political will malleable and memories short. So argues Erik Banks in this stimulating book, which tells the story of the recent global economic crisis in the words of the main players in the drama. Banks shows how few bankers, regulators and politicians saw the crisis coming, and how they believed its effects would be containable when it began. When realisation kicked in, they all began to compensate by talking loudly and designing populist knee-jerk measures which seemed only to deal with the specifics of preventing another crisis exactly like that which had already occurred. The form of future crises was barely thought about. Banks' reconstruction of the crisis, and the demonstration that so few substantive lessons have been learnt, is essential reading for anyone interested in our current predicament.
ERIK BANKS is a senior risk adviser for a European universal bank. Over the past 23 years, he has held senior risk positions in the investment banking and hedge fund sector in New York, Tokyo, Hong Kong, London and Munich. He is the author of more than 20 books on risk, derivatives, emerging markets and governance, including the Palgrave titles ‘Failure of Wall Street’ (2004), ‘Dictionary of Finance, Investment and Banking’ (2009) and ‘Dark Pools’ (2010).
# The Rise and Fall of an Economic Empire: With Lessons for Aspiring Economies
Colin Read, Palgrave Macmillan, September 2010
While many authors have documented empires maintained through military strength, power derived solely from economic might is a more modern phenomenon. These different sources of power share one important characteristic, though. There is an inevitability to the decline of empires that rest on either foundation. There are also lessons to learn from every empire. Just as earlier empires based on military or colonial power experienced spectacular ascendancies and subsequent declines, modern economic empires are no less fragile. The overextension, overconfidence and underinvestment that lead to the demise of military or colonial empires have their analogies in economic empires. An economic superpower grows based on its strengths, is fuelled by its successes, but declines as its values are transformed and economic arrogance dilutes its hegemonic powers. In this book, Colin Read describes the various factors that give rise to economic empires, and documents how these same forces eventually lead to their downfall. By analysing the successes of each factor and the reasons why each falters, he offers insights into ways to sustain economic relevancy. He also offers lessons to aspiring economies so that they may best leverage and manage their growth and avoid the problems that beset less carefully designed economies. In doing so, Read gives us an interesting and provocative glimpse into the current global dynamic in which the United States, the world's first true economic empire, struggles to maintain its global economic supremacy in the face of a rapidly growing China that will soon challenge it as the world's largest economy.
COLIN READ is a columnist and the author of a number of books for the academic and popular press on economic issues. He is a Professor of Economics and Finance at the State University of New York, USA. He has worked in Indonesia for the Harvard Institute for International Development and at the Harvard-MIT Joint Center for Housing Studies. This is his fourth English language book. His previous titles include: ‘Global Financial Meltdown – How We Can Avoid the Next Economic Crisis’ (2009), ‘The Fear Factor – What Happens When Fear Grips Wall Street’ (2009) and co-edited and co-authored ‘The International Taxation Handbook’ (2007).
