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The Forgotten History of the Financial Crisis
Article

The Forgotten History of the Financial Crisis

What the World Should Have Learned in 2008

Adam Tooze
Foreign Affairs, 2018
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Editorial Rating

9

Qualities

  • Analytical
  • Eye Opening
  • Engaging

Recommendation

Historian Adam Tooze drills down into the real causes of the global financial crisis in this enlightening chronicle of little-known 2007–2008 events. He convincingly posits that, as the crisis spread across the world at great speed, the quick actions of the US Federal Reserve averted a worldwide financial collapse. getAbstract recommends that analysts, investors and executives read this in-depth yet highly accessible account of what former Fed chair Ben Bernanke called “the worst financial crisis in global history, including the Great Depression.”

Take-Aways

  • The financial crisis of 2007–2008 engulfed countries around the globe and precipitated a 90% plunge in capital flows and a 22% drop in exports.
  • The extensive interlinkages among financial institutions that put the world’s banking system in jeopardy started in the 1980s, when banks began funding their portfolios with interbank loans in financial markets. 
  • These arrangements boosted bank profits but led to high leverage, more risk and the greater likelihood of contagion in a credit crunch. 

About the Author

Adam Tooze is a history professor at Columbia University, where he leads the European Institute.

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