Saturday, 30 January 2010

Fool's Gold: Review.

An enthralling race through the anarchy, selfishness and ultimately vandalism of financial capital. It puts the last decade of capitalist "development" in context and is taut as a thriller in its last couple of chapters.
Although many of the processes are complex Gillian Tett explores the foundations of them well so even if you get a little bit lost you have the basic understanding of what the bankers were getting up to.
Her journalistic style makes it readable but I would criticise the referencing which is patchy. It seems to be trying to nod its head to academic work (Tett studied anthropology prior to FT journalism) but not fully engaging with it. The references either should have been ditched or more fully developed. Perhaps the latter could not happen because of speed of publication as it is pretty contemporary.
Though Tett states in the conclusion that she is angry over the mayhem unleashed by the banks her prose does not really reflect this in the way say Naomi Klein would. Understandable given the different politcal complexions but this position is a boon here. Taking a fairly diffident style in reporting the banks dealings in credit derivatives as they get more and more ludicrous is actually pretty effective.
I am not 100% sure why she chooses to focus her discussion through the prism of JPMorgan and she occassionally falls into the trap of character biography of some of the protagonists (see Robert Peston review from last year) but normally pulls back from the brink.
It definitely deepened my understanding of how the banks pursued profits through essentially gambling on losses and defaults, hedging their bets, swapping risks and expanding credit exponentially. It made me angry and I will use it for future reference.
One quote to show the madness - when the sub-prime mortgages started to default in big numbers in 2006 the banks actually increased their exposure to it : " Between Oct and Dec 2006 banks issued a record $130 billion in CDOs alone double the level of a year ago and 40% were created from sub-prime mortgages". And they wonder why people dont trust the banks!

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