Lords of Luck

17 May

For those of you who remain concerned about the precariousness of our global economic situation, I highly recommend Lords of Finance: The Bankers Who Broke the World (The Penguin Press, 2009). It’s a wonderfully written book by Liaquat Ahamed, whose career has been in investment banking not academia or financial journalism. His is a fast-paced history replete with treasured anecdotes and insightful analysis about the most frightful of economic times that, if we’re not careful, may become second only to our own.

For those of you who prefer not to consider the possibility that our economies can actually worsen and who have faith that those in positions of power are capable and open-minded people, doing all they can to steady the financial mess we are in, I suggest you go see Ironman II instead. While equally chaotic as our economic messes, the movie, at least, has a happy ending.

Ahamed’s subject is what spurred the decisions of the financial giants who steered the global economy to the disaster of the Great Depression. When reading about Montagu Norman, the eccentric governor of the Bank of England, Benjamin Strong, the chronically ill gentleman of power inside the Federal Reserve, the luckless Emile Moreau at the Banque de France, and the Reichsbank’s vainglorious Hjalmar Schacht as well as the so-called experts in their respective nations’ finance ministries and treasury departments, I could not help but think of their doppelgangers in similar positions of financial power today. And I cringe.

Norman, Strong, Moreau, Schacht, and their co-stars were all fighting against or preparing for history’s financial shipwrecks. None of the men (and they were all men) in the early part of the last century could imagine any economic turbulence that might lay ahead of them. They made choices in the hope of bringing back prosperous and mythic times of yore. As a result, their decisions about pegging currencies to gold, balancing budgets, influencing exchange rates, or attacking inflation, deflation, national debts, and more succeeded or failed by sheer luck.

Worse, just like Alan Greenspan, the most overrated economic leader in generations, these men were captive to their ideological beliefs. If one of their pet constructs seemed to bolster the finances of their nation, they accepted that the success was based on the rigorousness of their ideas. If another construct failed miserably, they found a fallacious reason to excuse their blinkered belief system. Just like the mendacious and pedantic Greenspan.

As I’ve noted before about myself, I generally see the glasses we face in life as being half empty and often cracked as well. So it’s not surprising that when I look at our economic leadership of today and their policies, I see vain men and women driven by ideologies that work as often as not because of happenstance. Whether we escape even worse economic mishaps in the months and years ahead simply depends on how lucky they, and we, are.

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  1. Tweets that mention Lords of Luck « Croisan Views by Mark Everett Hall -- Topsy.com - May 17, 2010

    […] This post was mentioned on Twitter by New Book Reviews. New Book Reviews said: Lords of Luck: For those of you who remain concerned about the precariousness of our global economi… http://bit.ly/aUc2Lv #books #writing […]

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