Lords of Finance: 1929, The Great Depression, and the Bankers who Broke the World

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9780099493082: Lords of Finance: 1929, The Great Depression, and the Bankers who Broke the World

With a keen sense of history and compelling narrative skills, Liaquat Ahamed gives us a vivid and dramatic account of four men whose actions led to the world economic collapse of the late 1920s.

Many of us presume that the Great Depression resulted from a confluence of inexorable forces beyond any one person's or government's control. In fact, as economist Liaquat Ahamed explains, it was decisions taken by a small number of central bankers that were the primary cause of the economic meltdown.

Meet the neurotic and enigmatic Montagu Norman of the Bank of England; the xenophobic and suspicious Emile Moreau of the Banque de France; the arrogant yet brilliant Hjalmar Schacht of the Reichsbank; and the dynamic Benjamin Strong of the New York Federal Reserve Bank. These men were as prominent then as Alan Greenspan and Hank Paulson are in our time.

Lords of Finance brings a fresh perspective on the origins of financial crises and an arresting reminder that its individuals who lie at the heart of global catastrophe.


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Amazon Exclusive: Liaquat Ahamed on the Economic Climate

In December 1930, the great economist Maynard Keynes published an article in which he described the world as living in “the shadows of one of the greatest economic catastrophes in modern history.” The world was then 18 months into what would become the Great Depression. The stock market was down about 60%, profits had fallen in half and unemployed had climbed from 4% to about 10%.

If you take our present situation, 16 months into the current recession, we're about at the same place. The stock market is down 50 to 60 percent, profits are down 50 percent, unemployment is up from 4.5% to over 8%.

Over the next 18 months between January 1930 and July 1932 the bottom fell out of the world economy. It did so because the authorities applied the wrong medicine to what was a very sick economy. They let the banking system go under, they tried to cut the budget deficit by curbing government expenditure and raising taxes, they refused to assist the European banking system, and they even raised interest rates. It was no wonder the global economy crumbled.

Luckily with the benefit of those lessons, we now know what not to do. This time the authorities are applying the right medicine: they have cut interest rates to zero and are keeping them there, they have saved the banking system from collapse and they have introduced the largest stimulus package in history.

And yet I cannot help worrying that the world economy may yet spiral downwards. There are two areas in particular that keep me up at night.

The first is the U.S. banking system. Back in the fall, the authorities managed to prevent a financial meltdown. People are not pulling money out of banks anymore—in fact, they are putting money in. The problem is that as a consequence of past bad loans, the banking system has lost a good part of its capital. There is no way that the economy can recover unless the banking system is recapitalized. While there are many technical issues about the best way to do this, most experts agree that it will not be done without a massive injection of public money, possibly as much as $1 trillion from you and me, the taxpayer.

At the moment tax payers are so furious at the irresponsibility of the bankers who got us into this mess that they are in no mood to support yet more money to bail out banks. It is going to take an extraordinary act of political leadership to persuade the American public that unfortunately more money is necessary to solve this crisis.

The second area that keeps me up at night is Europe. During the real estate bubble years, the 13 countries of Eastern Europe that were once part of the Soviet empire had their own bubble. They now owe a gigantic $1.3 trillion dollars, much of which they won’t be able to pay. The burden will have to fall on the tax payers of Western Europe, especially Germany and France.

In the U.S. we at least have the national cohesion and the political machinery to get New Yorkers and Midwesterners to pay for the mistakes of Californian and Floridian homeowners or to bail out a bank based in North Carolina. There is no such mechanism in Europe. It is going to require political leadership of the highest order from the leaders of Germany and France to persuade their thrifty and prudent taxpayers to bail out foolhardy Austrian banks or Hungarian homeowners.

The Great Depression was largely caused by a failure of intellectual will—the men in charge simply did not understand how the economy worked. The risk this time round is that a failure of political will leads us into an economic cataclysm.

About the Author:

LIAQUAT AHAMED holds degrees in economics from the Universities of Cambridge and Harvard. He worked as a professional economist at the World Bank during the 1980s and since then as an investment manager.


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Book Description Cornerstone, United Kingdom, 2010. Paperback. Book Condition: New. 198 x 130 mm. Language: English . Brand New Book. This has happened before. The current financial crisis has only one parallel: the Wall Street Crash of 1929 and subsequent Great Depression of the 1930s, which crippled the future of an entire generation and set the stage for the horrors of the Second World War. Yet the economic meltdown could have been avoided, had it not been for the decisions taken by a small number of central bankers. In Lords of Finance , we meet these men, the four bankers who truly broke the world: the enigmatic Norman Montagu of the bank of England, Benjamin Strong of the NY Federal Reserve, the arrogant yet brilliant Hjalmar Schacht of the Reichsbanlk and the xenophobic Emile Moreau of the Banque de France. Their names were lost to history, their lives and actions forgotten, until now. Liaquat Ahamed tells their story in vivid and gripping detail, in a timely and arresting reminder that individuals - their ambitions, limitations and human nature - lie at the very heart of global catastrophe. Bookseller Inventory # AAZ9780099493082

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Book Description Cornerstone, United Kingdom, 2010. Paperback. Book Condition: New. 198 x 130 mm. Language: English . Brand New Book. This has happened before. The current financial crisis has only one parallel: the Wall Street Crash of 1929 and subsequent Great Depression of the 1930s, which crippled the future of an entire generation and set the stage for the horrors of the Second World War. Yet the economic meltdown could have been avoided, had it not been for the decisions taken by a small number of central bankers. In Lords of Finance , we meet these men, the four bankers who truly broke the world: the enigmatic Norman Montagu of the bank of England, Benjamin Strong of the NY Federal Reserve, the arrogant yet brilliant Hjalmar Schacht of the Reichsbanlk and the xenophobic Emile Moreau of the Banque de France. Their names were lost to history, their lives and actions forgotten, until now. Liaquat Ahamed tells their story in vivid and gripping detail, in a timely and arresting reminder that individuals - their ambitions, limitations and human nature - lie at the very heart of global catastrophe. Bookseller Inventory # AAZ9780099493082

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Book Description Windmill Books, 2010. Book Condition: New. 2010. Paperback. Tells the story of individuals - their ambitions, limitations and human nature - which lie at the heart of global catastrophe. This book features the four bankers who truly broke the world: Norman Montagu of the bank of England, Benjamin Strong of the NY Federal Reserve, Hjalmar Schacht of the Reichsbanlk and Emile Moreau of the Banque de France. Num Pages: 576 pages, Illustrations. BIC Classification: 3JJG; KCX; KCZ. Category: (G) General (US: Trade). Dimension: 198 x 130 x 36. Weight in Grams: 460. . . . . . . Bookseller Inventory # V9780099493082

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