The Crunch

On August 9, 2007 France's largest bank announced that it would suspend trading in two huge investment funds it controlled. The same day three German banks revealed that they were close to collapse. A few days later came the first run on a British bank since the 1860s as vast queues of worried investors besieged Northern Rock. Within weeks, the government was forced to bail out this previously little known bank to the tune of £30 billion, share prices in other mortgage lenders were plummeting, and alarming news arose from several banks in the United States. Award-winning journalist Alex Brummer painstakingly traces the course of this crisis from its origins in the subprime market to its explosion on to the international scene. It is a story of greed, mismanagement, and dithering in which bankers seeking to make a quick buck, regulators engaged in turf wars and blame-avoidance, and governments paralyzed by the sheer scale of the problem all conspired to bring the banking system almost to its knees. It is also a story of victims: the 1.5 million people in the US who have already been thrown out of their houses; the entire population of the UK who have been co-opted to guarantee Northern Rock with £30 billion of public money; borrowers everywhere who are now finding credit more expensive and harder to get.

Alex Brummer is a city editor at the Daily Mail and the author of Hanson: A Biography and Weinstock: The Life and Times of Britain's Premier Industrialist.