Wednesday , 22 November 2017


"Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable" – A Book by Mark Gilbert

“Complicit” is a rousing, fun look back at the credit crisis filtered through the mind of someone who labored in the center of it. Ending the story much the same way the boom ended for so many a greedy, blinkered little pig — by giving you the middle finger abruptly and without a hint of premonition — only highlights the talent that makes “Complicit” such an enjoyable read. It is a tour of almost-impossible-to-believe tales of greed, stupidity, and woe across eleven short, engaging chapters. Words: 1445

In further edited excerpts from his review* of Mark Gilbert’s book “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable,” C.J. Maloney (http://hnn.us/blogs/4.html) goes on to say:

A Frenzied Trip Down Memory Lane
The book comes at you in a series of brief, loud bursts: every chapter is further divided into sub-sections such as “Be Careful What You Wish For” and “LIBOR Freezes Over.” It is a frenzied trip down memory lane, even for those of us who lived through the thick of it all. Though I personally watched a proud Lehman Brothers morph into a corpse at the speed of leverage, I found myself growing slowly appalled while reading the alphabet litany of bailout acronyms; every page was a reminder of how much I’d already forgotten.

Naturally, those of Austrian mindset will disagree with almost all of Mr. Gilbert’s conclusions about what happened before, during, and after the Great Moderation. The importance of reading books that you don’t agree with, however, exceeds that of reading those that preach to your choir. It expands your understanding of any subject to see how others look at things, and, most importantly, it grants you access to some great reads.

The best chapter is number ten, “Giants Fall”, where Mr. Gilbert recounts the collapse of Bear Stearns, Lehman, and AIG along with the Federal Reserve’s ad hoc, utterly lawless response.

A Whirlwind of Jumbled Madness
The book’s tone matches exactly the events it describes: it reads like a whirl of jumbled madness, and that’s just pitch perfect. If you were there, if you took the cab rides to eat trendy food and the jet jaunts to paradise, if you hugged your bonus tight before throwing it into the wind, you know that a whirl of jumbled madness was exactly what it all felt like.

Calling a Spade a Spade With Humour
America long ago watched Lady Liberty replace her golden torch with a dance pole, the better to crotch grind the ignorant marks and empty their pockets with lurid distractions. Mr. Gilbert, though on the other side of the pond, sniffed out the timeless insanity we reek of, noting Playboy playmate Jamie Westenhiser’s 2005 announcement that she was henceforth out of the skin trade and into real-estate sales. As Gilbert puts it, “Just as shoeshine boys … offered stock tips … before the Great Crash of 1929, a stripper signaled the top of the U.S. housing market” (p.23). Instead of Colonel Kurtz moaning, “The horror! The horror!” “Complicit” holds up, “The absurdity! The absurdity!”

When his blood is at high tide, Mr. Gilbert displays the biting wit the Brits are known for. He derides as useless “fairground hawkers” (p. 5) the mathletes who churn ever more complexity into the financial markets “every time Microsoft Corporation upgrades its Excel spreadsheet software to accommodate more cells, rows, and columns” (p. 5). All of them get manically busy just to create “an investment strategy customized to your particular paranoia and enthusiasm” (p. 35).

Echoing descriptions of how gambling gripped entire peoples during other manias, he likens the derivatives markets to “a casino … they had the whiff of a Nigerian banking scam” (p. 37).

Nothing But a Tease
As a believer in a gold standard almost all of my disagreements with Mr. Gilbert concern money. As in all speculative crazes, it is money that lay at the heart of the boom’s story and, without a lucid explanation to the reader about what exactly money is, no story of any boom is complete.

In regards to this all-important question, “Complicit” is a tease. At the book’s starting gun, Mr. Gilbert declares that “where did the money come from?” is a “key question” to answer (p. 1) and he does answer it, perfectly pointing out that “central banks [are] responsible for steering global monetary policy” (p. 46). Even more enticing, he accurately records that “there wasn’t anywhere near as much money as there seemed to be … it was all an illusion” (p. 1). Yet, despite the occasional flash of monetary skin, the book as a whole is a frigid prude. Neither “money” nor “credit” is felt important enough to even list in the book’s index.

This is odd as Mr. Gilbert is fully aware that money was the crux of the boom. He sees that while “the seeds of the global crisis were sowed in the housing market” (p. 9), the “foundations of the housing boom crumbled easily because they were made of borrowed money” (p. 11). He reminds us that it wasn’t just the housing market that got drunk on easy money, since “floods of liquidity were seeping into every part of the financial market” (p. 133). Who else besides the central bankers (who were “responsible for steering global monetary policy”) and the politicians who appointed them made all this possible (p. 115)?

Yet, unlike Gilbert’s rogues’ gallery of short-sighted bank CEOs, idiot traders, foolish investors, and spineless regulators, the central bankers and politicians who were the crazed lunatics behind the curtain get off scot-free. While the author mildly upbraids them for not taking away the punchbowl once the party started to really get out of hand, he never asks why they were serving the poison to begin with. This is all because he never asks what money is.

The Final Chapter Gives You The Finger
The last chapter gives one final tease, a brief shout toward bringing back what he calls (correctly) “a true capitalist model” to “allow the free market to dictate the price of money everywhere and anywhere.” The very thought of such freedom, though, is quickly dismissed out of hand since “the prevailing lack of trust in market rationality … might prove [it] even less popular than the current system” (p. 169).

For now, not giving money the respect it deserves leaves Mr. Gilbert offering suggestions to prevent a repeat of the boom’s effects but foregoing any attempt to remedy its monetary cause.

Mr. Gilbert’s primary policy suggestions quite naturally target his villains — the bankers — for enhanced political control (p. 163). In his eyes this comes from the very nature of banking, since “finance is just too dangerous and too important to be allowed to grow unfettered” (p. 168).

As the final chapter ages, it suddenly swerves into a disjointed segue, asking “what proportion of senior (bank) positions women occupy” and suggesting that “a government mandated quota system … might be worth trying” (p.173). Maybe the female touch will sooth market volatility.

With this chivalrous pleading on behalf of the fairer sex, Mr. Gilbert — abruptly and without a hint of premonition — brings “Complicit” to a crashing halt. I slammed the book closed, pleased with this perfect ending, though I couldn’t place exactly why I felt that way. It took a bit of thought until it finally hit me — it brought back memories of the Replacements (the seminal ’80s punk band) and their habit during live shows of deliberately goading the crowd, ending a concert by playing, for instance, “Yummy Yummy Yummy” over and again until the audience either stormed out or rioted.

Until “Complicit”, I’d never read a book, especially not one on financial markets, that ended by giving me the middle finger.

“Complicit” is a rousing, fun look back at the Great Moderation’s riotous career, filtered through the mind of someone who labored in the center of it. Ending the story the same way the boom ended for so many a greedy, blinkered little pig — abruptly and without a hint of premonition — only highlights the talent that makes “Complicit” such an enjoyable read.

*http://mises.org/daily/4133 (C.J. Maloney lives and works in New York City. He blogs for Liberty & Power on the History News Network website.)

Editor’s Note:
– The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
Permission to reprint in whole or in part is gladly granted, provided full credit is given.
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