Tuesday, July 21, 2009

Inside the Meltdown: Financial Ruin and the Race to Contain It

NY Times

A year ago it would have been hard to imagine a book about the Federal Reserve and Treasury Department making it onto people’s must-read summer reading lists. But the financial calamities of last autumn put the global economy on the brink of disaster and led to continuing fiscal woes. Understanding what happened has become vitally important not just for bankers and economists, but for everyone affected by the fallout, which means ... well, just about everyone.

For all of us then, David Wessel’s new book “In Fed We Trust” is essential, lucid — and, it turns out, riveting — reading.

In these pages Mr. Wessel, the economics editor of The Wall Street Journal, chronicles how the Fed chairman Ben S. Bernanke, with Henry M. Paulson Jr., then the Treasury secretary, and a small group of associates, frantically worked to shore up the United States economy, capturing how this handful of people — “overwhelmed, exhausted, beseeched, besieged, constantly second-guessed” — tried to catch and stabilize one toppling fiscal domino after the next.

In this volume Mr. Wessel uses his narrative gifts and a plethora of sources to give readers a vivid, highly immediate sense of what transpired in last-minute, high-pressure, seat-of-their-pants meetings in Washington and New York while placing these events in a broader historical context. He examines the Fed’s increasingly important (and increasingly debated) role as an economic first responder, looks at how personality and personal philosophy can inform policy making and offers a concise explication of the causes of what he calls “The Great Panic.”

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