Beyond the Crash
Simon and Schuster
Rs 655 pp 315
The Great Recession is a sprawling systemic story with battles won and fought over economic arcana, heroes and villains who seem to flail around with equal ignorance. Gordon Brown’s memoir of the crisis credibly portrays him as a crisis manager who had at least one blinker off.
The former British prime minister’s account is a work in three parts. The first is an interesting description of the internal decision-making of Brown’s inner circle and the government as the subprime crisis began to spread. Brown’s primary contribution, and an important one, was to conclude that the initial US response — buying up toxic bank assets — would be insufficient. The only economics-literate western leader, Brown concluded that the real threat was outright insolvency, that the banks would have to be recapitalised on an enormous scale.
Economic crises, Brown says in a conversation, are different from political ones because you need to be decisive because of the importance of not rattling the confidence of the market. Brown also describes pushing for a global stimulus within the Group of 20. This is less impressive, as it’s hard to believe there was much opposition on that front. Because he declines to criticise anyone, praising all world leaders and only slightly damning the cluelessness of most bankers during the crisis, his account is drained of even the little colour that a narrative about finance possesses.
The second part is the Brownian Prescription for Global Finance. Top of the list: more global coordination to tackle global problems. This is hardly an original insight. More useful is his description of the political economy concerns of the major powers and how these multiple interests could be fitted together to make a complete world economic jigsaw. There is also a lot, mostly vague, on greed and the need for moral values to be a part of 21st century capitalism.
Brown gives India far more space, half a chapter, than the memoirs of any recent world leader. Brown sees India as a good boy in the world economy: “Today the faster China and America grow, the more unbalanced the world economy becomes. But today and tomorrow the faster a reforming India grows, the more balanced the world economy can be.” Asked in conversation about Manmohan Singh, he depreciatingly calls himself a “follower” of Singh. But don’t expect to find a line to that effect in the book.
The last part of the book is what Brown has decided not to write about. For example, how a few years ahead of the subprime blow-up, he and others had been given presentations by investment bankers that the credit ratings on mortgages were pure bunkum. Or any recognition that recapitalisation has proven a nightmare for smaller countries like Ireland and Greece. Nonetheless this is the first memoir of a world leader directly involved in the global financial crisis. Brown partly accepts this: “My case for writing this account is that I was there.”