The aftermath of the 2008 financial crisis produced a lost decade for European economies and helped lead to the rise of anti-establishment political movements here and abroad.
This history is, on its own terms, perfectly accurate. In the early nineteen-thirties, when the authorities allowed thousands of banks to collapse, the unemployment rate soared to almost twenty-five per cent, and soup kitchens and shantytowns sprang up across the country.
In the years leading up to September, 2008, Tooze reminds us, many U.S. policymakers and pundits were focussed on the wrong global danger: the possibility that China, by reducing its huge holdings of U.S. Treasury bills, would crash the value of the dollar.
The subprime fever originated in the United States, but soon spread to European behemoths like Deutsche Bank, HSBC, and Credit Suisse: by 2008, close to thirty per cent of all high-risk U.S. mortgage securities were held by foreign investors. Although the major international banks were domiciled and regulated in their individual countries, they were operating in a single, integrated capital market.
Many of the politicians who came to be associated with the financial crisis and the bank bailouts weren’t so lucky. In 2009 and 2010, the center-left parties that occupied positions of power in the United States, Britain, and Germany all suffered electoral setbacks. In Berlin and London, new center-right governments committed themselves to slashing budgets and reducing deficits, which rose sharply as jobless rates went up and tax revenues went down.
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