|SocialismToday Socialist Party magazine|
Capitalism up close
Too Big to Fail: Inside the Battle to Save Wall Street
By Andrew Ross Sorkin
Penguin, 2010, £10-99
IN THE space of several weeks in September and October 2008 the global financial system and its heartland, the USA’s Wall Street, was "changed almost beyond recognition". We are still living with the calamitous consequences two years later.
The key event in this saga was of course the bankruptcy of Lehman Brothers. By the end of September 2008, the five biggest US investment banks had failed, were sold, or were converted into bank-holding companies; two mortgage-lending giants and the world’s largest insurer were placed under government control; and rescue packages totalling $1.1 trillion had been doled out to keep these institutions, and the US economy, afloat.
Author Andrew Sorkin is well placed to describe the events of those tumultuous weeks. As mergers and acquisitions reporter for the New York Times, Sorkin had access to all the key individuals involved. Although not a participant in the events he reported on them as they were developing. Too Big to Fail is in essence a re-working and supplementing of that reporting into a minute-by-minute narrative.
Too Big to Fail is a unique book. The content is that of current affairs, its style that of a thriller. The protagonists – the CEOs and politicians – are introduced in the same way as characters would be in a fast-paced novel. The feelings and motivations of these characters take centre stage as the plot unfolds. The chapters are like the scenes of a screenplay; we encounter the characters mid-action, and join and leave them at dramatic points in the story. This is compelling reading but may be a rather frivolous way of treating the subject. This is not necessarily the author’s fault. Many of the accounts show the frivolity with which decisions that would effect the lives of millions were treated. Consider this account of how the dollar figure for the bailout of Wall Street was arrived at:
"Back in his office… [Paulson] met with Fromer and Kashkari and debated what the precise cost might be. ‘What about $1 trillion?’, Kashkari said. ‘No way’, Fromer said. ‘Okay’, Kashkari said. ‘How about $700 billion?’ ‘I don’t know’, Fromer said. ‘That’s better than $1 trillion’. The numbers were, at best, guesstimates, and all three men knew it. The relevant figure would ultimately be the one that represented the most they could possibly ask for from Congress without raising too many questions. Whatever the sum turned out to be, they knew they could count on Kashkari to perform some sort of mathematical voodoo to justify it… As he plucked numbers from thin air even Kashkari laughed at the absurdity of it all".
These anecdotes are meant to be punchy and human, bringing the story to life. They do that, but for socialists they do more. The huge power so casually wielded to such devastating effect for so many millions by a tiny clique is profoundly disturbing. It shows that after the recognition of their ‘mistake’ in allowing Lehman Brothers to collapse anything and everything would be done to save the financial system in the interests of capitalism.
The main source for the book is "more than five hundred hours of interviews with more than two hundred individuals who participated directly in the events surrounding the financial crisis. These individuals include Wall Street chief executives, board members, management teams, current and former US government officials, foreign government officials, bankers, lawyers, accountants, consultants, and other advisors". From this, one has to wonder whether this book is the ‘official’ account of the economic crisis by the US establishment. Although not his intention – Sorkin would undoubtedly jealously defend his journalistic independence – in many ways he is allowing these individuals to tell their story through him.
The thoughts and feelings ascribed to the ‘characters’ can only have come from interviews with the individuals themselves, people that knew them, or speculation on the part of Sorkin. Compelling reading maybe, but not necessarily objective fact. It is only in the eleven pages of the epilogue that he offers his own analysis of what his previous five hundred pages have described in painstaking detail. In a rare moment expressing his own view, Sorkin comments that of the many "characters in this drama" their "primary motive was to save themselves". Even if these accounts were one hundred per cent accurate, the value that they have for a real understanding of what unfolded in those weeks is still debatable. These larger than life characters, bombastic and arrogant, can obscure the fact demonstrated throughout the pages of the book, but never really articulated, that they were mere leaves in the wind of massive economic forces outside of any individual’s control.
The myth of fierce capitalist competition is unconsciously dealt a blow in this book. Despite heading rival banks supposedly competing with each other, all the CEOs, directors and politicians live intertwined lives. Career paths traverse the same organisations and back again; from boardroom to boardroom, to government office and back again. Hank Paulson, Treasury Secretary, was previously the CEO of Goldman Sachs. Almost all the players are on first name terms with each other. The eventual portrayal of ‘cut-throat capitalism’ is more akin to that of a ‘gentleman’s game’ where the intention is never to deal a death blow to one another but to be ‘good sports’ and concede when one is ‘out-foxed’ and brag when one is ahead. And the point should be emphasised that despite playing key roles in the wrecking of the world economy, the book’s ‘characters’ are all still millionaires.
None of the above is intended to condemn Too Big to Fail. It is what it is and the author has not promised us more. On its own, it is not sufficient for understanding all the issues involved in the eruption of the world economic crisis. But nevertheless it is a good supplement to more analytical works available, including previous coverage in the pages of Socialism Today.
Home | About Us | Back Issues | Reviews | Links | Contact Us | Subscribe | Search | Top of page