After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead – Alan S. Blinder

Alan

Arguably one of the most relevant and clear books dealing with the most recent financial crisis that engulfed the global economy before bringing it to a grinding halt. Completely bereft of financial jargon, Alan Blinder substitutes stunning alacrity and clarity of thought for investment banking speak and verbal calisthenics.

Proceeding to highlight the prime reasons leading to the collapse of the financial markets, he identifies the prime suspects with pinpoint accuracy. While not being polemical, he also does not spare the culprits and exposes their wrong doings in a manner not done before (at least in so far as the layman is concerned). Laying the blame squarely upon the shoulders of ‘seven villains’ (in Blinder’s own words), the mot notable of which being lax regulators, greedy investment bankers churning out esoteric financial instruments, accumulated leverage and obscene compensation schemes, the author maps out in graphic detail the extent of devastation wrought by each of the seven offenders.

Blinder also dwells in great length upon the various resuscitation measures undertaken by the US Government via the Treasury and Federal Reserve to stem the damage and staunch the economic wounds. He carefully handholds the reader through a veritable maze of alphabet soups and novel rescue mechanisms. For example, the following acronyms are all representative of the various lending facilities devised by the Federal Reserve to pump funds into an economy teetering on the brink of collapse: TAF, TALF, AMLF,CPFF,PDCF and TSLF!

In the latter half of the book Blinder also provides prescriptive and prophylactic ideas for the prevention of another catastrophe of the likes of the Financial Recession of 2008. The world is ill equipped to face yet another stern and uncompromising test such as the one posed by “Lehman Day”. The remedies include bolstering the regulatory teeth by expediting the completion of the Dodd-Frank Act, preparation of a concrete exit strategy on the part of the Federal Reserve and keep a lid on the disgraceful lending practices as well as the compensation limits to executives.

Messrs. Ben Bernanke, Hank Paulson and Timothy Geithner have with their concerted efforts aided by the unerring support of Barack Obama managed to reign in the devil of destruction. However as Blinder is quick to assert, the damage wrought has been unprecedented and the recovery is far from done. It is now totally in the hands of the financial markets, the regulators and the world economies to take such concerted efforts so as to prevent the global financial engine from hurtling towards yet another road to perdition.

The sound of Blinder’s music is not just a faint stirring. It is a song of greed,guts and grim reality. ‘After the Music Stopped’ – INDISPENSABLE!

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