Liaquat ahamed lords of finance

He does this winningly enough to make his book about an international monetary horror story seem like a labor of love… Mr. Ahamed does a superlative job of explaining the ever-germane way the problems of one shyster, one bank, one treasury or one economy can set off repercussions all around the globe.

Liaquat ahamed lords of finance

Learned yet unpretentious, he dips into diaries, letters and cables to pull out evocative vignettes…Central bankers, [Ahamed] says, can resemble Sisyphus in Greek mythology— condemned to roll a boulder up a hill, only to watch it roll down again. Like Alan Greenspan, the four men described here saw their apparent successes melt into failure. Rarely has that statement seemed truer than with Lords of Finance.

Liaquat Ahamed has been a professional investment manager for 25 years. He has worked at the World Bank in Washington D. He has degrees in economics from Harvard and Cambridge Universities. The European powers were at peace. Goods flowed home from colonies. The newly reunited United States was growing into muscular adolescence.

And all of the world's major economies rested on a seemingly solid base: the gold standard. But it proved to be a system in a snow globe, easily shattered. World War I broke the idyll and unhooked country after country from dependence on gold. They resorted to printing money to fund the war, leading to massive inflation, unemployment, political instability and general suffering across the Continent.

It's no wonder, then, that after the signing of the armistice in the world's four most powerful bankers -- a fraternity described in newspapers of the time as "the world's most exclusive club" -- did everything they could to force nations back to the discipline of the gold standard. It was a ruinous decision. Ahamed's illuminating and enjoyable book focuses on the four men whose arrogance and obstinacy, he contends, caused the worst depression in modern times: Benjamin Strong Jr.

They were the most important central bankers in their respective nations when those four countries controlled most of the world's wealth and one -- England -- was its unrivaled lender. It was a time, almost unrecognizable to us, when the central banks that printed each nation's currency were privately owned, and regulation was unheard of. As a consequence, this handful of men -- who knew each other intimately enough that one was godfather to another's son -- could wield a coordinated, long-lasting and terrible impact on the global economy.

The gold standard's role in the worldwide depression of the s has been probed before, notably in Barry J. Eichengreen's scholarly Golden Fetters But Ahamed -- a hedge fund adviser, a World Bank veteran and a supple writer -- personalizes the story, exploring how insular relationships led to bad choices. Strong and Norman, for instance, became friends and gained each other's trust through lengthy correspondence.

Strong used his influence to secure a loan for England, then prodded Norman to put England back on the gold standard. Norman, in turn, persuaded Strong to push down U. When Strong died inhis replacement became Norman's thrall and fell in lock-step with the emphasis on gold, extending the economic agony. Meanwhile, the unchecked concentration of power in one banker's hands was also roiling Germany.

InSchacht went bizarrely off the farm and attacked his government, releasing public statements accusing the state of losing control of its finances and saying that Germany was too broke to pay additional war reparations. While Schacht partly spoke the truth, his freelancing undermined already shaky public confidence. Later, he sabotaged a loan his nation tried to secure in New York, nearly bringing down the government.

Ahamed damns the dead, placing blame at the feet of men largely lost to history. The risk in writing about forgotten men, however, is that they might not have been interesting enough to be remembered. Lords Of Finance unearths some gossipy details: Norman, for example, was a salad-bar spiritualist who tried a little of this, a little of that including Theosophy and autosuggestion and once told colleagues he could walk through walls.

But quirky does not equal memorable. These four bankers are about as compelling to us as, say, Treasury Secretary Henry Paulson may be to readers a century from now. My guess is that readers in will instead remember Warren Buffett and Bill Gates, just as we still know J. Morgan and John D. Rather than splendid personalities, this book's real advantage is timeliness.

Parallels to today's global financial collapse come with regularity throughout, sometimes causing spit-take laughs, sometimes shudders. Until last year, few believed anything would stop U. That is, until the sub-prime mortgage crisis exploded. Likewise, in the prosperous and interdependent Europe of years ago, war was considered unthinkable because it would destroy all.

Byan entire generation of young male university graduates was dead. And, frankly, the brainpower needed for forward-thinking was lacking. European bankers of the time carried a cavalier ignorance of economics, and that goes double for America's first Federal Reserve directors. The science of monetary policy was still in its infancy, and no one could have expected four dreary bankers to turn suddenly into brilliant, ahead-of-their-time economists.

That role should have fallen to John Maynard Keynes, one of the few heroes of Ahamed's book. Keynes called the gold standard a "barbarous relic" and clearly explained its limits; inhe accused the British banking elite of "attacking the problems of the post-war world with unmodified pre-war views and ideas. Looking at the events of the s and s, one wonders: Could a modern confluence of catastrophes cause another global depression?

No major power is likely to return to the gold standard, so that risk is off the table. But is there a comparable systemic problem today, something we refuse to see? Ahamed thinks we're plain lucky that recent financial crises -- in Mexico inAsia and Russia inthe United States beginning in -- "have conveniently struck one by one, with decent intervals in between.

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Sorry, there was an error. Sorry we couldn't load the review. Top reviews from the United States. There was a problem filtering reviews right now. Please try again later. The world? But beneath the veneer of boom-town prosperity, cracks started to appear in the financial system. The gold standard that all had believed would provide an umbrella of liaquat ahamed lord of finance proved to be a straitjacket, and the world economy began that terrible downward spiral known as the Great Depression.

Joe Nocera at the New York Times called the book "[a] grand, sweeping narrative of immense scope and power, the book describes a liaquat ahamed lord of finance that long ago receded from memory. Robert Peston at the Sunday Times stated that Liaquat Ahamed "provides a compelling and convincing narrative of bungling, tortured bankers vainly trying to reconcile their conflicting duties to their countries and to the global economy.

The quartet were dealt an unwinnable hand, in the unsustainable burden of debt heaped on Germany after the first world war in the form of reparations, and the corresponding amounts owed to the US by Britain and France. But these central bankers made serious mistakes. On September 2,Chairman of the Federal Reserve Ben Bernanke was asked by the Financial Crisis Inquiry Commission what books or academic papers he would recommend to understand the financial crisis of — The only book that Bernanke recommended was Lords of Finance.

From the left, though conceding that Lords of Finance was 'undoubtedly the most engaging narrative of the run-up to the Crash to have appeared in recent years', the book was characterized as 'apologia' for latter day 'lords' by the New Left Review : 'damning the s quartet of central bankers, the better to highlight the wisdom of the s trio,' Alan GreenspanRobert Rubin and Lawrence Summers 'and now of their successors: Bernanke, Mervyn King and other saviours since '.

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