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The First History of Our Financial Crisis

  • Per H. Hansen


Adam Tooze's Crashed is arguably the first historical narrative of the financial crisis. It is an ambitious account of the crisis and its global economic, financial, political, and geopolitical causes and implications. Crashed is organized chronologically in four parts—the “Gathering Storm,” “The Global Crisis,” “Eurozone,” and “Aftershocks”—and focuses more on the macrolevel structures, processes, and decisions than on the microlevel and the people suffering from the crisis. Except, that is, in aggregate numbers and a few empathic comments such as this: “As house prices fell, equity dwindled, and the hardest hit slid into negative equity. Families scrambled to slash spending and pay down credit card and other short-term debt. The result was a smothering recession in consumer demand” (p. 143).



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1 For a detailed account of how globalization and the financial crisis impacted individuals, families, and communities, read the brilliant Goldstein, Amy, Janesville: An American Story (New York, 2017).

2 Tooze, Adam, The Deluge: The Great War and the Remaking of Global Order (London, 2014).

3 On the term “our crisis,” see Kobrak, Christopher and Wilkins, Mira, “The ‘2008 Crisis’ in an Economic History Perspective: Looking at the Twentieth Century,” Business History 53, no. 2 (2011): 176.

4 Kerin Hope, “Greece Brain Drain Hampers Recovery from Economic Crisis,” Financial Times, 16 Aug. 2018; Valentina Romei, “In Charts: Greece's Economy Is Rebounding—but There Is Far to Go,” Financial Times, 18 Aug. 2018.

5 See, for instance, Gillian Tett, “European Banks Still Have Post-Crisis Repairs to Do,” Financial Times, 19 July 2018; and IMF, “Euro Area Policies: Financial System Stability Assessment” (IMF Country Report No. 18/226, Washington, DC, 2018).

6 A point also made in Eichengreen, Barry, Hall of Mirrors: The Great Depression, the Great Recession and the Uses—and Misuses—of History (New York, 2015); and Hansen, Per H., “From Finance Capitalism to Financialization: A Cultural and Narrative Perspective on 150 Years of Financial History,” Enterprise & Society 15, no. 4 (2014): 605–42.

7 See Kenneth Rogoff, “Crash Time,” Project Syndicate, 7 Sept. 2018, Tooze, to my knowledge, has not responded to Rogoff's rather scathing review.

8 See Blyth, Mark, Austerity: The History of a Dangerous Idea (Oxford, 2013); Eichengreen, Barry and Temin, Peter, “Fetters of Gold and Paper,” Oxford Review of Economic Policy 26, no. 3 (2010): 370–84; Eichengreen, Hall of Mirrors; and Hansen, “From Finance Capitalism.”

9 See Hyun Song Shin, “Global Savings Glut or Global Banking Glut?,” Vox, 20 Dec. 2011,; and, for a historical discussion, see Borio, Claudio, James, Harold, and Shin, Hyun Song, “The International Monetary and Financial System: A Capital Account Historical Perspective,” in Central Bank at a Crossroads: What Can We Learn from History?, ed. Bordo, Michael D., Eitrheim, Øyvind, Flandreau, Marc, and Qvigstad, Jan F. (New York, 2016).

10 For a historical perspective, and on the term “run on repo,” see Gorton, Gary, Misunderstanding Financial Crises: Why We Don't See Them Coming (Oxford, 2012).

11 Note, however, that Martin Wolf does not see a conflict between a macroeconomic and a macrofinancial view; rather, they supplement each other. Wolf, , The Shifts and the Shocks: What We've Learned—and Still Have to Learn—from the Financial Crisis (London, 2014), 113–15 and chap. 5, esp. 70–71.

12 Eichengreen, Hall of Mirrors; Fligstein, Neil, Brundage, Jonah Stuart, and Schultz, Michael, “Seeing like the Fed: Culture, Cognition, and Framing in the Failure to Anticipate the Financial Crisis of 2008,” American Sociological Review 82, no. 5 (2017): 879909.

13 For a broader perspective and discussion of alternative explanations of the rise of nationalism and populism, see Sargent, Daniel J., “The Fates of the West: Globalization, Populism, and the Prospects for Western Liberalism,” review essay, Business History Review 92, no. 3 (2018): 543–51.

14 Deregulation is explained almost exclusively as a result of American politics. As Rawi Abdelal has shown, France and Europe also played a role in deregulating capital movements; see Abdelal, , “Writing the Rules of Global Finance: France, Europe, and Capital Liberalization,” Review of International Political Economy 13, no. 1 (2006): 127.

15 Eichengreen, Hall of Mirrors. See also Per H. Hansen, “Review Essay,” review of Hall of Mirrors, by Eichengreen, Barry, Business History Review 89, no. 3 (2015): 557–69. Based on my review, I would argue that Tooze misses the essential point in Hall of Mirrors, which is how historical analogies were used to legitimize policy in relation to financial crises.

16 Adam Tooze, “How to Mishandle a Crisis,” review of Hall of Mirrors, by Eichengreen, Barry, New Left Review 92 (Mar.–Apr. 2015): 141.

17 Tooze, 142–43.

18 Kindleberger, Charles P. and Aliber, Robert Z., Manias, Panics and Crashes: A History of Financial Crises, 6th ed. (New York, 2011), 26.

19 For recent discussions, for instance, on the spread of agency cost theory and shareholder value, see Fourcade, Marion and Khurana, Rakesh, “The Social Trajectory of a Finance Professor and the Common Sense of Capital,” History of Political Economy 49, no. 2 (2017): 341–87; on financialization: Mazzucato, Mariana, The Value of Everything: Making and Taking in the Global Economy (London, 2018), esp. chaps. 5 and 6; on the spread of financialization to Europe: Berghoff, Hartmut, “Varieties of Financialization? Evidence from German Industry in the 1990s,” Business History Review 90, no. 1 (2016): 81108; on ideology and deregulation: Moss, David A., “Reversing the Null: Regulation, Deregulation, and the Power of Ideas,” in Challenges to Business in the Twenty-First Century, ed. Rosenfeld, Gerald, Lorsch, Jay W., and Khurana, Rakesh (Cambridge, MA, 2010), 3549; and on Wall Street culture: Ho, Karen, Liquidated: An Ethnography of Wall Street (Durham, 2009), and Ho, Karen, “Disciplining Investment Bankers, Disciplining the Economy: Wall Street's Institutional Culture of Crisis and the Downsizing of Corporate America,” American Anthropologist 111, no. 2 (2009): 177–89.

20 For this argument, see Hansen, “From Finance Capitalism.”

The First History of Our Financial Crisis

  • Per H. Hansen


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