Authors trace meltdown to greed, blind faith in markets

— -- Larry Elliott and Dan Atkinson are London newspaper journalists who have been writing about the perils of the financial markets for decades. They could be excused for saying "I told you so" to government policymakers and regulators, all sorts of bankers and investors themselves who are responsible for the current global economic mess.

The titles of the previous books by the journalistic duo are telling: The Age of Insecurity is one. The other is Fantasy Island: Waking Up to the Incredible Economic, Political and Social Illusions of the Blair Legacy.

At the beginning of the book, the authors focus on the four weeks between Sept. 7 and Oct. 7, 2008, when, as they phrase the situation, "The great global chain letter that had been the turbocharged free market economy ran out of subscribers." Elliott and Atkinson take many individuals — both contemporary and historical — to task for allowing market crashes to occur in the name of greed. Mostly, however, the authors blame the underlying faith in free market economies.

Their criticisms of the free market system are akin to the criticisms issued by atheists against organized religions, and in language just as superheated: "As a failed utopia, the financially driven free market system was now up there in the same gallery as the Tanzanian road to socialism, Juan and Eva Peron's Justicialismo movement, and Major C.H. Douglas' social credit campaign. No number of lavishly produced booklets by pro-market think tanks could change this. The card sharps had been found out, the masters of the universe had rattled the begging bowl, the racket had unraveled, and the scam was over."

Veterans of documenting boom-and-bust economic cycles, Elliott and Atkinson understand well that no system involving investment dollars can ever operate with purity. As they note sagely, "Greed will never be expunged from financial markets; the pursuit of riches is, and always has been, a factor motivating those who buy and sell shares, bonds, currencies and commodities."

But the current financial crisis falls into the extreme category, the authors say, because "the money lust" became so pronounced that it crossed "the dividing line between cupidity and criminality." So what if home buyers default, if banks suffer a run on deposits, if investment firms tank? The rich can take their ill-gained profits and retire into their gated communities.

This time around, some of the wealthy gamers of the market-based economy suffered losses in their financial holdings. They never saw it coming.

"It was unthinkable, and even when cracks did start to appear in the edifice, the New Olympian class managed to blame everyone but themselves," write Elliott and Atkinson. "This arrogance stemmed from the not unreasonable belief that big finance was now too big to fail and there was a loud and insistent demand that the monetary authorities step in with unlimited quantities of financial assistance."

The book unfolds unevenly. Sometimes the authors organized chapters chronologically, other times thematically. Sometimes the repetition seems endless, other times gaps are left unfilled. If the book is organized around a narrative thread, I could not find that thread. As a result, the book occasionally feels like heavy going. It is saved by the authors' obvious knowledge, as well as their lively phrasing.

Elliott and Atkinson offer proposed solutions, but little hope. After all, changes in the behavior of greed cannot come from legislators or government regulators.

Steve Weinberg is a freelance writer based in Columbia, Mo.