Crashed

Crashed is a thick book that covers the Great Recession and its aftermath. In particular, the book connects the 2008 recession and Eurozone crisis, blaming it on Europe’s lackluster response to the 2008 recession. The radical intervention by the United States and China to save their economies were not made by Europe in 2008, whose banking sector and overall economy were weaker in the early 2010s. At the same time, any stimulus taken was beyond the capacity of smaller European states. Financial crisis became fiscal crisis for European countries. This connection was seldom made in the news coverage of Eurozone crisis, which blamed Southern European excess for their predicament.

The Great Recession is the probably most significant historical event of my lifetime. For one, it was the worst economic recession in 80 years. Millions of Americans were impoverished. It’s cause by careless technocratic elites and unequal resolution by the same technocracy generated a swell of populist anger. This anger was channeled into populist political campaigns on both sides of the Atlantic. Across the Atlantic, the moderate Left and Right have lost ground to their ideological flanks. These populists have all had authoritarian tendencies; democracy has been damaged.

The 2010s in some ways were like a new 1930s, but unlike Wages of Destruction (which I read first), Tooze is writing history as it is happening. The book is published in 2018, covering events up to 2017. From the post-COVID perspective—another once in a lifetime crisis—we can judge Tooze’s commentary on 2008.

• Tooze is right in noting that the 2009 stimulus in the United States was not enough. Unemployment in the United States peaked at 10%, taking 7 years to reach pre-crisis levels. Learning from this, Congress passed trillions of stimulus which went directly to households in 2020.
• Tooze is right in calling Dodd-Frank a mess. The implicit too-big-to-fail guarantee incestuously ties the government and Wall Street together. Systematically important financial institutions have turned into arms of the state, albeit operated for private profit.
• Tooze justly notes that inflicting austerity on the Greece only caused suffering. Even today Greece has a 15% unemployment rate and a debt to GDP ratio of 176%.
• Tooze correctly ties the collapse in centrist politics across the Atlantic back to the 2008 recession. The inequality of the crisis-fighting measures reactivated the Left. The power wielded by unelected elites reactivated the far Right¹.
• Tooze misses the new Cold War emerging between China and the United States. Obama began an anti-China stance with the TPP push and freedom of navigation fights in the South China Sea. Trump dug into the toolbox of tariffs to escalate the war. Biden has continued and substantiated Trump’s anti-China industrial policies.