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Firstly, I must recognize my ignorance about this subject, which is increasingly present in the media, forums or social networks. I had to investigate a little to clarify myself, and to separate the wheat from the chaff. I have no doubt that there can be a bubble, but I also believe that in an incipient way there are changes in everything related to certain areas of banking management and economic and contractual transactions between companies.
It is called as Fintech those companies with a technological base applied and developed to provide services and solutions in the financial field. I know that this sounds very generic, but the truth is that the spectrum of initiatives included in this concept is very broad. Many start-ups are applying the full potential of today’s technology to compete in markets traditionally restricted to banks. We can find non-bank companies offering payment services between companies or individuals, loans, foreign exchange operations, optimization of treasury positions … and so on to a myriad of services, usually on digital platforms, offered in a more immediate, efficient and economical way.
I approached this book trying to understand the key factors that led us to the devastating financial crash that began in 2008 and which led to the deep in which we are still immersed (more in some places than in others, as it is well known).
The author presents his work, not as an academic exercise or a detailed analysis, but as an essay of the events and protagonists who took part in the outcome of collapse. On the pages of this voluminous book (618 in my pocket edition) a lot of characters appear, and we see which decisions they made on the most frantic days of the crisis (September 2008). Perhaps this is precisely the strong point of the book: as we go on reading, we will form our own opinion, and intuitively we discover which the causes of the crisis were.
Thus, to me it is clear that at the base of the crisis the most important factors were the excessively in debt financial institutions (like the rest of the world) resulting from an expansionary policy of easy and cheap money; some managers, very likely to make risky investments and on very complex products, which generated to them astronomical salaries; lax regulation, and very sensitive regulators to the wishes of the big banks in an endogamous environment; very interrelated banks that expanded the bad (and the good, when there was) as a deadly epidemic; and why not say it, an economic boom, which we had not enjoyed in decades, that made lubricant, and we all wanted to take part of (and they made us to believe that it was possible).
Bankers are shown as actors in a desperate race against the clock so that their institution are not the next ones to fail, losing their jobs and their hefty fees. Egoists obsessed with saving their ass (no patriotism or defense of the free market), who do not hesitate to beg the help of the American Administration. An Administration which is unable to cope with the tsunami that is coming up, and doubts whether leave the market to act on its own, but in the end it takes part with all the tools at its disposal, including the creation of a bad bank.
And after all, what have we learned? I think very little. The so mentioned modification of the regulation of financial institutions to make it stiffer, has run halfway, the surviving banks have a huge size so its systemic risk is greater than ever, there have been no assumptions of guilt, and at most, the issue has been closed based on fines, but without determining responsibilities. If corrective measures are not implemented, we run the risk that, when time has passed and we have forgotten, some return to take big risks and make the same mistakes.
Finally, I think that this book is a key to understanding a moment of the History. Maybe it’s a little long, but its reading is enjoyable as it could be a thriller, only that this is not fiction.