Book Reviews – “On the Brink” and “Lord of Finance”

Here we go again. It must be my kismet that I read these two books one after the other and felt the contrast so stark that I’m forced to share my thoughts on these two books. The book, “On the Brink – Inside the race to stop the collapse of the Global Financial System” – is written by our republican minded ex-treasury secretary – who is to be credited for socializing the world of finance; going against his ideology of self regulating free markets. The other – “Lord of Finance - The Bankers Who Broke the World” – is written by Liaquat Ahamed who has been a professional investment manager for twenty-five years – and this book of his won him the Pulitzer a couple of months ago.

While the first book is focused on Mr. Paulson’s experience during his tenure as the Treasury Secretary – the other is one of the best books on the Great Depression and the aftermath. While the first book is written solely based on the recollection from memory (Mr. Paulson claims to possess photographic memory) the other is well researched and referenced book. While the first book drags, the other keeps you involved all the way till the end – even though you know what the answers will be. While the first appears borderline fiction, the later is definitely non-fiction. 

Mr. Paulson does not hide the fact that he likes power and unquestioned power if he could have it. Only a president like Jr. Bush will be ignorant enough to hire him and give him the power that he sought. He not only used it, he used it very wisely and effectively to help out some of his friends and used it effectively to wipe off some of his old nemesis. Mr. Paulson presents no insight into rationale for his decision except for “the financial world will come to an end if we don’t pay these humongous sums to banks”. Mr. Paulson’s narrative only conveys some of the facts as if he is trying to cover the true story while ignoring some of the crucial description and rationale for decisions that he made (such as TARP and its execution). I would rather read – “Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System-and Themselves” by Andrew Ross Sorkin; over this book. I have reviewed the “Too big to fail” on Kazira earlier.

Mr. Ahemad on the other hand, focuses on the four major characters at the beginning of the 20th century –
• Mr. Montagu Norman, Governor of Bank of England,
• Benjamin Strong Jr, First President of the US Federal Reserve System,
• Hjalmar Scacht, Governor of Bank of Germany, and
• Emile Moreau, Governor of Bank of France.

He captures the personality traits and their modes of operations in such a way that this books reads like “The DaVinci Code” – You don’t want to put it down. He sprinkles the book with facts such as – a Russian spy working for the US government was instrumental in laying out policies of the Bretton Woods Conference.

His thoroughness is so good that you feel as if you are living the times and tribulations faced by these four legendary figures in the field of finance during WW I, the great depression, and the WW II. He covers the WW I and WW II in depth and its associated reparation policies and its implication very well. Most notable is his comparison of the great depression to the present financial crisis and his assertion that the Great Depression was equivalent of recent stock market collapse, .com bubble collapse, and the housing market collapse COMBINED … The book also covers the financial and personal philosophies of the leaders at that time such as Churchill, FDR, and Hitler. He also provides great insight into the life of notable financial luminary such as John Maynard Keynes.

OVERALL A GREAT BOOK FOR SOMEONE WHO WISHES TO LEARN THE EXISTING FINANCIAL MODEL AROUND THE WORLD. My only complaint about this book is that it did not cover the time after the great depression – nor it should – But his narrative is so good that I hope he write another book to cover the time frame from the great depression till today.