Book Bits | 9.8.2012

The Price of Politics
By Bob Woodword
Review via the Associated Press/Newsday
A combination of miscalculations, ideological rigidity and discord within the leadership of both political parties brought the U.S. government to the brink of a catastrophic default during the 2011 showdown over the federal debt ceiling, according to a new book by journalist Bob Woodward. “The Price of Politics,” Woodward’s 17th book, chronicles President Obama’s contentious and still unresolved fiscal policy battle with congressional Republicans that dominated the White House agenda for nearly all of 2011. The book is scheduled for release on Tuesday. Woodward is a Washington Post associate editor. As the nation’s leaders raced to avert a default that could have shattered the financial markets’ confidence and imperiled the world’s economy, Obama convened an urgent meeting with top congressional leaders in the White House. According to Woodward, House Speaker John Boehner pointedly told the president that the lawmakers were working on a plan and wouldn’t negotiate with him.

A Nation of Deadbeats: An Uncommon History of America’s Financial Disasters
By Scott Reynolds Nelson
Review via The Seattle Times
Four years ago, as Wall Street plunged, Virginia historian Scott Reynolds Nelson posted on Facebook a comparison of the events of 2008 to the Panic of 1873. His posting startled readers and led to “A Nation of Deadbeats,” a book he subtitles “An Uncommon History of America’s Financial Disasters.” The crises were alike in some ways. All had to do with uncertain financial promises, “whether personal notes in 1792, bills of exchange in 1819, bank drafts in 1837, railway mortgages in 1857, or second- and third-mortgage railway bonds in 1873,” Nelson writes. Most panics of the 1800s came after too-loose lending by the English. The 1929 crash came after Americans undertook to lend to Europe and Latin America.
Crisis in the Eurozone
By Costas Lapavitsas
Q&A with author via The Guardian
Lapavitsas: It is likely that the eurozone will begin to unravel, although it is impossible to anticipate the form that the unravelling might take. There could be a complete dissolution, or the creation of a “hard” euro surrounded by variants of national currencies. There could also be individual exits by countries in the first instance. Whatever its form, the unravelling of the monetary union would have enormous costs. It is absolutely vital to have a Europe-wide public debate on how to manage the process.
The Quest for Prosperity: How Developing Economies Can Take Off
By Justin Yifu Lin
Review via Publishers Weekly
In the 1960s, conventional economic thinking was that Africa had “better conditions and opportunities for economic development” than did East Asia. Lin, the chief economist and senior vice president for the World Bank from 2008 to 2012, tackles prevailing shibboleths in this provocative and challenging work. Lin argues that “different countries… require different policy choices to facilitate growth”; indeed, developing nations that progressed industrially and technologically “rarely followed… the dominant development paradigm of the time.” Lin concludes that the Soviet Stalinist model of modernization through industrialization provided a poor precedent for subsequent leaders whose zest for large capital-intensive projects was inappropriate, especially since developing nations rarely have abundant available capital. Lin focuses on the concept of comparative advantage, which indicates that nations should concentrate on “what they can produce best” and trade with other nations that do likewise.
Aftermath: The Cultures of the Economic Crisis
Edited by Manuel Castells, Joao Caraca and Gustavo Cardoso
Summary via publisher, Oxford University Press
The crisis of global capitalism that has unfolded since 2008 is more than an economic crisis. It is structural and multidimensional. The sequence of events that have taken place in its aftermath show that we are entering a world that is very different from the social and economic conditions that characterized the rise of global, informational capitalism in the preceding three decades. The policies and strategies that intended to manage the crisis-with mixed results depending on the country-may usher in a distinctly different economic and institutional system, as the New Deal, the construction of the European Welfare State, and the Bretton Woods global financial architecture all gave rise to a new form of capitalism in the aftermath of the 1930s Depression, and World War II.
The Fateful History of Fannie Mae: New Deal Birth to Mortgage Crisis Fall
By James Hagerty
Summary via publisher, The History Press
In 1938, the administration of Franklin Delano Roosevelt created a small agency called Fannie Mae. Intended to make home loans more accessible, the agency was born of the Great Depression and a government desperate to revive housing construction. It was a minor detail of the New Deal, barely recorded by the newspapers of the day. Over the next seventy years, Fannie Mae evolved into one of the largest financial companies in the world, owned by private shareholders but with its nearly $1 trillion of debt effectively guaranteed by the government. Almost from the beginning, critics repeatedly warned that Fannie was an accident waiting to happen. Then, in 2008, the housing market collapsed. Amid a wave of foreclosures, the company’s capital began to run out, and the U.S. Treasury seized control. From the New Deal to the administration of President Obama, author James R. Hagerty explains this fascinating but little-understood saga. Based on his reporting for the Wall Street Journal, personal research and interviews with executives, regulators and congressional leaders, Hagerty charts the course of Fannie Mae.