Book review: Whoops, by John Lanchester

John Lanchester takes the credit meltdown right back to the end of the Cold War which had two implications - (a) capitalism won and (b) Americans had no reason to display their moral superiority.

He also picks out the disastrous marriage of the financiers and watchdogs, the '80s Big Bang and Reagan's regulation bonfire.

To the mix, he explains how the quants (mathematicians) made the madness possible, devising risk-eliminating equations that proved how an unemployed debtor failing to meet mortgage payments was the least likeliest thing ever to happen.

But the most impressive feat in this fascinating work is to bring complex financial engineering within the grasp of the layman, using explanations that are lucid, lively and understandable.

There are flaws in strands of his arguments but Lanchester provides the transparency that - he asserts - would have prevented some of the more numpty assumptions of dumb bankers.

He doesn't so much point out the nudity of the emperor - too late for that - but he does lay bare the startling rapacity and cynical ingenuity of bankers who set about subverting the rules set up to save them from their sticky-fingered predilections.

He makes a compelling argument that a curb on banking is as necessary as a stair gate in a lighthouse full of toddlers.

– From November 2010