The Fate of the West: The Battle to Save the World’s Most Successful Political Idea

by Bill Emmott

One of the most devastating delusions during the decade that led up to the 2008 collapse was the notion that a process called securitisation was spreading risk around, putting it where it could most efficiently and safely be held, making the global financial system less risky than in the past. Securitisation is the process by which packages of loans – most notoriously subprime mortgage loans to poor people in the US, but also many others – are assembled by financial firms, often sliced up into their component parts, and sold on as so-called “derivative securities” (that is, paper that was derived from an original debt) in more and more complex forms, supposedly so as to make the slices of rights thereby concocted more appropriate for particular species of buyer.