Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

In the first half of 2012 the rotating presidency of the G20 fell to Mexico. On Friday, January 20, 2012, a week after the S&P downgrade of eurozone sovereigns, finance officials from around the world assembled in Mexico City. On their agenda was a remarkable request. The eurozone members of the G20 were calling on the rest of the world to contribute $300–400 billion in additional funding to enable the IMF to backstop crisis fighting, not in an emerging market or in one of the less-developed countries of sub-Saharan Africa but in Europe. The non-European members of the G20, led by the United States, China and Brazil, considered the European request and turned it down. As Mexico’s deputy finance minister remarked to the press: “There is a recognition of the measures Europe has taken. But it’s also clear that more needs to be done.”1 Amid the din of world events, the incident barely warranted a headline. But the location of the meeting, the nature of the request and the response by the rest of the G20 add up to a remarkable historical denouement. It was also indicative of the precarious state in which the eurozone was left hanging by the bruising battles of 2011. The G20 and S&P concurred: The Europeans had not done enough. They had not squarely addressed the basic instabilities with regard to the sovereign bond market and bank recapitalization, which had sucked the IMF into its engagement in Europe back in 2010. They had eventually recognized Greece’s insolvency and were on...