Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

Of course at every stage in the construction of global capital markets, think tanks, economists and lawyers contributed ideas and argumentation to justify the next move. Technological change gave banks massive new information-processing capacity. The complex financial instruments they produced exuded an energizing charisma.53 The clannish society of the bankers created a social force field of common assumptions and an overweaning superiority complex. They were the masters of the universe. They could not fail. But the basic driver of expansion and change was the competitive search for profit, played out in the force field of financial engineering, transnational capital movement and competitive deregulation between Wall Street, the City of London and Basel. It was not that the key players were completely oblivious to risk. But they believed in their capacity to manage it and were totally committed to maximizing the rate of return. So every regulation and every restriction on leverage was subject to second-guessing and subversion by the overwhelming force of competition and the unfettered movement of capital that had been gathering steam since the 1960s.