Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

Given that resistance from France and Germany had kept any firm fiscal policy commitments off the G20 agenda at London, it was something of a surprise that the final communiqué spoke in grandiose terms of $5 trillion in fiscal expansion that would save millions of jobs and “accelerate the transition to a green economy.”55 Where that enormous figure came from is something of a mystery. Over the weeks that followed it was left to outside agencies such as the IMF to do the work of compiling data about the emergency spending programs that had been launched around the world. The results were striking. In total, between 2008 and 2010, crisis-fighting expenditure would come to $1.87 trillion, or $2.4 trillion in PPP-adjusted terms—counting only discretionary spending and emergency tax-cutting measures. It was not $5 trillion, but it was nevertheless historically unprecedented. What was even more striking was the distribution of this spending. Whichever way one measured it, in 2009 and 2010, Asia and the emerging markets produced the most dramatic response to the crisis. Russia, Indonesia, Korea, Turkey, Brazil and Argentina were now in a position to launch truly substantial fiscal responses.56 According to the IMF’s figures, in 2009 Russia’s discretionary crisis response more or less matched that of Germany or exceeded it in PPP terms.57 And these figures were a serious understatement of China’s effort. They did not include the huge lending boom. By comparison, despite the size o...

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