For those wanting a simple but compelling account of what went wrong, and how it went wrong so badly, you could not do better than read Boomerang - the Meltdown Tour by Michael Lewis.
If the subject matter was not so serious, this book would be hilariously funny. Even with the serious background of the situation, the book reminded this reviewer of a Hunter S. Thompson tour. But this time the author was high on debt instead of pocketsful of drugs.
Lewis writes that the book began accidentally while he was at work on another book about the Wall Street and 2008 United States financial disasters.
"I'd become interested in a tiny handful of investors who had made their fortunes from the collapse of the subprime mortgage markets."
Without doubt, the subprime mortgage markets caused huge financial hardship for many Americans as they found themselves overleveraged into houses they could not afford. When they stopped paying their mortgages, the rest of the world started to hurt.
Lewis explains in his preface - in simple and concise language - how it all went so wrong in the US before moving on to Iceland.
The interviews Lewis managed to gain and the details he gleaned from all of the countries visited give an overall picture of greed, ineptness and plain stupidity of some people.
Icelandic fishermen became investment bankers, leading to the collapse of the central bank, which in turn led to the collapse of banks in the United Kingdom and elsewhere.
However, it is the visit to Greece which sums up the frustration Germany must feel with the spendthrifts in the euro zone. The cash economy means many Greeks can avoid paying tax. Hardly anyone uses a credit or debit card, meaning business transactions can go undetected. A wage freeze was adopted but Greeks were paid for an extra week or two for the year, meaning they received a different type of pay increase.
The visit to the Vatopaidi monastery was a gem. There, Lewis found a "bunch of monks" who had found new, improved ways to work the Greek economy. Having seen the beauty of the monastery in a recent television documentary, it was fascinating to learn how one monk, with specialised financial knowledge, had turned the run down tip of an island into a gold-leaf plated thing of beauty.
Lewis also visited Ireland and Germany before reviewing just how badly some in the US had handled the global financial meltdown. He writes in a refreshing style that will make you smile.
Jane Gleeson-White set out to explain the accounting method in her book Double Entry. The sub-text is how the merchants of Venice shaped the modern world and how their invention could make or break the planet.
The first few chapters take some concentration, but once you understand her style, Gleeson-White skilfully takes the readers through how early merchants adopted the "father" of book-keeping, Luca Pacioli's method as their own.
Pacioli was a Franciscan monk born near Florence in the 1440s. In 1494, he published the first printed treatise on Venetian book-keeping. The method was not always widely accepted until merchants realised they could grossly inflate or deflate their profits, depending on what suited their circumstances at any particular time.
UK railway builders and factory owners adopted the method in the 1770s, allowing railways to be built and factories to be expanded.
Gleeson-White maintains none of that would have been possible without double-entry book-keeping.
Unfortunately, it takes far too long for the author to move to the 2000s and explain how the method was used to inflate the value of companies like Enron, WorldCom, HIH and One.Tel.
The last 100 pages of the book are riveting. While the explanation of the invention and sophistication of double-entry was intriguing, the real meat of the book was in how business people from the early ages had used the scheme to defraud shareholders.
New methods of accounting are being developed to take in the green economy, which includes sustainable development and poverty eradication.
The book concludes that the new eco-accounting could be the one last hope for life on Earth.
- Dene Mackenzie is a Dunedin business and political journalist.
