The authors describe the present US debt crisis as the most serious of the last 75 years. In the first two weeks of October 2008 they claim, “The United States, the very centre of economic globalisation, was gripped in a panic that threatened to destroy the world economy.” After 2000, the United States was borrowing massively from abroad and over the period to 2008 the flow of capital into the country averaged about five per cent of GDP. This was a rate of debt creation that could not continue. The Bush boom meant that the US economy was growing twice as fast as the European average and three or four times as fast as the economies of Germany and Japan. Investors bought into the US economy because they thought it was safe but if, as turned out to be the case, it was not safe where else could they go in our interconnected globalised system? There have been many financial crises in the western dominated world system but in the present time there is a major difference which lies in the emergence of China – and to a lesser degree other Asian economies – that are not bound into the US dominated system and this change, still only half taken into account at the present time, represents a new world financial order that has surely come to stay.

By 2008 the United States had become the biggest international borrower in world history, with almost half its $6 trillion federal debt in foreign bonds. The proportion of foreign loans to the size of the economy put the United States in league with Mexico, Pakistan and other third-world debtor nations. The massive inflow of foreign funds financed the booms in housing prices and consumer spending that fuelled the economy until the collapse of late 2008. Whatever a country does not pay for out of its income, it has to borrow and by 2008 two thirds of the $6 trillion in federal debt was owed to foreigners and three fourths of that was owed to foreign governments with China in the lead. Such borrowing was a recipe for disaster and the question it raises is just why did the United States allow this to happen. For decades, now, the West, led by the US and the World Bank, has lectured the indebted countries of the South about their unsustainable debts. What induced the United States to run up a similar or greater level of debt? Its example proved contagious. Ireland, one of the smallest economies in Europe, followed the US lead. In 2003, Irish banks owed $12 billion to the rest of the world; by 2007 that figure had risen to $130 billion. In Dublin from 1997 to 2007 the average house price rose from $115,000 to $550,000. Between 2000 and 2007 three and a half million jobs in manufacturing were lost in the United States and while such losses were taking place the boom principle – that the easiest way to get higher returns was to make riskier investments – prevailed. The US that has long preached how market forces should be allowed to prevail suddenly had to learn how to bail out a banking system that had imploded. In the 1990s there was enthusiasm for globalisation but by 2005 globalisation had ceased to be a term of hope and become negative: it threatened jobs, destroyed traditional communities and lifestyles and homogenised cultures. The Bush boom had left the US with $10 trillion of debt. Now, solutions have to be found and the US must reorient its economy towards exporting more and importing less. What does the crisis tell us about human behaviour, banks, greed and irresponsibility while individuals, like sheep, have all gone the same way. As the authors show, the crisis was foreseen by many and was avoidable through appropriate policy measures. Hard-hitting and lucidly argued, this book is essential for anyone wishing to understand what went wrong and why?