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Cata$trophe: Adam Tooze tells the real story of the 2008 financial meltdown

Historian Adam Tooze wrote Crashed: How a Decade of Financial Crises Changed the World as the decade was unfolding. The giant waves from the crash of 2008 are still hitting shore, both politically and economically. The 2019 Gelber Prize-winner talks with Peter Armstrong, CBC's Senior Business Correspondent, about how what happened on Wall Street was just the start, and how flaws in the globalized banking system came to affect regions, nations, and individual lives.
CBC Radio ·
A broker at the Frankfurt stock exchange in fall 2008. Germany's political leadership destructively "failed to appreciate the scale of the risk" in the years following the crash, according to author Adam Tooze. (AP Photo/Michael Probst)

It's quite a feat to write the "standard work" about an historical moment while that moment is still occurring, but that's what the jury of the 2019 Lionel Gelber Prize believe Adam Tooze did with his book, Crashed: How a Decade of Financial Crises Changed the World.

Adam Tooze is an Anglo-German historian based in New York. That confluence of expertise and geography gives him particular insight into the 2008 financial crash.

He argues against the prevailing "national American narrative" of excessive "pride and hubris" around the U.S. subprime mortgage crisis, and the idea that the U.S. crisis slammed into connected economies. 

Crashed is a nonfiction book about the 2008 global economic recession by Adam Tooze. (The Lionel Gelber Prize)

Instead of a broken relationship between the economies of nations, Tooze says that it was a precarious financing situation between banks worldwide, particularly those in America and North Atlantic Europe, that led to the meltdown.

The effects of the crisis were felt everywhere: from the loss of peoples' homes and savings in places like Ireland and the southern U.S., to years of political fallout in Ukraine and Eastern Europe.

The fragilities of our financial system aren't the result of any glitch, Adam Tooze maintains. They're baked into global capitalism. Some international regulators, such as Indian economist Raghuram Rajan, tried to sound the alarm before 2008 — but to no avail.

Even as things appear to stabilize, and economies grow, the 2008 crisis has led to profound changes around the world. Adam Tooze points to the 30 per cent unemployment rate for young people in Spain as an example of the crash's impact on entire generations. 

In the end, these enmeshed global structures seem outside of individual control. But that does not mean people are powerless.

One of the purposes of writing the book is to inform, in some small way, the conversation that (asserts) in the end, classical politics truly matters.- Adam Tooze

Tooze says there is "a huge onus in ensuring that the discourse, the rationality, of parliamentary party-based politics is preserved.  Because without it, the technocracy by itself is not going to give us the solutions. And we know that private interests are too conflicted under most circumstances too." 

In this episode, Adam Tooze talks with Peter Armstrong, CBC's Senior Business Correspondent, about how what happened on Wall Street was just the start, and how flaws in the globalized banking system came to affect regions, nations, and individual lives. 

Adam Tooze is author of Crashed: How a Decade of Financial Crises Changed the World. He is the Shelby Cullom Davis chair of History at Columbia University, and Director of the school's European Institute.  

Further reference:

**This episode was produced by Lisa Godfrey.