I.O.U.

Why Everyone Owes Everyone and No One Can Pay

John Lanchester

• Publisher: Simon & Schuster
• Year: 2010
• eBook ISBN: 9781439169872
• Topic: Economics
• Subtopic: Business General
• Index: Economics

For most people, the reasons for the sudden collapse of our economy still remain obscure. I.O.U. is the story of how we came to experience such a complete financial disaster, starting with the magical proliferation of credit that led to an explosion of lending on the global and local landscapes of banking and finance. Viewing the crisis through the lens of politics, culture, and contemporary history—from the invention and widespread misuse of financial instruments to the culpability of subprime mortgages—Lanchester deftly draws conclusions on the limitations of financial and governmental regulation, capitalism's deepest flaw, and most important, on the plain and simple facts of human nature where cash is concerned. With newly updated, superbly written reportage, Lanchester delivers a shrewd perspective and a digestible, comprehensive analysis that connects the dots for expert and casual reader alike. Part economic primer, part fiscal and historical analysis, I.O.U. is an eye-opener of a book.

INDEX

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Abacus, 244

accounting, 26, 28, 106, 231

Against the Gods (Bernstein), 149

AIG:

bailout of, 39, 76–78

in CDS market, 75–78, 201

aircraft industry, 227

Alternative Mortgage Transaction Parity Act (AMPTA), 100

Angelides, Philip, 242, 243, 244

Animal Spirits (Akerlof and Shiller), 145n

Annie Hall, 1–2

Apple, 34

appraisals, 128

arbitrage, 54–55

arms manufacturing, 200

Arthur Andersen, 106

Asano, Yukio, 18

asset price bubble, 176–77

assets, 10, 25–42, 106, 176

in balance sheets, 25–34, 37–38, 70, 120

banks and, 25, 32–42, 70, 74, 120, 194

of businesses, 29–30, 34

derivatives and, 38, 48–50, 52, 57–58, 120, 205–6

housing and, 96, 126, 130, 176–77

intangible, 30

leverage and, 35–36, 41

liquidity and, 28–29

risk and, 37, 146, 165

toxic, 37–38, 42, 75, 165, 189

ATMs, 7–9, 176

Austen Riggs Center, 140–41

automobiles, automobile industry, 1–2, 24, 40, 134, 197, 222

in balance sheets, 27–28

stocks in, 148–49

balance sheets, 25–35

banks and, 25–34, 37–39, 41–42, 70, 120, 205–7, 237–238

of businesses, 29–34, 37, 106

of individuals, 27–29, 35

Baltimore, Md., 83–86, 127, 129, 163

Banfield, Thomas, 236n

Bankers Trust, 150

banking, bankers, banks, 19–22, 24–43, 169, 171–78, 216–20, 222–30

assets and, 25, 32–42, 70, 74, 120, 194

ATMs of, 7–9,...

Table of contents

• Cover
• Dedication
• Epigraph
• Introduction
• One: The ATM Moment
• Two: Rocket Science
• Three: Boom and Bust
• Four: Enter the Geniuses
• Five: The Mistake
• Six: Funny Smells
• Seven: The Bill
• Epilogue
• Acknowledgments
• Sources
• About John Lanchester
• Notes
• Index
• Copyright