Sunday, April 29, 2012

On the Brink - Hank Paulson

On the Brink is Hank Paulson's personal recount of the financial crisis of 2007-08. This book was widely expected by specialists and non-specialists alike (at one point, it reached number 4 in Amazon's sales list), if nothing else because Paulson was probably the main decision maker during the 2007-08 financial crisis, which led to the nationalization of a tremendous number of American financial institutions and to the failure of Lehman Brothers.

On the Brink was widely reviewed when it appeared (The EconomistThe Daily BeastNYTHuffington Post, and The Independent, just to mention Google's preferences). The reviews and their quality vary greatly. Some of them argue that Paulson is responsible of letting Lehman fail while nationalizing the other financial institutions, pushing the United States to the worst crisis in generations; others mention that Paulson was jumping from one fire to the other without looking at the big picture. The reality, as usual, probably lies in the middle. Paulson was, indeed, always in the rush and catching up with events, but he was also the person who took all the decisions. Though he probably doesn't realize it, Paulson's book shows clearly how he presented all the decisions regarding bail-outs as faits accomplis to his boss, the President of the United States, who had no choice but sign. This has been confirmed by former aides of the White House, most notably by Matt Latimer, speechwriter of George W. Bush. Remarkably, while Paulson praises Bush constantly, Latimer is clear on the disenchantment between the two characters, and between Treasury and the White House in general. I encourage those who have read Paulson's book to compare it with Latimer's article.

Most of the autobiographies and memoirs written by policymakers are a boring recollection of facts, a listing of praises (or lack thereof) to other policymakers, and a few juicy gossips. On the Brink is not the exception to this rule. Paulson's communication skills are poor, and his writing is straightforward as a result of his lack of style, not because of training of refinement (at the end, Paulson acknowledges that a team helped him polish the book).What makes interesting this book is the vertiginous speed at which facts evolved: banks and financial institutions were falling basically every other week, and one guy and his staff were in charge of fixing everything around the clock and tell the American people that things were going to be OK every Sunday morning.

The value of On the Brink is neither literary, nor factual: the financial crisis created an industry of books about the crisis which describe facts in a more vivid and entertaining way (also, remember, that some of the facts of the financial crisis were under investigation when Paulson published his book, so gossips and rumors are obviously absent).

If there is one reason to read On the Brink is to get a firsthand approach, as limited as it is in terms of communication skills, of the financial crisis. Shortly, this will be a great document for historians in 50 or even 20 years. For this generation, other books might have a greater added value.


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