Pavlos Efthymiou: The Diary of the Crisis – Book Review*
Leading Greek journalist Pavlos Tsimas (Mega, Ta Nea) narrates in the first person, his experiences and reflections on the global economic crisis drawing from his interview material, images and memories. ‘The diary’ is a story of bubbles, irresponsible deregulation, irresponsible lending and borrowing and unrestrained speculation. It assesses government responsibility, greed and revisits the Keynesian/Monetarist ideological bras de fer. Tsimas masterfully interweaves multiple perspectives into his account, which is perhaps ‘the diary’s’ main strength. To understand and analyse the crisis and its implications Tsimas draws upon policy-makers, economists, journalists, businessmen and ordinary citizens. It is not just the calibre of the interviewees -Ministers, Nobel Prize Winners, f. Heads of State – that explains the added value of the book, but the very way Tsimas’ synthesis highlights the vulnerability of the global economy and a series of structural weaknesses that account for the magnitude of the current crisis. To a considerable extent, the crisis and its scale caught both the world’s most knowledgeable and most ignorant by surprise. Even the maestros of the euro-area’s bond markets, the ‘all knowing’ Credit Rating Agencies were caught unprepared, grading the US sub-prime bubble, other toxic products, and even states with AAA days before these crashed (p. 42; pp. 96-97). Many knew of one or some of the bubbles out there, but knowing all of them was an impossible quest, and along the way, the developed world’s growth had become considerably dependent upon these.
For Tsimas, the key vulnerability of the global economy came with ‘complete deregulation’ (p.62) which allowed for uncontrolled over-borrowing, extreme speculation, a huge ‘nominal’ economy and a comparatively small ‘real’ economy. A striking example is that “[Iceland’s] three banks had reached a ‘worth’ equal to ten times the size of the whole of Iceland’s economy” (p. 72). Throughout the book Tsimas does not conceal his scepticism regarding this dwarfing of the real economy by its nominal gigantic shadow which was increasingly overwhelmed by sophisticated mathematical by-products that were bought and re-sold by investment banks, hedge funds, insurance companies and others, maximizing liquidity (e.g. pp. 35-37).
The reader can discern Tsimas’ concord with the views of two recurrent interviewees J. Stiglitz and P. Krugman who basically advocate a political economy closer to the pre-1980 model, with appropriate regulations in place to ensure economic stability and sustainability coupled with a sensible degree of socioeconomic justice. In other words, Tsimas takes a position in the Keynesian/Monetarist debate, highlighting the need for targeted government intervention, and a focus on growth as opposed to an exclusive focus on austerity. He draws upon the IMF’s record to show how the organizations’ fixation with ‘austerity’ (deeming that austerity will lead to higher competitiveness and hence maximizing exports and attracting FDI) has led many of its ‘patients’ to a ‘swift death’ rather than the promised fast recovery. Tsimas also highlights several concerns associated with drastic, and largely horizontal, cuts at times of crisis (e.g. p. 221; pp. 280-283). It is clear that for the ‘Diary’ at least, European policy-makers and the IMF have been trapped in a situation where they effectively discuss only the one side of the coin: ‘austerity’ or ‘putting budgets in order’; failing spectacularly to discuss growth – which is after all the motor that shall produce surpluses – which are in turn the key to repaying a country’s debt and ensuring its sustainability. ‘The diary’ also diagnoses a leadership deficit in global economic governance, encapsulated best perhaps in the diagnosis that a new Franklin D. Roosevelt is required to set the limits, boundaries and a new sustainable regulatory framework which will tame the markets and the speculators (e.g. pp. 49-50; pp. 266-267).
Tsimas’ account is compelling to read and the personal viewpoint adds significantly to this. For instance, in March 2009, Tsimas interviewed Charles Grant, with the latter predicting a Greek bailout and an IMF involvement. His self-critical remarks regarding his reaction to Grants forecast are gripping (p. 195): “I confess my sin: everything I heard seemed to me unthinkable, like a joke even. Now that I read again the minutes (of that interview), I am angered by my lack of judgement”. The language Tsimas uses is fascinating, graphic and at times constructively poetic. He makes the reader reflect on the way he writes and revisit paragraphs and phrases in admiration. To an extent, the book reads like a marvellously written and unusually long International Herald Tribune or Financial Times article. The diary enjoys both the insight of a great journalist and the access to the paramount related sources.
Tsimas’ diary makes 9 stops, immersing the reader into 9 different experiences of economic plight: Istanbul (2001), Buenos Aires (2001), New York (2008), Athens (2008-), Budapest (2008), Dublin (2009), Dubai (2009), Reykjavik (2010) and Lisbon (2011). The interconnections between the crises are effectively highlighted, and the readers of ‘the diary’ will get a clearer picture of the broader character of the crisis – its global dimension, its particular implications for Europe and the eurozone, but also for Greece which has spent a good deal of the past 3 years in the centre of the cyclone. Tsimas’ book serves as an excellent tour de force of the crisis; it will guide its readers through the world of the crisis swiftly and effectively, providing them with an entertaining read, many answers but also considerable food for thought.
