Capitalism Unhinged: The IMF and the Lessons of the Last Financial Crisis

In what many observers termed the first crisis of the twenty-first century, a completely unanticipated attack from a faceless enemy shattered the worlds of countless families as they went about the normal course of their lives. Nearly four years have since passed. In some places, many people whose only culpability was to invest their savings or take jobs in the wrong places are still fighting to escape the poverty and economic insecurity that attacked without warning or mercy.

The Chastening reminds us of the chaos and confusion that swept through the world's financial system from July 1997 to April 1999. Interrupting a decade of unparalleled economic prosperity and promise, the crisis revealed the precariousness of the system that channels investment through much of the globe. From his vantage point as The Washington Post's chief correspondent covering the international financial crisis, Paul Blustein recognized that he "had the makings of a good yarn about economic phenomena of great significance." He applies the craft of great storytelling to a highly deserving subject that is normally the province of technocrats, academics, and financial wizards. The result is an accessible account of one of the most significant financial episodes of our generation from the perspective of the International Monetary Fund (IMF) -- an institution that is as little understood as it is important.

Blustein aptly names the decision-makers at the IMF and the key economic agencies of creditor nations "the High Command," hinting at the warlike nature of the crisis they navigated. In sharp contrast to the world we entered on September 11, 2001, the enemy that stalked the global economy in 1997 was impersonal: the herd psychology of financial markets. Although it has been with us for centuries, financial panic takes on a sufficiently novel twist in each new crisis to challenge key assumptions and policies adopted in response to the last. The Chastening applies skillful investigative journalism to reveal just how much the fabled financial guardians of the 1990s relied on trial-and-error, finger crossing, and guesswork in fighting the crisis -- in sharp contrast to the image of elite technocrats dispensing monetary medicine with scientific precision.