This is perhaps one of the best books I’ve read to date for explaining the economics behind the 2008 financial crisis in laymen’s terms. Walking us through the history in the decades leading up to the explosion in derivatives that swept through the global banking industry John Lanchester offers a very frank and digestible explanation while doing an admirable job keeping the text entertaining. I.O.U. also touches upon some of the psychology behind human judgment and why we’re often very bad a handling finances and that the reliance upon risk analysis models has only exacerbated the inherent risk introduced by the derivatives market. However the author is very clear that there had to be witting and unwitting accomplishes along the way to allow these practices to flourish, and still continues today thanks to the stupendous amounts of money they’ve been make playing all sides of the transactions they broker. The fact that some outfits are prepared to reward incentives on deals that have yet to even realize any of the profit expected is perhaps the most egregious of the examples provided that shows just how misaligned the global financial industry is from the rest of the world.

A fascinating read I’d certainly recommend picking it up.