“The Ascent of Money: A Financial History of the World,”

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Niall Ferguson’s latest book, “The Ascent of Money: A Financial History of the World,” went to press in May 2008, but it shrewdly anticipates many aspects of the current financial crisis, which has toppled banks, precipitated gigantic government bailouts and upended global markets.

“Are we on the brink of a ‘great dying’ in the financial world,” Mr. Ferguson asks, “one of those mass extinctions of species that have occurred periodically, like the end-Cambrian extinction that killed off 90 percent of Earth’s species, or the Cretaceous-Tertiary catastrophe that wiped out the dinosaurs? It is a scenario that many biologists have reason to fear, as man-made climate change wreaks havoc with natural habitats around the globe. But a great dying of financial institutions is also a scenario that we should worry about, as another man-made disaster works its way slowly and painfully through the global financial system.”

In the course of this useful if somewhat lumpy volume, Mr. Ferguson looks at the roots of the current economic meltdown, examining how, in a globalized world that uses increasingly complex financial instruments, defaults on subprime mortgages in American cities like Detroit and Memphis could unleash a fiscal tsunami that spans the planet.

But the book does not focus primarily on speculative manias and financial crises; for that, the reader is better off with two old-school classics, “Manias, Panics and Crashes” by Charles P. Kindleberger and Robert Aliber, and “Extraordinary Popular Delusions and the Madness of Crowds” by Charles Mackay. Instead Mr. Ferguson discusses such cycles of euphoria and panic within a larger historical context: he traces the evolution of credit, debt and the idea of risk management over several centuries, and as he did in an earlier book, “The Cash Nexus,” he examines the potent links between politics and economics.

http://www.nytimes.com/2008/12/02/books/02kaku.html?th&emc=th