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The Penguin Press



The Alchemists: Three Central Bankers and a World on Fire

Edited by Scott Moyers

New York Times Bestseller

The inside story of the work of the world’s most powerful central bankers, offering an unparalleled view from the cockpit of the global economy, as three men struggle to keep it from going down.

Six times a year, Basel, Switzerland, hosts what is arguably the planet’s most exclusive party, an intimate weekend gathering of the world’s most powerful central bankers to exchange ideas, eat and drink well, and revel in the company of the only people who can understand the unique burdens they share. Neil Irwin’s The Alchemists opens in Basel during the May 2010 meeting, with Europe in the throes of a particularly acute installment of its ongoing financial crisis, and each of our protagonists facing his own particular dilemma. For Jean-Claude Trichet of the European Central Bank, it is to try to save a currency union that he spent a lifetime building. For Mervyn King of the Bank of England, it is to navigate the rough waters of domestic British politics without walloping either his nation’s economy or his own credibility. For Ben Bernanke of the Federal Reserve, it is to try to keep the global economy afloat without making the Fed the target of Congress’s anger. It is just one more fiendishly tricky moment they have faced together since August 2007, when fissures in the system first became visible to the naked eye.

Irwin leaps back from 2010 to tell the full story of the last five years from the vantage of these three central bankers as they worked in close coordination to keep ahead of unfolding events. Irwin has spent years covering the world’s central banks and their leaders, and he enjoys a rare degree of intimacy with them and their challenges. From the beginning of the global financial crisis, he has been one of the few with the vision and the access to chronicle it as it truly is—an interconnected global phenomenon. Deftly woven throughout the book is an invaluable history of central banking, which provides essential context to the present-day story in the United States and abroad.

The Alchemists is the high-drama, panoramic story of the central bankers’ role in the world economy we have been missing, with the reach of a contemporary version of Liaquat Ahamed’s Lords of Finance. It is a landmark reckoning with central bankers and their power, with the great financial crisis of our time, and with the history of the relationship between capitalism and the state. Definitive, revelatory, and riveting, The Alchemists shows us where money comes from—and where it may well be going.



“[Mr. Irwin] has provided an accessible, engrossing account of the tribulations that Mr. Bernanke, with Mervyn A. King of the Bank of England and Jean-Claude Trichet of the European Central Bank, endured in pulling the world financial system back from collapse… Mr. Irwin seems to have talked with everyone, read the right scholarly papers and interviewed important dissenters in the Fed, the European Central Bank, the Bank of England and the Bundesbank… He has a nice touch for translating central banking’s mysteries, opaque and forbidding, into understandable English. He is astute in describing the internal and external politics of institutions traditionally expected to remain above politics of the usual sort.” The New York Times

“An excellent account…scrupulously reported and full of clear explanations of events and economic concepts….an incredibly valuable book for all economically concerned non-economists. As someone who knows well the three central bankers that the book features…I can attest that the narrative has more than just a ring of truth. It gets the individuals, the circumstances surrounding their decisions, and their motivations right and also presents them fairly. Irwin’s volume will have lasting value for a wide range of audiences, including students and elected officials, but it will make its greatest contribution as a corrective to the many unfounded or simply crazy ideas about monetary policymakers’ intentions and impact.” —Adam S. Posen, Foreign Affairs

“A detailed and fast-moving account of these perilous years. This is the crisis as told through emails, phone calls, meetings and one very fateful walk along the beach in Deauville, France.” The Wall Street Journal

“The most complete and authoritative account to date of the response of the central bankers to the global financial crisis.” Kirkus Reviews

“Brilliantly reported and riveting, Neil Irwin’s The Alchemists is a must read for anyone who wants to understand the global reach of the financial crisis through which we are still living. The international perspective brings a fascinating and wholly new dimension to the story, one that has until now not been adequately told.” —Liaquat Ahamed, author of Lords of Finance

“So you thought central banking was boring. Well, it usually is, but not when Neil Irwin writes about it. The Alchemists is engrossing, entertaining, and enlightening all at once. What more could you ask for?” —Alan S. Blinder, author of After the Music Stopped

“Most accounts of the financial crisis focus on a familiar trio of government regulators: America’s Bernanke, Paulson and Geithner. Neil Irwin’s riveting, superbly paced The Alchemists departs from this conventional framework to capture the truly global nature of the crisis. In his nimble hands, the reader sees the global contagion unfurl country by country, like some menacing medieval plague, as he proves convincingly—and as his bankers learn—that in the unfettered markets of the 21st century, central banks must hang together if they are to have any hope of engineering the long-awaited, and still-delayed, soft landing for the world economy. Perfectly timed to assess his subjects’ careers, The Alchemists should take its place on the small shelf of entertaining and insightful central banking literature alongside Liaquat Ahamed’s Lords of Finance.” —Roger Lowenstein, author of The End of Wall Street

“Neil Irwin understands the mystery of money, and he tells his story with the perspective of a historian and the craft of a crack journalist. More than just a reconstruction of the financial crisis, The Alchemists is about trust and hubris and sophisticated folly—a very human tale.” —Sebastian Mallaby, author of More Money than God: Hedge Funds and the Making of a New Elite

Author Q&A


As the central bankers discussed the situation on that May evening, Trichet kept darting from the room for conversations on his cell phone. Speaking with the French finance minister or the German chancellor or the International Monetary Fund’s managing director, he tried to persuade them to take bold action, to collectively guarantee the debts of Greece and other European nations. It was alot to ask—that taxpayers of Germany and France be willing to backstop more profligate spenders in Greece and Portugal.

But Trichet had more than words to offer. He dangled the proposition that if the governments were aggressive enough, the ECB would consider using its own resources—its bottomless ability to print euros—to help ease the situation by buying up the debt of the troubled European nations. It would be a crossing of the Rubicon for the central bank: Buying government bonds was strictly forbidden by its founding treaty, which states that the ECB can’t print money to fund its governments—an action that in the past had frequently yielded disastrous results.

Trichet could take the step only by exploiting a loophole—while the central bank couldn’t lend money directly to governments, it could buy their bonds in the open market, which would have the same effect. But the action was just as likely to create deep divisions in the Eurozone as it was to hold it together. Axel Weber, the president of the Bundesbank, Germany’s central bank, was dead set against the move. Weber, who represented the largest economy in the Eurozone, and who at the time seemed the likeliest successor to Trichet, threw down the gauntlet in an e-mail to his colleagues two days earlier. If the ECB started buying bonds, he wouldn’t merely oppose it in the boardroom of the central bank, but violate time honored etiquette and announce his opposition publicly.

As darkness fell, the European finance ministers gathered at an emergency meeting in Brussels and went into radio silence: They pressed mute on the speakerphone they were using to communicate with the central bankers in Basel as well as officials in Washington, Tokyo, and beyond. An hour passed. During hour two, the ministers came back on the line—a deal seemed imminent. The sixty-eight year old Trichet had to make a call: Would he lead the ECB to skirt a founding principle in the name of averting a crisis that could destroy a monetary union he spent a lifetime helping to build?

“Once we open Pandora’s Box,” Weber warned, “we cannot close it again.”

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