One of my holiday reads (at the serious end of the spectrum) was Fool's Gold by Gillian Tett. It's an excellent overview of how the financial crisis came about, told through the lens of events at JP Morgan. Her hypothesis is that the drive to innovate, arising from both internal culture and competitive performance pressure against other investment banks, lay at the root of the credit derivatives and subprime bubble and bust.

There are two aspects of the book I particularly liked. One is that Gillian explains clearly what all the innovative derivatives were so that – albeit briefly – I understood the whats and whys of CDOs and SIVs. This in a highly readable book with plenty of anecdotal liveliness.

The other stems from her training as a social anthropolgist, which gives Fool's Gold an interesting external perspective on the behaviour of the investment bankers. For example, she explains that people operate within certain mental maps which make it impossible for them to appreciate that others might have a completely different perspective from them. To give one instance, people at JP Morgan who had introduced certain innovative financial instruments in a context of strict risk management could not imagine that others elsewhere would use the same instruments in a completely irresponsible way. Gillian has clearly spoken to many of the individuals involved, just as for a piece of serious fieldwork.

Even more striking is her observation that areas of silence in society reflect the disposition of power – and that there was almost total silence in the policy and political world about the explosion of credit derivatives and sub-prim mortgages. This chimes well with the thought-provoking recent article by Simon Johnson in The Atlantic, about the oligarchic power of investment banks in the US (and, although he doesn't specify, the UK too). The crisis was and still remains a crisis of power in western economies, just like earlier episodes of economic and financial upheaval such as the mid-70s.

Fool's Gold doesn't aim to give the full history of the events which led up to the collapse of Lehman Brothers and all the rest – in a way, JP Morgan is a slightly odd candidate to choose as a window on events, not being at the complete epicenter of scandalous risk-taking, greed and misselling. However, I highly recommend it as a terrific read with fascinating insights, and an absolute model of clarity. Gillian was a reporter on the economics beat when I was covering the same territory for the Independent – even then her quizzical anthropological eye was apparent. She's a great journalist and well-deserving of her acclaim in covering the financial markets.

Here is the New York Times review of the book – there are plenty of others.