The weekend austerity began.

An excerpt from

The Alchemists:

Three Central Bankers

and a World on Fire

(Penguin Press, 2013)

by Neil Irwin, Washington Post

columnist and

economics editor.

[ILLUSTRATION OMITTED]

Make your way to the French Canadian metropolis of Montreal. Then, if you have the proper connections, hop on a military jet and fly four hours due north. You'll find yourself in Iqaluit, a town of fewer than 7,000 people on the southeastern coast of Baffin Island, directly across the Davis Strait from Greenland. At one time it was a pit stop for American fighter planes being sent across the Atlantic to fight in World War II. But now it has a different place in history: It was the place that the leaders of the advanced economies collectively decided that the battle on the great crisis of 2008 had been won, and the time to pivot toward fiscal austerity and tighter money had arrived.

When the Group of Seven finance ministers and central bankers arrived there on February 5, 2010, the temperature was an unseasonably warm 0[degrees] Fahrenheit, and they were treated to demonstrations of igloo making and other examples of native culture. The British press had fun with a photograph of Bank of England Governor Mervyn King wearing a giant fur-lined coat and riding a dogsled. "For God's sake, just don't get photographed clubbing a baby seal," said one central banker's communications adviser on the banker's way out the door. Or, for that matter, get caught eating any: All the officials except the Canadians skipped the final meal, at which raw seal meat was served.

Wearing sweaters and sport coats rather than their usual dark suits, the finance ministers and central bankers assembled in a circular conference room at the Frobisher Inn ("the largest full-service business hotel in the Eastern Arctic") under a domed ceiling of exposed wooden beams evocative of an igloo. Greece's financial troubles had exploded into the open only four months earlier, and its borrowing costs were rising seemingly by the week, every basis point rendering its debt burden more onerous. The president of the European Central Bank, Jean-Claude Trichet, made an impassioned plea to his European colleagues, one that suggested he might be changing his...