The Chastening is a book about the IMF's response to the financial crises in the mid-to-late 1990s that threatened to topple the financial systems of a number of countries.
Loosened regulations and increases in technology have made it easier for large amounts of funds to flow across borders. This can be beneficial when capital is put to work where it can be its most productive. But it can also be destructive when panic causes this "Electronic Herd" to exit a place in a very short period of time.
Such were the nature of a number of crises that afflicted countries such as Russia, Korea and Indonesia from 1996 to 1998. Countries with even loosely pegged exchange rates saw their reserves dwindle as the panic-stricken Herd departed country after country. Banks that borrow short and lend long fell, threatening to take down economies with them.
Seeking to alleviate the damage was the IMF, with its war-chest and crew of "expert" economists. They paid house-calls to the countries afflicted by crises, and in some cases the cures may have been worse than the diseases.
Blustein does an expert job taking the reader through the times. His well-researched book shows us what the IMF was agonizing over internally even as it presented a united public face. He also unveils what the IMF's western country puppet-masters were trying to do, which was at times at odds with what the IMF was attempting.
Books like this can go overboard with too many characters playing too many roles (such is the challenge of describing real life!), but Blustein does a good job keeping things manageable for the reader. Each chapter is devoted to one country-crisis (plus one hedge-fund crisis, namely LTCM), which helps keep things readable. I highly recommend the book to anyone interested in this subject.