|  | Author: Gillian Tett
Publisher: Tantor Media
List Price: $34.99
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as of 11/23/2009 03:10 CST details
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Rating:  46 reviews
Sales Rank: 459107
Format: Audiobook, CD, Unabridged
Languages: English (Original Language), English (Unknown), English (Published)
Media: Audio CD
Edition: Unabridged CD
Number Of Items: 8
Shipping Weight (lbs): 0.4
Dimensions (in): 6.5 x 5.5 x 1.1
ISBN: 1400112834
Dewey Decimal Number: 332.660973
EAN: 9781400112838
ASIN: 1400112834
Publication Date: July 1, 2009
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Showing reviews 41-45 of 46
 Well written book that is a must-read for anyone who works in finance, or is mad at the financial wreck we are in May 23, 2009
S. Yang
55 out of 58 found this review helpful
Having read this book over 3 days (interrupted only by work, playtime with my two toddlers, and sleep), I highly recommend it to anyone who cares about our financial system (be it that you work in finance, or hate financiers that brought us the ruins - just bear in mind they were not the only ones to blame, throw in the regulators, lenders, and borrowers who enjoyed the party, and politicians who took credit for the housing boom). The book is well-written, focused, and surprisingly a page-turner that you don't want to put down once you start reading it.
Having fought the battles in the trenches over the past two years during the ongoing financial crisis, I have a deep appreciation for what Gillian Tett has accomplished in this book. It provides a comprehensive view of one corner of the financial markets - the one that caused so much of the wreckage over the past two years. While it will be a daunting task for any single writer to document the crisis we are still going through (given the multiple contributing factors/actors to this crisis), the author has done a great job producing a contemporary record on the credit derivatives market and its role in fueling the housing bubble leading up to the crisis.
Obviously, the author deliberately chose to exclude some critical episodes of the credit crisis (such as the SocGen trading scandal, the resulting ill-timed massive cut in Fed funds rate leading to the oil shock of 2008 that partially contributed to the inflation scare and added shock to the economy). She also chose to withhold judgment on policy responses during the early stage of the crisis and exclude the various "local" factors contributing to the subprime housing boom (think Hank Paulson and Ben Bernanke claiming the subprime crisis "being contained", think Barney Frank and his role in shielding Fannie and Freddie from proper oversight, think Clinton and Bush administrations' claim that homeownership was at "historical highs"). She may be right to do so as inclusion of these topics will obfuscate the focus on credit derivatives. An educated reader will want to keep in mind such background information as part of the mosaic of the financial crisis.
Without a full understanding of all the factors contributing to the crisis we find ourselves in, it would be tempting to find solutions that seem to eliminate the excesses of the past years only to sow the seeds for future problems. So-called "always fighting the last war". A simplistic solution to the credit derivatives abuse would be to ban it. A simplistic solution to the failed U.S. auto industry would be to subsidize it with taxpayer funds. A simplistic solution to the housing problem would be to mitigate mortgage foreclosures through taxpayer subsidies (as if everybody who bought a home deserves to live in that home or be a homeowners in the first place).
Gillian Tett was nominated as British Business Journalist of the Year not for this book, but her regular writings in the Financial Times. Her writings in the FT are insightful and timely. This book only reinforces her reputation as one of the best journalists in the field.
On a separate note not related to the book but the book reviews found on Amazon, I find it hard to believe that any review by people who haven't actually read the book is entertained on this site. Simply saying that "I heard this was a good book and I heard the author interviewed" is no qualification for one to write a book review. There is no prize to win from writing the first review, especially when it's only based on hear-say. Anyone who does that is doing the author and intended readers a great disservice, no matter how flattering the review is. Amazon should impose some minimal standard on such postings.
Excellent Review of the Players: From AIG to Wells Fargo May 18, 2009
Mike Morgan (New York, NY)
99 out of 103 found this review helpful
The book starts with a fly-on-the-wall description of big, offsite meeting in Boca Raton for J.P. Morgan employees. There they made plans to ensure that J.P. Morgan led the industry in credit derivatives. This story of the bravado of young party animals becomes the backdrop for how we got into this mess. These recently minted and overconfident traders and analysts risk takers, lead a headlong charge into a poorly understood market innovation. After that, Tett describes in detail the array of models, players and events that lead to the financial crisis and weaves them all together to explain the events like no other author yet has done.
Although the description of events are detailed, Tett leaves out explanations of how basic psychology and particular modeling errors contributed to the problem - such as the researched described in Hubbard's The Failure of Risk Management: Why It's Broken and How to Fix It (although Hubbard is talking about risk management in a broader sense than financial risks alone, I still recommend both books for this topic). But Tett is also more pragmatic and specific than Taleb's The Black Swan: The Impact of the Highly Improbable and makes more logically supported conclusions than Posner's A Failure of Capitalism: The Crisis of '08 and the Descent into Depression.
Tett seems to cover just about every aspect of the recent crisis that an author can cover without getting into specific mathematical modeling errors (Hubbard argues this is a critical contributor but it would be hard to elaborate without alienating much of the audience). She covers AIG, Bear Sterns, Fannie Mae, the credit rating agencies and the Basel II accords. She mentions Gaussian copula model, Goldman Sachs and the actions of Alan Greenspan. The details of Structured Investment Vehicles (SIV) and Value at Risk are included along with recent events like the Troubled Asset Relief Program (TARP).
I do not believe there is another single book that has this breadth of coverage combined with a logical picture of how they formed an avalanche of connected events. As of now, this is the single most important book on the topic, period.
 Tells Only Half the Story ... Poor Book May 16, 2009
Chris DuBois (San Francisco, CA USA)
50 out of 99 found this review helpful
Gillian Tett has emphasized one part of the causes of the financial crisis but mostly failed to desribe the two primary causes of this crisis which were (1) "too cheap money" created by the Federal Reserve System in the early part of this decade and (2) the political corruption by the Democrats of the quasi-governmental institutions Freddie Mac and Fannie Mae - both of whom created a market for sub-rpime mortgages which virtually everyone admits were at the center of the financial meltdown and which were sold around the world (see below for documentation on both causes).. Without these two defining events, the financial crisis would not have been possible. Ms. Tett tells the story of what happened down stream from these two primary causes of the world wide financial crisis. In so doing, she misses half the story and this is the half that made every thing else possible. That is why I gave this book only 2 stars. Credit default swaps and collateralized debt obligations did NOT cause the financial crisis.
By emphasizing the secondary reasons for the financial crisis over the primary causes, Ms. Tett is inadvertently helping to create a climate where governmental over-regulation of the financial industry will throw the baby out with the bath water. Ms. Tett in an interview about her book on Business News Network (Toronto - http://watch.bnn.ca/thursday/#clip172314 ) said she didn't want to do this but that is the inevitable effect of a very one-sided analsysis of the causes of the financial crisis that she gives in her book.
DOCUMENTATION for the two primary causes of the financial crisis is below.
(1) Too Cheap Money - The Federal Reserve set the cost of money, called the Federal Funds rate, to below 2% for three years (Nov 2001 to Nov 2004) the longest time in modern U.S. history - and thereafter it remained at historic lows until recently.
(http://www.newyorkfed.org/markets/statistics/dlyrates/fedrate.html).
This made loans artificially cheap. Without cheap money, all those sub-prime mortagages could not have been made because many fewer people would have been able to qualify for a mortgage.
Geithner (Barack Obama's Treasury Secretary and previous head of the New York Federal Reserve Bank , the most influential in the system) admitted on a Public Broadcast show - the Charlie Rose show on May 6, 2009 - that a root cause of the crisis was indeed the Fed Fund's rate being set too low. An article on the Wall Street Journal recounts this admisstion entitled: "Geithner's Revelation" (May 12, 2009) in which the first sentence reads:
.. a member of the U.S. political class admitted last week that the Federal Reserve helped to cause the financial meltdown.
and further on in the article:
the real news here is Mr. Geithner's concession that monetary policy was "too loose too long."[quote from Mr. Geithner]
http://online.wsj.com/article/SB124208327133908471.html
(2) The corruption of the quausi governmental organizations Freddie Mac and Fannie Mae by the Democrats. Sub-prime mortages were at the heart of the financial crisis. Freddie and Fannie encouraged the lowering of standards for issuing mortgages. They also brought up and repackaged these sub-prime mortgages and resold them around the world. In this way, Freddie and Fannie created a market for 50% to 70% of all the mortgages in the United States. Without this market making ability many fewer of these mortgages would have been created.
Freddie Mac and Fannie Mae were nominally in the private sector, but they were created by government and all of their key operating parameters (e.g. the amount of money they had to keep in reserve for bad loans) were under government control.
Freddie and Fannie were corrupted for poliical reasons. When the Republlicans tried to put more controls on these institutions, the Democrats rejected this. You can see this happending in the on-line video:
Video URL for Barney Frank, Greenspan on Freddie and Fannie:
http://www.youtube.com/watch?v=cMnSp4qEXNM
You can also read about it in a New York Times article:
http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print
Barney Frank opposes in this article any such extra oversight of Freddie Mac and Fannie Mae. (NY Times - Sept. 11, 2003) [Please note: the New York Times is no friend of the Repbublicans and has endorsed Democrats for President at least for the past half century]:
Quote from article:
"Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings."
Without these two governmental actions - setting the Federal Funds Rate too low and creating too much "cheap money" AND corrupting Freddie and Fannie which created the market for all these sub-prime mortgages, the financial crisis woud not have happened. These were the well springs of everything else that happened down the line. This book leaves the primary causes of the financial crisis largely untold and unanalyzed.
Excellent May 15, 2009
MaduraiGirl (Saratoga, CA United States)
9 out of 22 found this review helpful
I just listened to the author on NPR today afternoon. What a dynamic lady and what a book!!!
Very well written and pinpoints where exactly things went downhill in 2007. Great read and there's a lesson to be learned from this. Apart from the big lesson of course.. She says that non bankers should keep bankers in check and there should be transparency in banking. Opaque muddy views of the banking industry is what caused the juggernaut to obliviate the large excesses of the past 2 decades...
Good read...
profitandentropy.com May 14, 2009
Doctor Richard (Newton,, MA, United States)
4 out of 42 found this review helpful
I also just listened to the Terri Gross NPR interview, and hope that her book reveals how she knew so much that the experts could not know. Our thesis is that economists are not scientifically educated enough even to the level of a "physics for poets" course to realize that what they study is subject to the 2nd law of thermodynamics, just as is the rest of reality. The equilibrium of supply and demand central to economic theory mimics the Newtonian balance of action-and-reaction, a model that we show is inadequate to explain economics. [...] offers a paper that teaches enough thermodynamics to argue that profit in an economic system is analogous to increasing entropy in a thermodynamic system - and explains that increasing entropy is more like waste than like fuel. The expanding economy driven by value-less profit sent the system into thermo-economic equilibrium. I hope that interested readers will visit us.
Showing reviews 41-45 of 46
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