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Showing reviews 1-5 of 64
 Powerful Tool June 24, 2010
Deborah J. Weir (Greenwich, CT)
The author's unusual background in anthropology makes her an objective observer of financial markets. Much as I enjoyed the body of the text, I found her Epilogue to be the most enlightening. In this section, she outlines the intellectual power structure that elites employ to maintain their status and dominate the rest of humanity. This information is a powerful tool for navigating and surviving "the system."
Deborah Weir, CFA
Author,
Timing the Market (John S. Wiley & Sons, 2005)
Timing the Market: How To Profit in the Stock Market Using the Yield Curve, Technical Analysis, and Cultural Indicators
Excellent view into the causes of the Financial Debacle of 08 June 7, 2010
L. Bailey (Atlanta)
Fool's Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe
To see it play out helps one see how banks indiscrimately misused and gambled in the use of CDOs by using them with mortgages which J.P. Morgan would not have done. There is no history in many cases, and it wasn't like the trust built up by J.P. Morgan with its clients. The book opens wide the fact that the banks did the vast majority of this activity "off the books" in the shadow banking system. What caused them to do this?
The giant returns and bonuses they got, and the perceived notion that if they fell, they all would fall, and the government would have to back them up! KILL "Too Big to Fail" as a concept. The taxpayers refuse to pay for this fraud.
 Tett offensive June 1, 2010
O. Buxton (Highgate, UK)
I've now read no fewer than seven excellent books detailing the financial atrocities of 2007-9. Each takes a different spin.
British broker Philip Augar covers the historical perspective; hedge fund manager and amateur philosopher George Soros looks to epistemology; former Federal Reserve Chairman Alan Greenspan provides a wide-ranging survey aimed more or less at self-exculpation; former Goldman Sachs chief and US Treasury secretary Hank Paulson breathlessly covers the regulator's perspective; New York Times journalist Andrew Ross Sorkin impressively covers the CEO's perspective and Michael Lewis writes from the perspective of those motley few who not only saw the crash coming (as we all did!) with hindsight, but bet on it happening ahead of time.
Now Gillian Tett, an excellent writer for the Financial Times, provides the credit structurer's perspective. Surveying the economic and intellectual environment which lent the tools and opportunity for these sub-prime backed products to get off the ground, Tett tells the story through the prism of the J. P. Morgan structuring desk from whose "BISTRO" transactions ("bank of international settlements total rip-off" indeed!) all of this started, but who still never fell for the mortgage-backed kool-aid which overwhelmed the rest of the market. The house of Morgan (Jean Strouse's reverent tome is well recommended) has a venerable tradition that even Goldman Sachs would envy; its performance over the last three years has burnished that reputation in a way that Goldman certainly ought to.
Tett's curiously titled book is, for the most part excellent, entertaining and novel. She does a better (and certainly more balanced) job of explaining the engineering of a CDO than Lewis (though in fairness, his is the only other entry to even have a go), and the J. P. Morgan angle is a clever narrative to lay over the goings on.
So much so that when Tett loses her focus on Morgan in the closing stages - her attention switches to the much larger field of conflict as the financial world blew up - the book suffers: Tett's treatment Bear, Lehman, AIG, and others is (of necessity) cursory, and those who are interested should seek out Sorkin's extraordinary survey, which is far more thorough.
Tett does pull it all back together again in her epilogue by re-focussing on the Morgan diaspora in a where-are-they-now summary, and she provides a stark and assertive personal perspective. Her background is social anthropology which she says (and I fully agree) provides a valuable perspective on how this could all have happened, and how it might happen again, that you won't find in Hayek or Friedman. But this is added as an afterthought rather than a spoke of the central thesis, which is a pity. For me that's the real story: the herd mentality, the group-think, the social and anthropological hierarchies that persist (and on which our financial and political institutions, frankly, are built) which tend to neuter the checks and balances which classical market theory says ought to be provided by the market. Curiously, George Soros gets closest to this, in his otherwise rather idiosyncratic (and a bit premature) book.
Tett's missed opportunity here is compounded when she misinterprets the metaphor of Plato's cave: The participants who look at only the shadows projected on the wall aren't at fault for failing to look at the "perfect forms" whose outlines create the shadows: Plato's point is they *can't* ever see them: it is the human condition to be stuck with the shadows. That ought to lead, therefore to a different conclusion: not that we should turn around to look at the projector - for that will surely blind us - but that we need at all times to maintain a healthy scepticism for what we are seeing. The fatal mistake is to suppose it is the truth.
If we can devise a way of building that impulse - a will to contingency, if you like - into our institutions, we'll be on the way to fixing this.
Fat chance, I suspect.
Olly Buxton
Fascinating tale of dogma May 24, 2010
Ravin Singh (Austin, TX United States)
Fascinating to know that Derivatives were almost regulated in the early 90s. Greenspan, Rubin and lobbyists managed to block any efforts for getting them under control. Though the book is mainly about how CDOs were mishandled by the banks, the thing I get most out of the book is that blind faith in economic dogma is really frightening, be it communism or, as in this case, self-regulation.
The Derivatives Tribe May 23, 2010
Paul Frandano (Reston, Va. USA)
Although this is too admiring an account of the JP Morgan creators of CDOs and what then became of their "innovation," it is, as others have pointed out, an excellent blow-by-blow chronology of how those particular instruments became weapons of mass financial destruction. Tett, with a Ph.D. in social anthropology from Cambridge, puts her training to good use as the FT's international finance columnist. Here, based mostly on her own reporting, she tells an important, thickly descriptive story that many others are now also taking a whack at, but perhaps not as felicitously as Tett. She's not a brilliant stylist but writes with an admirable, straightforward clarity characteristic of the best exemplars of the Journalism Tribe. Sometimes, however, I thought her somewhat lacking in expository patience; in one instance, in zipping through her story (and think of it: a lively book on derivatives!?), although it may be that she was simply striving for an effect, trying to build narrative tension by withholding a major point until that moment in the narrative that it began to become apparent, I was a bit annoyed. The text continually begged an important question and made me wait several chapters for the full implications of why the AAA-rated "super senior" debt was the ticking time bomb lurking within so many portfolios. (I presume true financial cognoscenti would have known all along, but that's certainly not me, nor was it most of her presumed readers.) But when Tett discloses it, I got it, clearly and well.
Fool's Gold is good instructional material, brims with interesting characters, and opens a nice window on the arcane doings of a most peculiar tribe. If I have a genuine beef (as opposed to the above faux beef, more a frustration), it's probably over Tett's unfounded and redundant assertions that the JP Morgan founders of many species of derivative innovation were high minded visionaries who actually believed they were making the markets and thus the world a better place. (Bejesus, it's embedded in her subtitle.) She uses the term "ambitious" to describe many of her subjects. How does one construe the unembellished adjective "ambitious" in this particular setting? We have to figure it out ourselves. Ambitious to create social good? Ambitious for power and position? Ambitious for the Frank Sinatra objective of "having the most stuff" at one's end of days and thereby "winning"? None of these strike me as objectionable, but a hard-nosed journalist might be more compelling by not coming across as credulous in response to her subjects' high-minded self-description. It's not, after all, dishonorable to simply be piling up bonuses or augmenting the firm's asymmetric information advantage over potential investors, buyers who may not have fully understood the underpriced risk but did understand that "JP Morgan" plus "S&P AAA" were literally "money in the bank"--thereby allowing the innovators themselves to ride that advantage straight to considerable personal wealth.
In the end, like Catherine the Great in reverse, they took, but they wept. And Ms. Tett seems to have swallowed their protestations like a rube swallows snake oil: bottle, label, cork, and all. That said, I really enjoyed, and thus recommend, Fool's Gold, but be wary of what the salesperson's NOT telling you.
Showing reviews 1-5 of 64
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