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Unless you feel compelled to read every word that Michael Lewis writes, skip this book.

Panic! is a very peculiar concept for a book: Assemble mostly stories by journalists (and a few pundits) to describe the mood before, during, and after market crashes . . . while also providing a little understanding of "why" the market crashed. To me, that's a little like expecting sports journalists to predict who will be the best-performing athletes next season . . . and then explain why their predictions didn't pan out.

What do journalists know about financial markets? Based on reading these articles, precious little.

There are occasional gems that bear reading and serious consideration, but they are too few and too far between.

The articles are grouped around the market collapses that began with the October 1987 meltdown driven and aided by "portfolio insurance" program trades and move on to the currency runs on Thailand and Russia in 1997 and 1998, the Internet stock collapse in 2000, and the subprime mortgage fiasco recently spreading into the stock market crash of 2008-.

I predict that most readers will find the articles "describing" 1987 to be pretty confusing. There are better articles written about the period that are omitted from this collection. The currency runs are only slightly less confusing. The last two disasters are easier to follow if you aren't an economist or someone who watches CNBC six hours a day.

The standout of all the articles is the essay by Dave Barry, "How to Get Rich in Real Estate," from Dave Barry's Money Secrets. It's hilarious and right on. It's too bad the rest of the writing isn't as good.

Don't get me wrong. Michael Lewis knows how to write about finances in an entertaining way (even if he admits that he doesn't understand the newfangled financial instruments all that well), but he contributed only seven of the substantive articles in the collection. Two of them you will have read before (from Liar's Poker and The New, New Thing). One of them seems offbase to me ("In Defense of the Boom" which seems to say that having a wildly overpriced stock market in Internet stocks was a good thing).

I would have graded the book lower, but I was pleased to see that Mr. Lewis understands that the typical austerity advice that the IMF and the World Bank peddle to underdeveloped countries when there is a run on their currency is all wet. If we followed that advice in the current crisis, our short-term interest rate would be 22 percent and about 15 million more Americans would already be out of jobs.

At a time when one of the greatest financial messes in the history of the world is being unveiled daily in front of you, I would suggest you skip this book and watch the far more fascinating drama that's going on now. Clip the articles that you like, and you too will be able to produce a book like this one at some point.
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on 16 April 2010
...page 264 'how to get rich in real estate' by Dave Barry is very very funny!
the rest of this book is just hundreds of old articles about old stock market crashes
some of these are taken from Liar's Poker and The Money Culture by Lewis.
This is a pretty cynical money making compendium of old articles by financial journalists.
Apart from Dave Barry's short and hilarious piece it's a total waste of time and money!
JP :(
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The first thing to note is that Micheal Lewis edits this collection and doesn't write it - which is a shame as he writes better than most other financial pundits.

The book is bitty, it starts with the 1987 crash which it handles poorly, I skipped most of the stuff on the Asian Crisis, as it wasn't of much interest to me. After this point the book improves substantially, Dave Barry's essay "How to Get Rich in Real Estate" is the funniest thing I've read in years, but it's available online for free. ML recycles a couple of old essays, and adds a good new one re-assessing his take on the 1987 crash and deciding that this was the point the quants (boffins) took over finance.

The more current essays are more interesting but the quality of the articles vary quite widely and you really miss the sure touch of Michael Lewis's writing. On this evidence ML is a better writer than editor.
The book is worth getting out of the library but not buying, a missed opportunity.
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on 26 June 2009
Michael Lewis, author of Liar's Poker, an account of Wall Street in the 1980s, has edited this fascinating collection. The articles are by Joseph Stiglitz, Jeffrey Sachs, Paul Krugman, Robert Shiller, Lester Thurow, the Economist, the New York Times and Lewis himself, among others. They look at the US stock market crash of 1987, the 1997 Southeast Asia crisis, the 1998 collapse in Russia, the dotcom bubble bust of 2000 and the crash of 2007.

Throughout, City of London and Wall Street traders were `making a fortune from the misery of others', as Lewis noted. The IMF made things worse by always forcing countries to cut spending and raise taxes. In 1997-98, it told Brazil and Russia to defend their currencies and raise interest rates (which benefited Wall Street, if not Brazil and Russia). Stiglitz concluded, "capital market liberalization ... is dangerous. It was not an accident that the only two major developing countries to be spared a crisis were India and China. Both had resisted capital market liberalization. Yet today, both are under pressure to liberalize."

In 1998 short-term money panic, ironically, destroyed the hedge fund Long-Term Capital Management. But the US government vetoed proposals to curb speculation, improve debt restructuring and restrict bank secrecy.

Stiglitz wrote in July 2007, "the fact that so many countries hold large reserves means that the likelihood of the problem spreading into a global financial crisis is greatly reduced." Wrong, Joe - capitalism isn't that rational.

The City, like Wall Street, is a casino. US credit agencies rated bonds using a formula called - appropriately - the Monte Carlo simulation. The City's only purpose is to make money for its members. Its speculators make their profits by taking wealth from savers and investors and gambling with it.

The City serves no any wider public, social or economic purpose. Its claims to place resources where they maximise growth are bogus.
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on 3 June 2012
As an overview of several recent financial panics, you're left wondering just when it will happen again. Maybe it is right now (June 2012) with the Euro possibly about to collapse, although it's hard to see who's making money out of that situation. But rest assured, somebody is, and working hard to increase it. This book is an anthology of various pieces of writing about several recent panics - Black Monday of the Eighties, the Internet boom and the most recent sub-prime scandal. I found most of the chosen pieces interesting and they were arranged in a before-during-after chronology that shows what benefit hindsight can bring. I remember the Internet boom quite well, and despite the fact that I feel that people kind of knew it was a bubble while it was happening, that feeling was easily outweighed in the mind by the "But what if it's not?' misplaced optimism. Just like the feeling that property is a no-lose, one-way bet, which still persists in many people's minds.
As a brief financial history of the past three decades, this is a short reminder of times and places. It's an odd collection though, and you're left with the feeling that Lewis was only half watching the project that he's lent his name to. His pieces, I feel, are some of the best in the book for readability and opinion, but some of the selections from the New Yorker and the American news media are well worth reading too, showing how journalism should be done. Much has been written about all these panics in much more depth than this selection offers, but at least in here you'll find stuff definitely well written and worth reading, which isn't always the case with the more detailed examinations.
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on 7 January 2011
Panic! (The History of Modern Financial Insanity) is like no book I have read. This is not surprising considering it is written by ex-bond sales man Michael Lewis, a man who used to work for Saloman brothers playing the market for millions until he quit to expose the insanity of the system. That is what this book is all about.
While Lewis has written many books before such as liar's poker (that i am yet to read) this book is a general overview of the history of financial market: "the story of modern financial insanity". How ever the book is not actually 'written' by Lewis, he chooses to tell the story through many peoples perspective. The book is simply a book of articles masterfully arranged with Lewis being the narrator. One article would tell of how everything is up, the next a prediction of down fall, the next a story of what the government is doing the next a renegade traders account.

The book is split into 4 parts.
Part 1: A brand new kind of crash - the market crash of 1987
Part 2: foreigners gone wild - the asian crisis and subsequent recessions.
Part 3: The New New Panic - the internet bubble
Part 4: the peoples panic - the resent US subprime collapse

At the start of the book at Part 1 the book may seem of little economic relevance but stick with it, the information gathered on the markets and how they work is very useful to know and it gets more directly economical later when the markets start to affect the economy as a whole.

Part 2 is my favourite part, detailing the rise and fall of the asian markets, and how when they were thrown into recession it rippled across the world. There is a fantastic article by Paul Krugman from Fortune magazine, september 7, 1998 called Saving Asia that goes in-depth into different macro economic policies.
Throughout the book it tells of how again and again people make the same mistakes and how the history of markets have shaped the economic world.

"In Octorber 1987, the markets took power from people who traded with their intuition and bestowed it upon the people who traded with their forumlas. In Austust 1998, the markets took power away from the people with forumlas who hoped to remain detached from the market place and bestowed it upon the large wall street firms that oversee the market place." -How the Eggheads cracked, Michael Lewis, the new york times, 1999. (and we know now that in 2008 it took power away from the big firms with the fall of Lehman brothers)

In summary this is a fantastic book if you want to be filled in on recent economic and market history and equally useful if you want to understand markets. How ever due to the nature of the book some parts are very difficult to read, some of articles assume knowledge of the reader. Overall if you are the persistence to get through difficult articles, this book is well worth the read.
Advanced so A level although could be useful for business students as well as economics

By Jon Martin (Laelius) of Pol-eco-uk
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on 28 June 2010
In Dutch universities (and possibly elswhere), they would call this "a reader", a collection of texts usefull to the uninitiated. People who read "this time its different", Lewis's Liars poker etc. find little news.
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on 27 April 2009
Michael Lewis book is about the mad situation in the stock market. It is a collection of different articles over the last decade. You can find an abstract from Liar's Poker and out of the financial newspapers. It includes articles from Krugman to other well known economists. It suits the situation very well because the last hype is one of the last four crises in the stock market since the bad Monday in 1987. The participants in the stock market never learned the rule that you must change the behaviour when you lost the money. The problem is, that the players on the market doesn't act with their own money. With the new shock the rules have been changed. The government bail them out.
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on 17 April 2012
Not a book to sit down and read in one go, but some very interesting articles on various financial crises that have hit the markets over the last quarter century, from the crash of 1987 to the 2008 meltdown.
Most of this stuff appeared in newspapers and magazines at the time, but I found it quite enlightening to read the articles from the perspective of the current economic problems. Michael Lewis is the editor rather than the author of the whole book, though he wrote several of the pieces himself, some of the better ones, as it happens.
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on 6 December 2010
There are plenty of decent articles in this volume but it is pretty lightweight.
It is interesting just how inaccurate some of them have proved to be.
Certainly Michael Lewis' article on LTCM seems to take them at their own word as to how
The rest of the world was irrational rather than their model being flawed.
I think that lots of them are probably available for free.

Dave Barry's article about attending a wealth seminar is brilliant. It is just a shame that people still get fooled by these snake oil peddlers.
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