95 of 101 people found the following review helpful
Insight into the human drama,
This review is from: Fool's Gold: How Unrestrained Greed Corrupted a Dream, Shattered Global Markets and Unleashed a Catastrophe (Hardcover)
This is the first properly considered book about the financial crisis to be published. Gillian Tett is well known as a financial journalist (working for the FT in London). Accordingly, you might think this book has been rushed out to simply rehearse the emerging consensus view on the causes of the financial crisis. Not so! This is a very impressive volume. To start with - Gillian Tett knows the spider's web of complex structured products at the heart of this story well enough to be able to describe it simply. That is the mark of true mastery. What is best about this book, however, is the way it tells the human story. That is the story of the innovators at J.P. Morgan who created these products and realised at an early stage that they left behind a kind of nuclear waste that needed to be properly contained - particularly so in relation to derivatives based on residential mortgages (the default pattern of which was essentially unknowable until recently). Other banks didn't realise this (or didn't care) and just left that waste sitting on their balance sheets, or worse, shifted it to quasi-subsidiary vehicles where it was hidden and supported by short-term funding that quickly evaporated at the first sign of trouble. Ultimately, the book shows that financial innovation is not a problem per se - it's the use to which such innovation was put that created problems.
Overall - this is a very informative and interesting read which has clearly been in the planning for some time. A well considered book.
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Initial post: 5 Oct 2009 18:39:37 BDT
F. Chen says:
Thanks. I really want to know how much financial "nuclear waste" is still out there and how it might contaminate the next decade. In other words, I want to look forward to the consequences as well as backwards as to how the disease was propagated.
In reply to an earlier post on 18 Jan 2012 23:55:10 GMT
L. Hoebel says:
Tom Scott explains the simple and un-illuminating thesis "financial innovation is not a problem per se - it's the use to which such innovation was put". It wasn't technology that killed the beast, it was greed. It always is.
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