Posts Tagged ‘All the Devils are Here’

The Great Read-cession, Part X

We’re done with the book reviews, but John S isn’t done breaking down the books of the financial crisis. We still have a few things left to cover, most importantly….

The Whole Truth...

The Whole Truth…

Rankings!

Obviously I wasn’t going to read 16 books and NOT rank them.

It was a little hard to determine the criteria. Some of the books were well-written, but not especially good at delving into the causes; others were thorough but boring; some were great but a little off-topic. If someone asked me to recommend one of these books, I wouldn’t answer until I got more information about what exactly she was looking for. If, however, she were somehow unable to clarify, I would recommend them in this order:

16) A Colossal Failure of Common Sense

15) Reckless Endangerment

14) The Quants

13) The Greatest Trade Ever

12) Crash of the Titans

11) On the Brink

10) Bailout Nation

9) Financial Crisis Inquiry Report

8) Confidence Men           

7) House of Cards

6) Griftopia

5) More Money Than God

4) Too Big To Fail

3) The Big Short

2) Bailout

1) All the Devils Are Here

Some Questions, Answered

 So, um, whose fault was it? 

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The Great Read-cession, Part VI

All the Devils are HereWe’re up to Part VI, which means we’re over halfway through the breakdown of financial crisis literature. Today John S looks at what might be the best book about the crisis, and what might be the most fun.

All the Devils Are Here: The Hidden History of the Financial Crisis

by Bethany McLean and Joe Nocera, 2010

 

If I had to recommend just one book about the financial crisis, it would probably be All the Devils Are Here. It’s not necessarily the best-written or most thrilling book on the subject, but it’s the most comprehensive, and perhaps the only book that captures just how nuanced the causes of the crisis were. Instead of focusing on one bank or one cause or one period of time, McLean and Nocera trace the origins of the crisis back decades, and examine precisely how things evolved.

One thing they illustrate well is how Wall Street tends to create something useful, and then, in the course of trying to find new ways to make money off it, turns it into a weapon of wealth destruction. In the 1980s, for example, mortgage-backed securities seemed like a great idea. Grouping mortgages together into one security allowed investors to introduce capital to the industry without being subjected to the inefficiencies or risks inherent in one mortgage or even one region. They also helped the GSEs’ bottom lines, of course.

But as time went on, these securities changed the mortgage market itself. Wall Street’s demand for mortgages to securitize lowered lending standards and increased shady lending practices, like ARMs and NINJAs. Continue reading