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Books about 2008 Financial Crisis?
Posted on 7/21/13 at 11:52 am
Posted on 7/21/13 at 11:52 am
Can anyone recommend any good books about the origins and mechanisms preceding the 2008 financial crisis - cheap debt, bubble economics, CDO's, credit default swaps, etc?
I was thinking about getting Too Big to Fail, but it seems to be more about the response and aftermath to the crisis than it is about the leadup to the crisis.
ETA: The following books look interesting from an Amazon.com search. Any Money Board comments?
The Crisis of Crowding (Bloomberg)
Meltdown (with Ron Paul)
All the Devils Are Here (from author of The Smartest Guys in the Room, about Enron)
The Trillion Dollar Meltdown (published March 2008 about the coming crash)
I was thinking about getting Too Big to Fail, but it seems to be more about the response and aftermath to the crisis than it is about the leadup to the crisis.
ETA: The following books look interesting from an Amazon.com search. Any Money Board comments?
The Crisis of Crowding (Bloomberg)
Meltdown (with Ron Paul)
All the Devils Are Here (from author of The Smartest Guys in the Room, about Enron)
The Trillion Dollar Meltdown (published March 2008 about the coming crash)
This post was edited on 7/21/13 at 12:55 pm
5
Posted on 7/21/13 at 12:20 pm to Bayou Tiger
I'll start it off with three:
"The Big Short" - Michael Lewis
"Too Big to Fail" - Andrew Sorkin (yes, read it anyway).
"House of Cards" - William D. Cohan
"The Big Short" - Michael Lewis
"Too Big to Fail" - Andrew Sorkin (yes, read it anyway).
"House of Cards" - William D. Cohan
Posted on 7/21/13 at 12:22 pm to Bayou Tiger
The book Quantz is a very entertaining read about the failure of quantitative analysts and how their trading exacerbated the problem
Posted on 7/21/13 at 12:32 pm to Bayou Tiger
The Housing Boom and Bust
Thomas Sowell
Thomas Sowell
Posted on 7/21/13 at 1:47 pm to jeepfreak
To big to fail - has great detail on personal backgrounds and pretty much offers the play by play of the crisis.
Posted on 7/21/13 at 3:17 pm to cjared036
It's all cuz the AAA rated CDOs
Too big too fail was suggested by my professor
Too big too fail was suggested by my professor
Posted on 7/22/13 at 12:52 am to Bayou Tiger
Posted on 7/22/13 at 6:01 am to Bayou Tiger
All the Devils are Here is a great book on the subject. Very comprehensive, and covers the subject from many angles. I disagree with some of her political viewpoints she makes in the book, but she for the most part sticks to facts and her political views are generally only subtle within the book.
The Big Short is another great book on the subject. It is more isolated in its view, but an excellent read none the less. Lewis makes a complex topic very interesting.
The Big Short is another great book on the subject. It is more isolated in its view, but an excellent read none the less. Lewis makes a complex topic very interesting.
Posted on 7/22/13 at 7:31 am to MStant1
quote:This.
The Big Short is another great book on the subject.
Posted on 7/22/13 at 9:06 am to Coeur du Tigre
quote:
"The Big Short" - Michael Lewis
This one was very good..
The Short tells the story from the insider/outsider of finance perspective.
"The Payoff: Why Wall Street Always Wins"
by Connaughton. This one tells the story from a Washington DC perspective. Full disclosure, this one is written from a decidedly left of center perspective.
This post was edited on 7/22/13 at 9:09 am
Posted on 7/23/13 at 12:06 am to wiltznucs
Thanks for the suggestions.
I read The Big Short today and really enjoyed it.
However, I am still not understanding one of the key points, despite re-reading the related paragraphs numerous times.
Why were the credit default swaps needed (specifically issuing the swaps or taking the long side of the bet), as a proxy for subprime debt or perhaps in addition to it, to become bundled into synthetic CDO's? At one point in the book it mentions how selling a credit default swap on a security puts you at the same financial risk as if you own it.
That makes sense, but can you therefore infinitely replicate the existence of a CDO, and thus bundle it further into additional CDO's, merely by selling CDS's on it? It doesn't make any sense that this would be acceptable to do. If so then this process sounds simpler than going through all the effort to originate tons of mortgages and further parse up.
Is it that simple? If so then they just needed the "dumb money" as the final piece of the puzzle, which was not a problem with AAA ratings and complict CDO managers serving as gatekeepers. But what portion of that subprime exposure was still ultimately held by the institutional banks, since many still recorded significant subprime writedowns? Bailouts, TARP, etc?
I just feel like the institutional desire to sell these credit default swaps for the sake of bundling into other instruments is a key point that I am not understanding. Or maybe I am closer than I think?
ETA Follow-up: Wikipedia has a good write-up on synthetic CDO's. LINK. It seems that the long side of the swaps was indeed bundled into the synthetic CDO's, with yields based on the premiums from the swaps instead of mortgage payments.
Any help is appreciated, guys! Feel free to correct any terminology that I butchered.
I read The Big Short today and really enjoyed it.
However, I am still not understanding one of the key points, despite re-reading the related paragraphs numerous times.
Why were the credit default swaps needed (specifically issuing the swaps or taking the long side of the bet), as a proxy for subprime debt or perhaps in addition to it, to become bundled into synthetic CDO's? At one point in the book it mentions how selling a credit default swap on a security puts you at the same financial risk as if you own it.
That makes sense, but can you therefore infinitely replicate the existence of a CDO, and thus bundle it further into additional CDO's, merely by selling CDS's on it? It doesn't make any sense that this would be acceptable to do. If so then this process sounds simpler than going through all the effort to originate tons of mortgages and further parse up.
Is it that simple? If so then they just needed the "dumb money" as the final piece of the puzzle, which was not a problem with AAA ratings and complict CDO managers serving as gatekeepers. But what portion of that subprime exposure was still ultimately held by the institutional banks, since many still recorded significant subprime writedowns? Bailouts, TARP, etc?
I just feel like the institutional desire to sell these credit default swaps for the sake of bundling into other instruments is a key point that I am not understanding. Or maybe I am closer than I think?
ETA Follow-up: Wikipedia has a good write-up on synthetic CDO's. LINK. It seems that the long side of the swaps was indeed bundled into the synthetic CDO's, with yields based on the premiums from the swaps instead of mortgage payments.
Any help is appreciated, guys! Feel free to correct any terminology that I butchered.
This post was edited on 7/23/13 at 1:22 pm
Posted on 7/23/13 at 12:35 am to Bayou Tiger
Local banks no longer hold mortgages. Sold to Big Banks who bundle and sell as securities "Mortgage bonds." And get a AAA rating from the idiots at Moody's. Why aren't they in jail?
Liar's loans - borrowers had no credit and no means to repay. Banks needed more and more crappy loans to bundle.
Houses, as an investment, always go up.
Favorite quote on page 97 of The Big Short was the Mexican strawberry picker in Bakersfield with $14,000 annual income buying a $725,000 house, with NO MONEY DOWN! No speak the English, either.
Liar's loans - borrowers had no credit and no means to repay. Banks needed more and more crappy loans to bundle.
Houses, as an investment, always go up.
Favorite quote on page 97 of The Big Short was the Mexican strawberry picker in Bakersfield with $14,000 annual income buying a $725,000 house, with NO MONEY DOWN! No speak the English, either.
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