End of Wall Street



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Hardcover
368 pages
ISBN 9781594202391 Published April 2010
Penguin Press
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End of Wall Street
By Roger Lowenstein 

Related Blog Posts
Bloomberg Picks 30
Posted Nov. 19, 2010 9:02 a.m. by dylan
In - 800 CEO Read Blog

Here's a list we missed late last month. Though the post is rather cryptically titled Hellhound Bites Citigroup, Schwarzman Finds Gold Mine: Top Business Books, Bloomberg's James Pressley explains exactly why they put the list together:

With so many business books being published each month, we’re often asked for recommendations. Here are 30 of our favorite hardbacks published this year.

I've taken out the author's brief descriptions of each book (head on over to the original post for those), and have taken the liberty to break the books up into a few categories. You'll notice while perusing the titles that the list tends toward larger narratives (many of the financial crisis), biographies and financial history, which I'm a big fan of, and I think makes a lot of sense for Bloomberg and its readers.

A quick note: Many of the books I put in the "Economics" category are, at least in part, about the economic crisis. The books I chose to list in the "Economics" category are those that offer a detailed prescription to the crisis, rather than just documenting the causes and events of it (not that the latter is a lesser task). The books in the "Economics" category were also, by-and-large, written by economists, while those in the "Histories & Narratives of the Economic Crisis" were written by journalists and participants on Wall Street.

Histories & Narratives of the Economic Crisis

Economics

Financial History & Biographies

Other

Looking over the list, I'm reminded once again what a good year this has been for business books.

If you're an entrepreneur looking for ideas or nuts-and-bolts books on business, this list may not be a great help to you (We'll provide you one that will be on December 15th). But if you're an investor in or student of markets and business, it doesn't get much better than this.



Jack Covert Selects - Diary of a Very Bad Year
Posted July 15, 2010 10:51 a.m. by 800-ceo-read

Diary of a Very Bad Year: Confessions of an Anonymous Hedge Fund Manager by n+1, Keith Gessen & Anonymous Hedge Fund Manager, Harper Perennial, 260 pages, $14.99, Paperback, June 2010, ISBN 9780061965302

Keith Gessen is the founder of n+1, a mostly literary magazine out of New York City, and the author of All the Sad Young Literary Men, which, as you can probably gather from the title, is also thoroughly literary. So, how is it that he has now penned one of the most fascinating books to date on the recent calamity on Wall Street?

It began as concern for a friend who had borrowed against his home in a time of financial trouble. To figure out how deflating home prices were going to affect this friend, he did an interview for n+1 with an anonymous hedge fund manager he calls HFM. That interview turned into a series of interviews spanning two years, “from the first rumblings of the crisis in the fall of 2007 to the late summer of 2009....” The timing was serendipitous.

As the subprime crisis quickly spirals into a wide array of other crises, you’re given an intimate account of it all through the lens of someone watching from the twentieth floor. It is by turns tragic, introspective and wildly funny. It is always very intelligent and, above all, touchingly human. At the end of Chapter 2, “The Death of Bear,” we find HFM reacting to the quickly worsening situation with a bit of gallows humor.

n+1: So you look out here onto midtown on the twentieth floor. This is all going to be okay?

HFM: That guy there will lose his job. White shirt, futzing about—he’ll lose his job. He’s putting. There’s going to be no room for people like that, the bar is higher. You can’t play golf in your office during a crisis.

[…]

That guy’s done! Everyone else is okay.

There are books on the crisis whose breadth is seemingly larger—Too Big To Fail, The Big Short, The End of Wall Street. The story lines in those books are sweeping, the personalities larger than life. This book’s wealth is in its details, the book’s character anonymous but close and personable. When reading Diary of a Very Bad Year, the details gather into a more intimate experience of that wider picture and its sobering implications.



The Greatest Gamble Ever
Posted April 20, 2010 12:27 p.m. by dylan
In - 800 CEO Read Blog

Gregory Zuckerheim's The Greatest Trade Ever: The Behind-The-Scenes Story of How John Paulson Defied Wall Street and Made Financial History tells of how Paulson "realized something few others suspected—that the housing market and the value of sub-prime mortgages we grossly inflated and headed for a major fall." But it turns out that "The Greatest Trade Ever" may have been something very akin to a rigged bet. What the book didn't tell us (because it was unknown at the time) is that Paulson had shaped the portfolio of mortgages—hand-picking the bonds it contained for Goldman Sachs—that he bet against to make his fortune. (This is what is behind the SEC suit being brought against Goldman Sachs we've been hearing so much about.)

Instead of explaining this myself (Because I don't know if I really can), I'll defer to The New York Times and the authors they've had weigh in on the situation this week.

Yesterday, Too Big To Fail author Andrew Ross Sorking wrote about When Wall Street Deals Resemble Casino Wagers:

The Securities and Exchange Commission, in its suit, says that Mr. Paulson asked Goldman to help create a synthetic C.D.O. of lousy mortgage loans that he selected so he could bet that they would go down and then profit on their fall

[...]

This kind of high finance can numb the brain, and the legal questions are murky. But when you strip all of that away, this deal was nothing more than a roll of the dice.

Try this mental exercise: Imagine if, a few years ago, an influential investor like Warren Buffett, bullish on real estate, had asked Goldman to develop a synthetic C.D.O. made up of undervalued mortgages.

Now, imagine if Goldman had found John Paulson to take the opposite side of the trade and, lo and behold, a year later Mr. Buffett turned out to be right and Mr. Paulson lost his shirt. Would you call that fraud? Would you be very upset?

Maybe not, but Mr. Paulson sure would be. And he might be inclined to sue over it, especially if he found out that his bet had been rigged against him from the start.

Today, Roger Lowenstein, author of The End of Wall Street, took his turn explaining Goldman's Gambling With the Economy:

Wall Street’s purpose, you will recall, is to raise money for industry: to finance steel mills and technology companies and, yes, even mortgages. But the collateralized debt obligations involved in the Goldman trades, like billions of dollars of similar trades sponsored by most every Wall Street firm, raised nothing for nobody. In essence, they were simply a side bet—like those in a casino—that allowed speculators to increase society’s mortgage wager without financing a single house.

[...]

The government would not look fondly on Caesar’s Palace if it opened a table for wagering on corporate failure. It should not give greater encouragement for Goldman Sachs to do so.

The Return of Depression Economics and the Crisis of 2008 author and Nobel Laureate Paul Krugman, in his Op-Ed piece about Looters in Loafers on Sunday, explained how these bets made the overall recession worse:

So what role did fraud play in the financial crisis? Neither predatory lending nor the selling of mortgages on false pretenses caused the crisis. But they surely made it worse, both by helping to inflate the housing bubble and by creating a pool of assets guaranteed to turn into toxic waste once the bubble burst.

As for the alleged creation of investments designed to fail, these may have magnified losses at the banks that were on the losing side of these deals, deepening the banking crisis that turned the burst housing bubble into an economy-wide catastrophe.

And, though not specifically about Goldman Sachs and the SEC suit being brought against it, William Cohan, the author of House of Cards, took the space allotted him today on the Op-Ed page today to say You're Welcome, Wall Street.



Friday Links
Posted April 2, 2010 11:19 a.m. by dylan
In - 800 CEO Read Blog

➻ Rebecca Skloot, author of The Immortal Life of Henrietta Lacks, is "here to report: Book tours are not dead." Not here, precisely, but over at Powell's blog.

➻ Eoin Purcell believes "Publishers should be platform agnostic," and explained why in a Publishing Perspectives article earlier this week: E-books are a Cul-de-sac.

➻ Roger Lowenstein's The End of Wall Street hasn't gotten the buzz it probably deserves yet, which Janet Maslin began to remedy in the New York Times book section recently, writing:

It is a complex but imaginative book, an especially useful piece of the jigsaw puzzle that current Wall Street books are busy creating.

The author has documented economic history before in When Genius Failed, one of The 100 Best Business Books of All Time. His new book will be out next week, and if you liked Too Big to Fail or The Big Short, you'll appreciate Lowenstein's addition to the genre.

➻ Harvey Mackay, author of Swim With the Sharks Without Being Eaten Alive (also one of the 100 Best) showed up on Larry King Live recently with some great advice on how to break through an overcrowded job market and get noticed (and maybe even hired).

If you like what he has to say in the interview, his new book, Use Your Head to Get Your Foot in the Door, delves into the issues more deeply and intimately and, as Larry King says "there isn't a more important book out." Now, Larry King is no stranger to hyperbole, but that remark is spot on for so many Americans right now, and it's great to see him spread the gospel of Mackay. If you want to find out how to network without being annoying, check out Part 2 of the King interview or head over to harveymackay.com.

➻ Jon has tried to convince a few of us in the office that Kell on Earth is worth watching. I respond with a quote from a recent interview with Ms. Cutrone in Inc. Magazine:

I think one of the greatest gifts for me professionally and for my clients was to learn the word “no.”

➻ I'm really looking forward to diving into the advance copy of Mark Frauenfelder's Made by Hand that showed up here recently. You'll here more from us on it eventually, but if you can't wait, you can whet your appetite on this week's Treehugger review. And if you're interested in a different DIY project, such as say a college education, check out Salon's interview with Anya Kamenetz, author of DIY U: Edupunks, Edupreneurs, and the Coming Transformation of Higher Education.

➻ There is one more interview I want to point you to this weekend (or whenever you can get to it)—Michael Bungay Stanier interviewing Matt May.

➻ Walter S. Mossberg was amazingly able to review the iPad without chopping vegetables with it.

➻ Freakonomics the movie? Yep.

➻ Aaron isn't going to like it, but I've got nothing else, and the rest of the gang has already left for Conference Room H for a week-ending beer or four. So, here is Milwaukee's own, Juniper Tar. (This goes out to Shawn, Nancy and Mack.)



Roger Lowenstein's take on the current financial crisis
Posted Jan. 21, 2010 2:45 a.m. by jack
In - 800 CEO Read Blog

From the introduction of his April 06, 2010 book called The End of Wall Street, Roger Lowenstein states:

"On the evidence, Lehman was more nearly the climax, or one of a series of climaxes, in a long and painful cataclysm. By the time it failed, the critical moment was long past. Banks had suffered horrendous losses that drained their capital, and as the country was to discover, capitalism without capital is like a furnace without fuel. Promptly, the economy went cold. The recession mushroomed into the most devastating in postwar times. The modern financial system, in which markets rather than political authorities self-regulated risk-taking, for the first time truly failed. This was the result of a dark and powerful storm front that had been long gathering at Wall Street's shore. By the end of summer 2008, neither Wall Street nor the wider world could escape the imminent blow. To seek the sources of the crash, and even the causes, we must go back much further."




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