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Paperback
464 pages
ISBN 9781591840534 Published Sept. 2004
Portfolio
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Posted Dec. 10, 2010 10:23 a.m. by 800-ceo-read
I know you might be thinking, “Another book on the financial crisis… really?” But this is the one that many have been waiting for, and after reading it for myself, I can safely say that Bethany McLean and Joe Nocera have delivered the most comprehensive documentation to-date of the many pieces that built the puzzle of our financial system over the decades. And from CEOs to politicians, government officials to mortgage lenders, borrowers, ratings agencies and traders, all the devils are truly in there.
The authors are a dream-team of reportage. A contributing editor to Vanity Fair, Bethany McLean may be most well known for coauthoring The Smartest Guys in the Room, which is the definitive work on the Enron scandal and an easy choice for us when picking The 100 Best Business Books of All Time. And Joe Nocera, a columnist for The New York Times, ranks with Michael Lewis as one of the best pure writers on business working today. His 2008 book, Good Guys and Bad Guys, is one of the best collections of business journalism—and study of American business personalities—ever put together.
Their new effort, All the Devils is Here, is a complex tale, almost dizzying in scope, but is handled with such skill and so chock-full of magnificent and memorable stories that you’ll know the full story inside-out by the time you put the book down. The tale of John Breit in the book’s prologue will give you an idea of what I’m talking about.
Breit had once been the head of market risk management at Merrill Lynch, with easy access to the company’s directors. But, over the past decade, Breit and all other significant risk management was basically relegated to a broom closet—which is why it was a surprise when Merrill CEO Stan O’Neal asked to see him in September of 2007 to get his calculations of Merrill’s exposure to risk. McLean and Nocera recount the end of that meeting beautifully:
Listening to him, Breit realized that O’Neal seemed to have no idea that Merrill’s risk management function had been sidelined.
The meeting finally came to an end; Breit shook O’Neal’s hand and wished him luck. “I hope we talk again,” he said.
“I don’t know,” replied O’Neal. “I’m not sure how much longer I’ll be around.”
O’Neal went back to his desk to contemplate the disaster he now knew was unavoidable—not just for Merrill Lynch but for all of Wall Street. John Briet walked back to his office with a strange realization that he—a midlevel employee utterly out of the loop—had just informed one of the most powerful men on Wall Street that the party was over.
I would never use the words “if you’re going to read one book on the financial crisis,” because there are just too many must-reads in the category. And because its attention is so all encompassing, this book requires a good deal more patience than others. But McLean and Nocera have done something important, special and singular in All the Devils are Here, and I really hope you all read it.
Jack Covert Selects - The Match King
Posted Oct. 26, 2009 5:00 a.m. by 800-ceo-read
The Match King: Ivar Kreuger, the Financial Genius Behind a Century of Wall Street Scandals by Frank Partnoy, PublicAffairs, 272 Pages, $26.95, Hardcover, April 2009, ISBN 9781586487430
When reading The Smartest Guys in the Room, the outstanding book by Bethany McLean that looks into the Enron debacle, you will learn about an accounting term called “mark to market.” Not being an accountant, my simplified understanding of the concept is that when you purchase a product for $100 and you believe you can sell the product for $200 in five years, you put the sale price on your books at the expected selling price instead of the actual purchase price. Enron didn’t create this approach to record keeping. In the roaring ‘20s, a gentleman named Ivar Kreuger used it, made tons of money, and ultimately bankrupted millions around the globe. The Match King is his story.
Kreuger became known as the “The Match King” because, in his native Sweden, he had cornered the market on matches—monopolies were allowed then. He moved and acquired companies that made the machines used in his factories; ultimately he got involved in the forestry industry. During the reconstruction after WWI, his company loaned the equal of billions of dollars to European countries.
Using esoteric financial instruments like debentures and more common instruments like shares—which were much easier to sell in the days before the federal regulations brought on by the crash—Kreuger was able to fund his global acquisitions. His numbers were sketchy, but the banks valued him as a client too much to look too closely at his books. Then, October 1929 happened, and his pipeline of cash started to dry up. He was able to last longer than most business people who were nothing but glorified “snake oil” salesmen, but in 1932 the banks started to want their money back. Kreuger returned to Europe to face his European bankers and committed suicide the night before the meeting.
In The Match King, Frank Partnoy brings this fascinating person and exciting (though terrifying) time to life. So brilliant is Partnoy’s portrayal that I wanted to keep reading the book even as I walked to my car from the office at night. A great story, told well—there is nothing better.
