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General Search General GeneralFool's Gold: How Unrestrained Greed Corrupted a Dream, Shattered Global Markets and Unleashed a Catastrophe
Little, Brown Search Little, Brown by Gillian Tett Search Gillian Tett
Customer Reviews:
Excellent book and a very good read
Gillian Tett is an assistant editor of the Financial Times and oversees the global coverage of the financial markets. So we can assume that she has a reasonably insight into the way financial markets work, a good nose for a story, and a certain skill with words. This book is evidence of the fact that she possesses all three qualities.
She follows the story of the recent bank meltdown by following the team in the investment bank J.P.Morgan. The initial chapters (part 1 entitled Innovation) lay a solid foundation in understanding the origin of derivatives. I found it a bit "slow", but still necessary background to parts 2 and 3. Part 2 - entitled Perversion - watches as the basic idea of derivatives is adopted by all the other banks, and in many cases "highjacked" to make increasingly complex products designed (at least initially) to re-package and distribute risk. Part 3 - entitled Disaster - described the fact that all the products had (still have?) a "common failure mode", an underlying correlation that simply put meant that risk was not in fact being distributed. Tett manages to take this complex situation and make it both understandable and interesting to the layman. She focuses more on the people working in the banking system, rather than simply creating a chronology of events. However I would have liked more facts and figures to support the overall story.
As an outsider what shocked me in this story was the fragility of all the models, and shortsightedness of both those developing them as tools and those blindly using them without understanding their limits. I have never had a high opinion of the intellectual capabilities of investment bankers, and this book amply supports my statement. However, even more shocking was the way both the banks ignored good practice and the regulators failed to do their job. Financial innovation is inevitable and good, but clearly banks were shortsighted and driven often by amoral greed. Regulators simply did not do the job we pay them for (and I include government as the ultimate regulator).
Overall, easy to read and an excellent description of the recent crisis.
Fool's Gold 
I found this book very informative providing a comprehensive and factual view of the causes of the financial system failure.
The book was very well written and easy to follow.
A must read
If you have more intelligence than to just think one factor (i.e. derivatives) was responsible for the state we're in then this book is definitely for you.
It shows that what started out as a real, positive innovation was eventually distorted beyond recognition by an investor base that demanded higher returns and lower risk in the face of both low interest rates (2001 to 2005) and a stock market reeling from the effects of 9/11 and the dot-com bust.
She should have called it: The story of the J.P. Morgan CDO desk 
The book's content is less ambitious that its titles suggests. It is about how a team of derivative experts at J.P. Morgan contributed to the development of the securities, including credit default swaps and options, which led to the financial crisis. That's reasonably interesting, but it's a fairly narrow perspective on what happened. The collapse of Lehman is covered in a few pages. She doesn't even mention that the major banks were manipulating Libor. At points it sounds like she is writing to protect her sources. There is a lot about what a great CEO Jamie Dimon is at JP Morgan chase. She says the JPM team shouldn't be blamed for other banks misusing the derivatives they created. I've never heard anyone blame them for it.
There are a few mistakes: the internet bubble of 1999 was equity driven, not debt fueled. She uses acronyms too often, and there are no anecdotes explaining why the subprime default rates were so high. Indeed, she is very light on what happened in the subprime sector. The corruption there could have really livened up her book, and illuminated the causes of the crash. I learnt more about the crisis from the introduction to Niall Ferguson's Financial History of the World.
Fool's Gold 
I was slightly disappointed by the lack of analysis of the importance of the song in charting the Stone Roses journey away from the more gothy/punky sound of their early years to the blues/rock feel of Second Coming. Nor did the passages on Cairn Capital bear much resemblance to the company I worked at for nearly four years.
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new yorker must read this week explaining the financial catastrophe
... following up on for its excellent comments afterward, and comments on comments, especially the weakness of tett's reasoning and experience in places: http://www.amazon.co.uk/fools-gold-unrestrained-corrupted-catastrophe/dp/1408701642.
http://natgagu.blogspot.com/2009/05/new-yorker-must-read-this-week.html
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