Product Details

• Amazon Sales Rank: #699208 in Books
• Published on: 2009-01-26
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 352 pages

Synopsis
An analysis of five financial upheavals in recent history includes coverage of the 1987 stock market crash, the Internet bubble, and the sub-prime mortgage crisis, in a report that reveals how public knowledge differed from what was actually taking place.

Customer Reviews

Journalists and Pundits "Explain" Past and Current Market Collapses

Unless you feel compelled to read every word that Michael Lewis writes, skip this book.

Panic! is a very peculiar concept for a book: Assemble mostly stories by journalists (and a few pundits) to describe the mood before, during, and after market crashes . . . while also providing a little understanding of "why" the market crashed. To me, that's a little like expecting sports journalists to predict who will be the best-performing athletes next season . . . and then explain why their predictions didn't pan out.

What do journalists know about financial markets? Based on reading these articles, precious little.

There are occasional gems that bear reading and serious consideration, but they are too few and too far between.

The articles are grouped around the market collapses that began with the October 1987 meltdown driven and aided by "portfolio insurance" program trades and move on to the currency runs on Thailand and Russia in 1997 and 1998, the Internet stock collapse in 2000, and the subprime mortgage fiasco recently spreading into the stock market crash of 2008-.

I predict that most readers will find the articles "describing" 1987 to be pretty confusing. There are better articles written about the period that are omitted from this collection. The currency runs are only slightly less confusing. The last two disasters are easier to follow if you aren't an economist or someone who watches CNBC six hours a day.

The standout of all the articles is the essay by Dave Barry, "How to Get Rich in Real Estate," from Dave Barry's Money Secrets. It's hilarious and right on. It's too bad the rest of the writing isn't as good.

Don't get me wrong. Michael Lewis knows how to write about finances in an entertaining way (even if he admits that he doesn't understand the newfangled financial instruments all that well), but he contributed only seven of the substantive articles in the collection. Two of them you will have read before (from Liar's Poker and The New, New Thing). One of them seems offbase to me ("In Defense of the Boom" which seems to say that having a wildly overpriced stock market in Internet stocks was a good thing).

I would have graded the book lower, but I was pleased to see that Mr. Lewis understands that the typical austerity advice that the IMF and the World Bank peddle to underdeveloped countries when there is a run on their currency is all wet. If we followed that advice in the current crisis, our short-term interest rate would be 22 percent and about 15 million more Americans would already be out of jobs.

At a time when one of the greatest financial messes in the history of the world is being unveiled daily in front of you, I would suggest you skip this book and watch the far more fascinating drama that's going on now. Clip the articles that you like, and you too will be able to produce a book like this one at some point.

Illuminating articles on financial mania
Michael Lewis, author of Liar's Poker, an account of Wall Street in the 1980s, has edited this fascinating collection. The articles are by Joseph Stiglitz, Jeffrey Sachs, Paul Krugman, Robert Shiller, Lester Thurow, the Economist, the New York Times and Lewis himself, among others. They look at the US stock market crash of 1987, the 1997 Southeast Asia crisis, the 1998 collapse in Russia, the dotcom bubble bust of 2000 and the crash of 2007.

Throughout, City of London and Wall Street traders were `making a fortune from the misery of others', as Lewis noted. The IMF made things worse by always forcing countries to cut spending and raise taxes. In 1997-98, it told Brazil and Russia to defend their currencies and raise interest rates (which benefited Wall Street, if not Brazil and Russia). Stiglitz concluded, "capital market liberalization ... is dangerous. It was not an accident that the only two major developing countries to be spared a crisis were India and China. Both had resisted capital market liberalization. Yet today, both are under pressure to liberalize."

In 1998 short-term money panic, ironically, destroyed the hedge fund Long-Term Capital Management. But the US government vetoed proposals to curb speculation, improve debt restructuring and restrict bank secrecy.

Stiglitz wrote in July 2007, "the fact that so many countries hold large reserves means that the likelihood of the problem spreading into a global financial crisis is greatly reduced." Wrong, Joe - capitalism isn't that rational.

The City, like Wall Street, is a casino. US credit agencies rated bonds using a formula called - appropriately - the Monte Carlo simulation. The City's only purpose is to make money for its members. Its speculators make their profits by taking wealth from savers and investors and gambling with it.

The City serves no any wider public, social or economic purpose. Its claims to place resources where they maximise growth are bogus.

Curate's Egg
The first thing to note is that Micheal Lewis edits this collection and doesn't write it - which is a shame as he writes better than most other financial pundits.

The book is bitty, it starts with the 1987 crash which it handles poorly, I skipped most of the stuff on the Asian Crisis, as it wasn't of much interest to me. After this point the book improves substantially, Dave Barry's essay "How to Get Rich in Real Estate" is the funniest thing I've read in years, but it's available online for free. ML recycles a couple of old essays, and adds a good new one re-assessing his take on the 1987 crash and deciding that this was the point the quants (boffins) took over finance.

The more current essays are more interesting but the quality of the articles vary quite widely and you really miss the sure touch of Michael Lewis's writing. On this evidence ML is a better writer than editor.
The book is worth getting out of the library but not buying, a missed opportunity.