Product Description

In the mid 1990s, at a vast hotel complex on a private Florida beach, dozens of bankers from JP Morgan gathered for what was to become a legendary off-site meeting. It was a wild weekend. But among the drinking, nightclubbing and fist-fights lay a more serious purpose - to assess the possibility of building a business around the new-fangled concepts of credit derivatives. The group at the heart of this revolution was an intense team, made up of individuals with a supreme sense of loyalty to each other and to the bank - for years, nothing could break them apart. But when, finally, the team dispersed, the innovations spread far beyond their original intentions, producing perversions in the mortgage market that ultimately culminated in disaster. Part real-life thriller, part investigation and expose, this searing narrative takes us deep inside the shadowy world of complex finance - A PERFECT STORM for the credit crunch

Product Details

• Amazon Sales Rank: #5176 in Books
• Published on: 2009-04-30
• Original language: English
• Binding: Hardcover
• 352 pages

Review
`A truly gripping narrative . . . The fact that Tett is able to reproduce such raw private communications is a tribute to her journalistic abilities'
--Dominic Lawson, Sunday Times

Review
`Her blow-by-blow story is an impressive piece of detective work. She pulls back the curtain on a closed, unaccountable world of finance'

Review
`An absorbing 15-year gallop across the Wild West of the world's financial markets . . . Tett sketches a system in the grip of a great error, emanating outwards from a cadre of elite traders who were able to repel any attempt to monitor, question or restrain them'

Customer Reviews

Insight into the human drama
This is the first properly considered book about the financial crisis to be published. Gillian Tett is well known as a financial journalist (working for the FT in London). Accordingly, you might think this book has been rushed out to simply rehearse the emerging consensus view on the causes of the financial crisis. Not so! This is a very impressive volume. To start with - Gillian Tett knows the spider's web of complex structured products at the heart of this story well enough to be able to describe it simply. That is the mark of true mastery. What is best about this book, however, is the way it tells the human story. That is the story of the innovators at J.P. Morgan who created these products and realised at an early stage that they left behind a kind of nuclear waste that needed to be properly contained - particularly so in relation to derivatives based on residential mortgages (the default pattern of which was essentially unknowable until recently). Other banks didn't realise this (or didn't care) and just left that waste sitting on their balance sheets, or worse, shifted it to quasi-subsidiary vehicles where it was hidden and supported by short-term funding that quickly evaporated at the first sign of trouble. Ultimately, the book shows that financial innovation is not a problem per se - it's the use to which such innovation was put that created problems.

Overall - this is a very informative and interesting read which has clearly been in the planning for some time. A well considered book.

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.

Heads they win, Tails we lose
This is a gripping read from an author who is sure of her facts and can tell the true story of the banking crisis clearly and dramatically. Because she was one of the first to forecast financial disaster she has become a pundit on the subject and there is rarely a day when Gillian Tett is not on television or radio. Thanks to a useful glossary the reader is guided through the murky world of what Vince Cable dubbed "casino banking" with explanations of "Credit Default Swaps", "Mortgage-Backed Bond Security", the surreal sounding "Gaussian Copula" and the like. What started out as a well-thought out investment strategy turned into a glorified pyramid selling spree in order to generate bank profits, and therby bonuses. The author has a degree in anthropology and this gives the book a human interest beyond the world of high finance. Highly recommended for anyone wanting to understand the greatest economic trauma of our times.