nick205
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| posted on 3/3/11 at 12:05 PM |
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Book recommendation - The Big Short by Michael Lewis
Picked this up on spec the other day at the library. Hadn't heard of the author before, but will certainly be digging out some more of his
work.
This books covers the run up to the credit crunch and global recession and details the whole American sub-prime mortgage quagmire. It's really
quite terrifying how out of control a very small number of people were and what they managed to create with little or no interference from scrutiny.
Gut reaction is to hold them to account, but on balance the blame lies with everyone to some extent for the general glutony of credit and consumption
that gave them the opportunity to build such an enormous house of cards. At one point they were selling fixed rate sub-prime mortgage bonds in a
pyramid type scheme. When this started to get flakey they simply re-packaged slices of bonds into new bonds and carried on selling those. Next they
realised they could buy and sell insurance on the bonds of bonds to create yet another tier of tradeable asset.
People like Goldman Sachs were declaring billions of dollars in profits for selling nothing to anyone who would buy it, then selling them insurance on
it 
Well worth a read...
ETA: It's written in plain English too, not heavy financial speak 
[Edited on 3/3/11 by nick205]
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Peteff
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| posted on 3/3/11 at 12:25 PM |
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We know a song about that don't we 
I Got Plenty O' Nuttin
I got plenty of nothing
And nothing's plenty for me
I got no car - got no mule
I got no misery
Folks with plenty of plenty
They've got a lock on the door
Afraid somebody's gonna rob 'em
While there out (a) making more - what for
If you sell someone insurance on something that doesn't exist how do you pay out when they lose it? We're onto something here.
[Edited on 3/3/11 by Peteff]
yours, Pete
I went into the RSPCA office the other day. It was so small you could hardly swing a cat in there.
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