How could the world's most advanced and enlightened economy allow an irresponsible, greedy and self-deluded congregation of Wall Street bankers to accumulate such gargantuan financial losses that the whole country was imperiled? For, as Churchill might have put it, never in the realm of economic activity have so many suffered so much at the hands of so irresponsible a group of bankers.
Michael Lewis attempts to answer this question through the stories of the relatively few professional investors who took the time to dig into the subprime mortgage market and perform careful credit analysis of the loan quality underpinning the whole market. What they found was not surprising. It was a credit disaster waiting to happen. What is revealing is the reception they received from mainline Wall Street firms, their own investors, and the credit rating agencies. In nearly all cases their views were discounted ("it could never happen in the US housing market;" "subprime loan losses will not all happen at the same time") and they were dismissed as misfits. The Wall Street money machine, fueled by huge financial rewards, animal spirits and a "we know better" culture, simply moved on heedlessly to even greater risks and excess. Well worth the read, but I would start with David Faber's book ("Then the Roof Caved In") if you are new to the mortgage-backed security world of Wall Street.
I read this book not long after "Too Big to Fail." It has the benefit of being a first-hand account by the senior government official in the midst of the 2008 financial crisis: we learn much more in this book of the background thinking and concerns of top Treasury and Fed officials who were trying to cope with the onset of financial panic and meltdown. Put another way, the book offers much clearer context and explanation of the policy thinking than did the Sorkin book. The book keys on personal conversations and meetings, which keeps it interesting. There are revealing sketches of Mr. Paulson's interactions with Congressional leaders and the President, which show how completely unprepared they all were for the scope and severity of the financial crash. The weakest part of the book is the Afterword in which Mr. Paulson lays out the policy reforms that are needed in order to avoid a like financial disaster in the future. Although a vitally important and urgent reform (and one Congress and the Administration to their shame have still not addressed 18 months after the 2008 meltdown), this part of the book reads like a bland press release from the Treasury Department.
This book is well worth reading for a better understanding of the 2008 financial collapse. It is focused on the response to the financial meltdown at the highest levels of government and industry. It does not, however, provide particular insights into the irresponsible business practices that led to the crisis in the first place.
What distinguishes this book from others about the 2008 financial meltdown is the author's extraordinary access to the high-level government and industry players who were at the center of the drama. The writing style is easy to follow (once you have the names clearly in mind) and flows very well. The picture that emerges is a group of executives and officials trying to improvise remedies for a devastating and unprecedented financial collapse on the fly, under intense time pressures, and with no assurance they would be successful. In the circumstances we can be fortunate things did not go into complete meltdown. It is also abundantly clear that sensible financial reform is a must so that the country does not face a similar crisis in the future.
The book is mainly useful for understanding the course of events, policy decisions, and mergers that occurred once the scope of the financial meltdown became apparent at the highest levels of the government. It is less useful as a source for understanding the background and business practices that led to the enormous build-up of irresponsible investments in subprime mortgages and their derivatives that were the prime cause of the crisis. For that background, I would suggest Gillian Tett's book (Fool's Gold); A Colossal Failure of Common Sense (dealing with the Lehman collapse); and articles by Michael Lewis.
SciFi/Fantasy and Classics to History, Adventure and Memoirs to Social Commentary—I love and listen to it all!
I'd just listened to a heavy work, over 24 hours, and wanted something short and engaging. When I found this, I figured it would do well for my mood.
What I got was a punch in the gut.
Looking back, I went in god-awfully glib: This is short! This is, even better, free! This is perfect!
It was a descent into the madness and memories of that horrific day and the days that followed. I was suddenly transported back to days of weeping and stuffing Oreos into my mouth, all in an attempt to release the terrible grief and fear of all that I (and most of the country) was feeling.
The tapes start with people simply living their lives, going through their day, with a blip or two occurring on the radars of their awareness. It grows into a gnawing fear and dread. We get to experience things just as they do, hearing oddities from cockpits, trying to understand, then trying to take actions to control what they soon start figuring out is a completely out of control situation. The line, "Does anybody know why there's smoke in lower Manhattan?" about killed me. Follow up with, in trying to get a bead on lost planes, someone saying, "Look out the window. Do you see it flying low?" and then "Yeah, it just dropped like 800 feet!" with the second plane going into the WTC, and I was flat-out sick.
There is some misinformation that the controllers deal with; there is audio from NORAD and the "This is real world, not exercise!"; there is horror, dread, and some extraordinarily calm people doing the impossible.
There were plenty of times that I wanted to shout at them to just get the planes out of the air, but who knew then what we know now? The fact that decisions were made so quickly and with such finality is mind-blowing, especially when so many different towers were involved. And though the last four minutes of the recording are tinny and difficult to understand, they're worth listening to. They pretty much sum up everything that became part of our American culture.
It's strange. I work with teen-aged girls who were only toddlers when 9-11 happened. These tapes would mean nothing to them. But for anybody who watched their television sets in a trance-like horror on that day, I strongly suggest the quick listen. Warning, though: if you felt even an iota of anything that remotely suggests your humanity back then, you will most likely, even now at this late date, feel something pretty powerful.
Personally, I'm going to sit and stare at the wall for a while, wipe some tears away...