In the aftermath of the financial crisis, many commonly held beliefs have emerged to explain its cause. Conventional wisdom blames Wall Street and the mortgage industry for using low down payments, teaser rates, and other predatory tactics to seduce unsuspecting home owners into assuming mortgages they couldn’t afford. It blames average Americans for borrowing recklessly and spending too much. And it blames the tax policies and deregulatory environment of the Reagan and Bush administrations for encouraging reckless risk taking by wealthy individuals and financial institutions. But according to Unintended Consequences, the conventional wisdom masks the real causes of our economic disruption and puts us at risk of a slew of unintended—and potentially dangerous—consequences.
Unintended Consequences is not a book that takes a couple of insights and expands them into 300 pages; rather, it covers the entire scope of the economy. It’s a fascinating and contrarian case for how the economy really works, what went wrong over the past decade, and what steps we can take to start growing again. Whether you agree with the book’s provocative and counterintuitive conclusions or not, Unintended Consequences will reward you with a sophisticated understanding of the contemporary economy—one no other book has yet provided.
Edward Conard was a partner at Bain Capital from 1993 to 2007. He served as the head of Bain’s New York office and led the firm’s acquisitions of large industrial companies. Prior to that he worked for Wasserstein Perella, an investment bank that specialized in mergers and acquisitions. He lives in New York City.
©2012 Edward Conard (P)2012 Blackstone Audio, Inc.
"There are an amazing number of good ideas and interesting points made in this book." (Steven Levitt, coauthor of Freakonomics)
"Unintended Consequences will be the most talked about economics book in 2012." (Kevin Hassett, Senior Fellow and Director of Economic Policy, American Enterprise Institute)
"Ed Conard’s book presents the most cogent and persuasive analysis of the financial crisis to date." (Andrei Shleifer, Bates Clark Medal winner, Harvard University)
I focus on fiction, sci-fi, fantasy, science, history, politics and read a lot. I try to review everything I read.
Most of the analysis in this book is very detailed and mostly correct. The analysis of the recent financial crisis points out many common misconceptions about the crisis and addresses them well. Although the author does give some blame for the crisis to the government, he does not repeat the common uninformed conservative view that it was all or mostly caused by government action. The book is probably better for most people in written form, as there are a LOT of numbers popped around. You have to already have a pretty good understanding of economics and ability to keep a lot of numbers in your head to keep up with the audible.
A couple of nits, the author vacillates between investors being fully aware of the risks they are taking and investors blindly chasing momentum. I find the author also misses several key aspects of the crisis. Investors were lulled into underestimating the risk of the investments believing highly geographically diversified mortgages were very unlikely to have wide ranging defaults. The sellers clearly understood the actual risks. Nevertheless, the buyer should beware. The real issue was institutional depositors massively withdrawing their uninsured deposits when they lost faith in the bank financial books.
Unfortunately near the end of the book, it goes off the rails with the most intense rehashing of trickledown economics I have yet encountered. The rich should not be taxed at all, only the working middle class should be taxed. Indeed, using the author’s analysis it would be wisest to tax the middle class to give cash grants to fund more investment by the rich. The rich (or anyone) should never give anything to charity (like the immoral Bill Gates and Warren Buffet did) as charity is a waste of investable capital. Artists and pure scientist are immoral as it would be better for the economy if they were instead more responsible engineers and computer scientists. At this point I was expecting an intervention of the Ghost of Christmas Past.
Although this book takes some background and focus to understand, it is a book worth reading for two very different reasons. Firstly it is important to dispel the many false ideas about the causes of the financial crisis. Secondly it is important for any voter to really understand what the rich, conservatives really think. The author is a partner at Bain Capital and is a major supporter and fundraiser of the Romney campaign.
This book can only be described as outstanding. Mr. Conard has been able to discuss the reasons for the 2008 financial crisis in a clear and concise manner as well as give concrete suggestions for what government policies should entail so that our economy can return to 'normal' post-recession growth rates. While I am a fiscal conservative and believer in the strength of the free market system and therefore bias to Mr. Conard's point of view, I feel that this book should be required reading for all, as even those who believe in more governement intervention in our economy will be forced to reflect on the points that Mr. Conard drives home. While some portions of the books may get a little overly technical for an non-financial person, I feel that anyone with an above average level of intelligence will be able to easily get through those sections and will then be able to understand how Mr. Conard comes to his conclusions. This is one of the most informative and enjoyable books that I have ever read and I congratulate Mr. Conard on his work.
Say something about yourself!
An interesting perspective on the fiscal crisis, taxation, social programs and why the middle class is shrinking. Very thought provoking. Some points I could recognize and agree with but others left me scratching my head. I may have to listen again.
This book is bound to cause outrage and debate so let me break this down by audience.
Your a progressive;
This book will anger you and tell you the opposite of what you believe. It might as well have been written by the devil. However this is not some trite book, it's full of reasoned arguments and packed with data. The author criticizes both Republicans and Democrats, left and right with very valid points. You need to absorb the authors argument. Once you've done that you will better be able to understand the weaknesses inherent in progressive policies and think about how to mitigate them. Don't take the knee jerk reactionary position just because he is stating things you don't like to hear.
Your a fiscal conservative;
The author will mostly tell you what you want to here. But there are valid criticisms of Republican policies over the last couple of decades that you need to understand. There is also a weakness in his argument that the banks did nothing wrong in the financial crisis. Banks did drink their own cool aid and succumbed to a herd mentality. The author also doesn't parse out opportunity inequality from financial inequality. This needs to be explored for any real conversation about inequality.
Your not interested in politics or finance (the majority);
This audience will be the hardest for this book but it's the most important. Monetary and fiscal policy is being set by one of the above two groups at any given time. The financial system is the most important system in society, second to none. Without a well functioning financial system you can not own a home, get a degree, or simply buy stuff at the grocery store instead of carrying around a bag of gold at all times. This book will be difficult to read because it is packed with the language and information of the financial world. But in a democracy it is your responsibility to understand the material so that you can make an informed choice. The vast majority of news you read about the economy is crap because the real economy is a complicated beast that can't be coined in a sound bite. This book is the opposite of a sound bite (despite the title). If you can digest it without falling completely asleep or into a coma you will have gained a great insight how credit and credit risk in the economy functions. You will become a better voter.
The strength of the book was that it provided a window into the mind of an equity investor. It also provided a reasonably good description of the role of investment and risk taking in long term economic growth. The author's views of the causes of the financial crisis are interesting (it was just a run on the banks that the government turned into a panic by over reacting) and worth considering although I did not find it fully convincing. His representation of subprime borrowers bordered on the cartoonish, and his commentary on Roe V. Wade was unexpected but instructive. Some of his repetition of points was useful for emphasis but by the end of the book I found it annoying and boring.
I struggled to understand the deep thoughts Conrad is trying and often failing to convey. There are plenty of "I never thought about it that way" moments. But, he could have made them much more accessible and reached an audience beyond the economic scholars that will be able to wade through his dry explanations.
I would recommend this audiobook to anyone who wishes to understand the US economy.
His explanation of the role of risk and short-term debt in facilitating economic growth was outstanding. He is a brilliant teacher.
If you're going to read just one book on economics, read this. If you're going to read two, read "Economics in One Lesson" by Hazlitt.
Maybe reading it would be better, but trying to listen and comprehend was painful.Reader was much too monotoned.
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