Undefined jargon by the shedload
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After a very good start (first 2 chapters) in which the author summarizes the development of US economics from 1900 to the Reagan-Thatcher era, the book rapidly deteriorates into a jargon packed text. Some of it may be US English, but is still unintelligible to the layperson e.g. quants, barbelled, scarfing up, total positions to equity, work off positions, leveraged buyout deals,bought the call, buy a put, megaportfolio asset management, arbitrageurs swoop, roiled bond, counterparty surveillance, and so it goes on. Few of these terms are defined or explained. This may be fine for someone who understands the jargon, but then why bother buying the book in the first place?
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Very good coverage of the basics.
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If you are buying any other books, or reading any other articles on the recent "credit crunch", you should seriously consider getting this book too. The writer is a lawyer, and in very precise plain clear language, describes how each of the new types of financial instrument, from "put" to "synthetic collateralized debt obligation", works, covering why people originally developed them, and how people have gone on to use and enhance them. It then covers all the risks that have developed as a result of their use in practice, and briefly covers the overall financial consequences, as far as people understand them. This includes talking about various regulatory failures that have contributed to the crisis.
He then makes an overall estimate of the kinds of losses that are likely. Although the real losses are looking even more serious now, several months later, he gives figures and estimates in his reasoning that enable you to get some kind of overall picture of the problems. His focus is almost entirely on the United States, but the financial instruments used elsewhere are the same, and the regulatory failures similar.
If you are reading other accounts of the developing crisis, this is a very good place to get the basic technical information on what everyone is talking about. Some books leap into explanations, with only very brief, and sometimes misunderstood, accounts of the financial instruments involved. Even if you disagree with some of Morris's points of view or conclusions, his clear account of how each financial instrument works is still very helpful.
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An excellent, readable account
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I found this very short book (169 pages plus notes) very helpful in understanding what the "credit crunch" is about--what caused it, what the current imbalances in the financial system are, and how it may unravel. It starts further back in time than I would have expected (the 1950s to 1970s), but does this to explain the regulatory and financial stage on which the bubble of credit was born. Financial and economic terms are explained, without dumbing things down. Really excellent.
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