Frank Partnoy's "Infectious Greed"
The title comes from a Greenspan speech.
Great book on how the last 10 years happened. Partnoy points out how financial derivatives have allowed banks to divest themselves of risk while putting it squarely on the shoulders of insurance companies and individual (largely clueless) investors. A lot of today's liquidity is due to the fact that banks & brokerages have figured out how to completely circumvent all the Fed's rules on reserves while actually eliminating a lot of their portfolio risks.
Partnoy also gives the clearest (no mean feat) account of WorldCom & Global Crossing that I've ever read.
At one point Partnoy wraps up a two-page eyeball-glazing description of one of Enron's SPEs with the sentence: "Enron executed thousands of other examples like this one." Forensic accountants are STILL trying to figure out Enron's finances.
If you've ever prided yourself on your ability to read the footnotes in financial reports, prepare to be humbled. If you ever invest in collateralized mortgage obligations, collateralized bond obligations, or anything else other than a simple stock/bond-- read this first.
Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."
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