Books: Bestselling Crisis

Journalists, investors and pundits scramble to turn the global financial meltdown into book, sales.As fast as market indices around the world have plummeted, publishers have rolled out “the definitive” book on the crisis. In the interest of helping readers identify value, Latin Trade presents reviews of the best titles in the three main groups of authors:

JOURNALISTS

Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis
By Paul Muolo, Mathew Padilla
Wiley, John & Sons
US$27.95
Paul Muolo and Mathew Padilla find the roots of the subprime mortgage crisis at poorly managed investment banks that repackaged and sold toxic debt to investors in Europe and Asia. Angelo Mozilo, founder and CEO of Countrywide Financial, America’s largest home mortgage lender, serves as the conduit for explaining how bad mortgages were pushed up the line to Merrill Lynch, Bear Stearns, Lehman Brothers, among other investment banks, to be bundle into bonds for resale.

Greenspan’s Bubbles: The Age of Ignorance At The Federal Reserve
By William Fleckenstein, Fred Sheehan
McGraw-Hill Professional Publishing
US$21.95
MSN Money columnist William A. Fleckenstein and former asset manager Frederick Sheehan argue that former Fed Chairman Alan Greenspan was wrong at every turn and allowed bubbles to build through misguided monetary policies. Appearing before a Congressional committee in October, the former Federal Reserve chairman has subsequently acknowledged that mistakes were made and deregulation may have gone too far.

INVESTORS

The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means
By George Soros
PublicAffairs
US$22.95
George Soros doesn’t mince words: the current crisis is the worst since the 1930s and marks the end of the dollar’s role as the reserve currency. The Budapest-born billionaire recommends policies to clean up the mortgage mess (create regulations and formal market for mortgage-backed securities). Soros explains that investor attempts to understand and manipulate the market cause trends to become ultimately overblown misconceptions in a repeating cycle—a process known as the theory of adaptive markets.

When Markets Collide: Investment Strategies for the Age of Global Economic Change
By Mohamed El-Erian
McGraw-Hill
US$27.95
El-Erian, CEO of PIMCO (the world’s largest bond investor with almost $700 billion under management), explains the importance of China and India taking on new leadership roles alongside the United States and Europe, and derivatives outpacing market players and segments. Investment recommendations avoid one-size-fits-all portfolio, using ranges that break down to about half in equities, a fifth in bonds and, surprisingly, a third in commodities, real estate, infrastructure and other special opportunities.

PUNDITS

The Two Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash
By Charles R. Morris
PublicAffairs
US$22.95
Former banker Charles R. Morris offers a non-technical explanation of why and how the train went off the rails. In reaching back all the way to former President Richard Nixon in the 1970s, Morris points to a shaky foundation based on the free-market ideas of Milton Friedman and the so-called Chicago Boys at the University of Chicago (Yes, the same ones who had a hand in Chile’s economic reform). The boom leaves the station with market players and regulators recklessly stoking the engine with greed and incompetence, respectively. The greatest merit of Morris’ take on the crisis is that his version is short and sweet at 194 pages.

Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism
By Kevin Phillips
Viking
US$25.95
Phillips, a former political advisor to President Richard Nixon, looks at the financial crisis through a political lens. He associates capital market excess with Clinton Democrats, as well as the George W. Bush Administration, which presided over the only U.S. economic boom in history not to include the middle class. His core points: 1) Financial services’ increase from 11% to 21% of GDP has promoted a public and private culture of debt, and 2) the lack of an energy policy has left the United States vulnerable to oil shocks.