The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash
The sub-prime mortgage crisis is only the beginning: A more profound economic and political restructuring is on its way. We are living in the most reckless financial environment in recent history. Arcane credit derivative bets are now well into the tens of trillions. According to Charles R. Morris, the astronomical leverage at investment banks and their hedge fund and private equity clients virtually guarantees massive disruption in global markets. The crash, when it comes, will have no firebreaks. A quarter century of free-market zealotry that extolled asset stripping, abusive lending, and hedge fund secrecy will come crashing down with it. The Trillion Dollar Meltdown explains how we got here, and what is about to happen. After the crash our priorities will be quite different. But things are likely to get worse before they better. Whether you are an active investor, a homeowner, or a contributor to your 401(k) plan, The Trillion Dollar Meltdown will be indispensable to understanding the gross excess that has put the world economy on the brink--and what the new landscape will look like.
The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash Accessories
 Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism
The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means
GREENSPAN'S BUBBLES: THE AGE OF IGNORANCE AT THE FEDERAL RESERVE
When Markets Collide: Investment Strategies for the Age of Global Economic Change
The Panic of 1907: Lessons Learned from the Market's Perfect Storm
Fooling Some of the People All of the Time: A Long Short Story
The Post-American World
Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis
A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation
The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do about It
The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash Reviews
I was attracted to the book by the catchy title. There was no in-depth analysis nor insights regarding fundamental flaws of the global financial system that led us to this misery. For those who wish to understand the current financial turmoil, I think you'll be better served by reading books such as "The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means" by George Soros, or "Fixing Global Finance (Forum on Constructive Capitalism)" by Martin Wolf, and myriads of other thougtful discussions and analyses. After I rushed through it, I was bewildered why the book was writted and published at all: it was a hodgepodge of recycled news clips and published opinions in the firnacial journals.
If I were you I'd get the book from the library as it's short and probably 2 readings is enough to give you the basic information you probably wanted. The only thing wrong with this book is that the author has underestimated the amount of damage yet to occur.
The last chapter gives a couple of ideas to help us out of this mess but it's not the main focus. I borrowed the copy I read from a friend and read it in a long weekend.
This book is pretty much for the layman who is wondering where their 401K has gone and whether to buy back into the market now or wait. Think leverage upon leverage.
And that the amount of leverage that occurred was underestimated doesn't change the facts as to what the "Great Unwinding" that is going to occur. The author outlines how these financial institutions created these new "investment" vehicles then fleeced the market raking in huge fees in the process and setting the world's economy up for the huge fall when the under lying economics failed.
It doesn't really matter though because this book is not about how to fix things but a quick history lesson of what has happened. I've been reading estimates as high at 55Trillion with lows of 14Trillion.
Despite the fact that this book is already a bit dated (published in early 2008), it provides a good overview of the underlying causes of the financial meltdown. The book is succinct and to-the-point. The author explains the likely consequences of these bubbles bursting and the requirement for more regulation of the financial industry. He goes on to give some specific recommendations for regulation. He describes the credit bubbles that arose, unchecked by proper regulatory oversight, and aided by new financial innovations like CDOs and credit default swaps. It will be amusing to read that and see what Morris thinks of the government's enormous payout of taxpayer dollars to the high-finance robber barons. The author is knowledgable and writes very well (he has written widely).
I decided to buy this book based on the mostly positive reviews here, and found them accurate. I wanted to get a deeper understanding of the credit crisis that made big headlines this Fall (2008) and which prompted a huge government intervention. Edit: I just realized there is an updated version of this book coming out in Feb 2009, aptly titled "The Two Trillion Dollar Meltdown" (went up a factor of two). Excellent book and quick to read.
Financial derivatives - a form of claim on these financial assets - had a notional value of ten times global GDP, about $500 trillion. By 2005, global financial assets - stocks, bonds, loans and mortgages - were worth four times global GDP. The US and British governments are turning a debacle into a decades-long disaster, backing their financial capitalists and covering up their problems (hedge funds, like tax havens, do not disclose their balance sheets). He concludes, "market dogmatism. The USA's accumulated deficit between 2000 and 2006 was $4 trillion, funded by foreign countries, companies and banks. So now all the surplus nations - Russia, China, Japan, the Middle East countries - are moving away from the dollar and, like the pound, it is now in freefall, causing what the Economist called 'the biggest default in history'. The crash is in every kind of financial asset: there are no firebreaks.
Morris warns that the write-downs and defaults will take a trillion dollars, but due to capitalism's chaotic nature could cost two or three times more. The last three decades saw the most reckless speculation ever, and the greatest global real estate bubble. Morris urges a bigger public health care sector and a re-regulation of finance, which would be a start. has become the problem, rather than the solution." And he urges us to end what Adam Smith called "the disposition to admire, and almost to worship, the rich and powerful - the great and most universal cause of the corruption of our moral sentiments.". Likewise, when Japan's credit and property bubbles burst in the early 1990s, its ruling class defended Japan's financial capitalists, producing a slump that has not yet ended. Charles Morris, an American writer, lawyer and former banker, has written a useful account of the long-building credit crash. Thatcherism's free-market mania for asset stripping, abusive lending, and hedge fund secrecy has ended in ruin.
He stayed away from jargon as much as possible. Predicting the future is of course very difficult and often proves to be wrong but it would have been interesting to have this intelligent author attempt to make some forecasts. Understanding what led to the current crisis is not so easy but Morris does a nice job explaining what led to the mess that the US and the rest of the world finds itself in. Given the complexity, I believe, that Morris did a fine job.
Hence I did not blame the author for my lack of total understanding of some of these financial instruments. What was missing in the book which caused me to give it only 4 stars was his lack of reflections and predictions on what is to come. Towards the end of the book he gives some of his own solutions to the problems that we are facing. For more analysis of these derivatives I recommend "FIASCO" written by Frank Partnoy.
The author is not a dogmatist and gives readers a well-balanced view of politics and economics. Some of the complex financial instruments are so confusing that apparently the underwriters did not fully understand them. I also appreciated the historical and political insights which put the current crisis in perspective.
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