Tag Archives: finance

Are We There Yet? the Financial Crisis Recovery Summer Road Trip

With families deep into vacation season, setting off with the North American tradition of the grand road trip quest, somebody somewhere is probably asking: ‘Are We There Yet?’

That same tiresome question is being asked by economists and public policy experts in attempting to assess the health and future direction of the entire global economy, but more especially the North American economy. What makes this more fun is that the grown-ups (if we allow economists and public policy experts to be ‘mom’ and ‘dad’ for a moment) driving the car do not necessarily agree on which route take to get to our destination. Just like sitting in the back seat and pretending not to listen or taking sides in the argument going on in the front of the car, it does allow of some fascinating and at times entertaining ‘discussion.’

thistimeOne venue for these fascinating discussions is the Munk Debates, where four prominent speakers debating the merits and drawbacks of increase taxation for the most wealthy citizens. Another heated discussion is the debate on the merits and accuracy of the research and work of Carmen Reinhart and Kenneth Rogoff best reflected in their book ‘This Time is Different: eight centuries of financial folly’ (which was profiled in a April 2011 blog). Their work was challenged by a graduate student (it is always those pesky grad students) and found that some data points were missing which skewed the conclusion that excessive debt leads to slow economic growth.

As with all things involving human values and assigning social goals, the truth falls somewhere in the middle. The problem in our media-frenzied world of absolute truths and sound bites is the need to both overstate positions and refuse the more the open-minded debate style (which allows for the possibility that anyone of us could be wrong, or that essentially we have an important point to make but that there could parts of my statements or beliefs that could require correction or reassessment). Such a debate requires a society of trust, respect and tolerance of different points of view; I am not sure in this ‘gotcha’ world of hyper-politics that is possible. But at least we now know where we would like to go and ask the ever important question: ‘where is the next gas station?’

For your personal summer road trip:

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Alan Blinder, After the music stopped: the financial crisis, the response and the work ahead.

Bethany McLean and Joe Nocera,All the devils are here: the hidden history of the financial crisis.

Gretchen Morgenson and Joshua Rosner, Reckless endangerment, how outsized ambition, greed and corruption led to economic armageddon.

Neil Irwin, The alchemists: three central bankers and a world on fire.

-Phil

This time is different… really

I personally revel in plays on words, varying levels of seriousness based on voice inflections, double entendres and the allowing of multiple perspectives and points of view. By contrast, this drives my family and friends to frustration with replies like “Are you serious?!” or “Do you really mean that?”

There could be no rarer treasure chest of possible double meanings and the merging of mockery with seriousness than the business and finance books published since 2008. The topic touches so many aspects of our lives it’s difficult to categorize; let’s call it the housing/mortgage/insurance/investing/derivative/
banking/unemployment/pension crisis. See, you can have so much fun already! (If it weren’t so serious.)

Since there are so many approaches to the topic and, more importantly, different takes on who’s to blame, here’s a short list of some of the ‘best’ titles.

This time is different coverThis time is different: eight centuries of financial folly, by Carmen M. Reinhart and Kenneth S. Rogoff.
This book set the tone and standard by providing the best historical overview and taking us to where we are now. It is also the primary book that other ‘experts’ always refer to when they are debating the issue on radio or television.

13 bankers: the Wall Street takeover and the next financial meltdown, by Simon Johnson.
The greatest trade ever: the behind-the-scenes story of how John Paulson defied Wall Street and made financial history, by Gregory Zuckerman.
Profiles hedge-fund manager John (no relation to Henry below), who due to being an outsider in many ways within the tight-knit community saw the group think and herd mentality and acted on a once in a lifetime opportunity. A primer in thinking “outside the box,” if you will.

The big short book coverThe big short: inside the doomsday machine, by Michael Lewis.
Probably the most entertaining and personalized account.

On the brink: inside the race to stop the collapse of the global financial system, by Henry M. Paulson.
The insider-based account, with just a little bit of self-rationalization thrown in.

A colossal failure of common sense: the inside story of the collapse of Lehman Brothers, by Lawrence G. McDonald.

– Phil

p.s. Some of these titles appeared earlier in our Business and Finance newsletter. If you’d like to hear about the latest business books available at the Library, subscribe & receive it in your inbox monthly.