All The Devil's Are Here by Bethany McLean and Joe Nocera describes the speed with which a sickness in one part of the financial industry spills over to others. The failure of the Bear funds led to the failure of Bear which led to the failure of Lehman which led to the fire sale of Merril, and the failure of AIG. All was set in motion by the aggressive selling without checks at Countrywide and Ameriquest. The loss of confidence in one week which could crater all the banks of those days leading to 80% losses in a month was astonishing if you hadn't seen movies like Contagion or read about the Black Plague. Many of the characters talked about in the book have great tragic flaws, striving to emulate Goldman, for example, or not wishing to hear bad news, or firing their risk officers when the sales volume gets too low. It's a sobering tale of the fault lines among people and Wall Street that gives me the same willies that I feel when I read about all the writers who went under during the depression. Well worth reading.





Speak your mind

2 Comments so far

  1. Ed on November 21, 2011 4:44 pm

    Where the academic and government devils who jawboned the banks with fake studies on “redlining” mentioned in the book? Creating new default assumptions on such loans might not have been politically possible as it had been proven that the only reason for a downpayment and creditworthiness check was to keep disadvantaged communities poor.

  2. pacific SW on November 22, 2011 5:45 am

    is the alchemy book next?


Resources & Links