I loved Liar’s Poker, and Michael Lewis returns to his old stamping ground of Wall Street to write one of the best summations, in my view, of what happened in the markets leading up to the current woes. I do not buy into all of his analysis but as an entertaining version of events, it is pretty good.
Another good, if flawed account of the problems of the debt-driven economy came recently from Niall Ferguson, the historian. He has good things to say on how the understandable desire for home-ownership – encouraged by political leaders such as Margaret Thatcher in the 1980s – tipped into an attitude which stated that owning a home is almost some sort of “right”. If you think about it, paying a mortgage where you own only, say, 10 per cent of the equity is not really ownership, but a form of lease agreement. But I think Ferguson under-plays the role of central banks in the 1990s and ‘Noughties in getting complacent over the warning signs coming out of the housing and asset markets, such as gold. He had a recent television series on Channel 4 on this whole process – sponsored, I could not help noticing, by the Cayman Islands – and I was impressed by how Ferguson explained the often eye-watering complexities of derivatives and asset-backed products in simple ways without dumbing it down. Doing good-quality television shows on economics, where so much has to be conveyed by mood and picture, is hard. And Mr Ferguson’s modulated Scottish accent is a damn sight easier on the ear than the bizarre inflections of Robert Peston.
“I was the only guy I knew covering companies that were all going to go bust,” he says. “I saw how the sausage was made in the economy, and it was really freaky.”
Yep. I’ve had that sinking feeling.
Realizing that it isn’t you. That there isn’t anything to “get.” It doesn’t make sense, because it doesn’t. That those around you really don’t have any idea just what they’re doing, step #2, or what Plan B is.
Coming soon to an Afghanistan near you.
I didn’t liked that article at all. Better saying i feel duped by those kind of articles that follow a person that we don’t know much and have no way to know enough to give an opinion.
At certain places the article seems really weird and streching credibility.
Well, I did enjoy the article (I first read it about a month ago). I have been involved in the mortgage/securitization business for 20 years, and I know first-hand enough of what Lewis reports to believe him about the rest. Most eye-opening to me was that part about credit-default swaps; they’re a new enough invention that I’ve had no personal dealings with them and didn’t really understand how they work. Still, I had a general suspicion about them, and now I see that it was justified.
Niel Ferguson is not even a good historian – for example he (endlessly) claims that the Bank of England’s finance of the British government was copied from the Dutch (in reality the Bank of Amsterdam, the only bank the man can be talking about, was famous for NOT being fractional reserve).
As for citing the Scotsman as a economist………
Paid for by the government of the Cayman Islands.
I do not know whether the C4 series was good or bad – but the Cayman Islands thing reminds me of the sad decline of this place.
Only a few years ago the Cayman Islands were not a Welfare State – now they have joined the parade.