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FOOLs GOLD:
How Unrestrained Greed Corrupted a Dream, Shattered Global Markets and Unleashed a Catastrophe
- Gillian Tett
ANKIT KHANDELWAL
THEME
A vivid description, and investigation of the reasons behind the financial crisis of 2008, the biggest global economic meltdown after the 1929s Great Depression. Theme encapsulated in the subtitle.
US managing editor and an assistant editor of the Financial Times Winner of Spear's Book Award for the financial book of 2009, for Fools Gold.
GILLIAN TETT
EVERYONE!!!
Hows Tett investigates?
Finding links of all credit based financial products with J.P. Morgan.
J.P. Morgans alumni finding way around financial worlds greatest foe- fear of loan default. The Morgan group invents Credit derivatives- to provide a hedge against risk Creating Credit derivatives
CDO (Credit Debt Obligation) CDS (Credit Default Swap) Sub-prime Mortgages Frozen Credit Markets
All banks at Wall Street raked in to get the hottest thing in Financial Market- Securitized loan bundles. Morgans rivals took fatal step of adding subprime mortgage loans to the derivatives-and-securitization mix. Impact of real estate bubble burst of 2008-2009.
derivatives and securities tied to subprime mortgages suddenly lost value. Investors panicked stock markets crashed.
NOTHING!!!
Wall Street lobbying campaign that persuaded
Congress, Securities and Exchange Commission (SEC), Clinton and Bush administrations, Federal Reserve
The Regret
Morganites leave the bank and personally imported derivatives know-how to institutions that behaved more rashly.
The Bailouts
AIG, Chrysler, Bank of America and others.
My VIEWS
Tett excels at recreating the 2008 economic environment. She deciphers financial terms that a lay reader can understand. Analytical as and when required. Unbiased and upfront confrontation during interviews.
LEARNINGS
There seems to be no end to mans greed. Analogy of a car accident.
Car analogous to the credit derivatives Car driver analogous to the investment bankers
Banks job is to find balance between profit making and safe-guarding depositors assets.
LEARNINGS (Cont)
Government should take interest in regulating the financial markets. Even central banks can run foul. There can be conflict of interests in economic policy makers suggestions.
Professors and law officers greed.
REFERENCES
www.ft.com: Gillian Tett Profile www.newyorktimes.com www.wikipedia.org: Photo of Gillian Tett http://seekingalpha.com/: Photo of Fools Gold book
THANK YOU