Sunday, September 28, 2003

Infectious Greed

All economists must read this new derivatives book:

Infectious Greed

All investers must read this book. All policy makers and politicians must read this book. All people interested in political economic truth and reality must read this book. All people should read this book.... I don't know how I can emphasize it any more. I just finished reading the book. I have never read a more thorough book about our nation and the world than this, and I have read and/or researched thousands, and thousands. It is from the perspective of the real mechanics of the derivatives market and all associated entities of all markets, politics, and policy. You must read it. Frank Partnoy, of Enron testimony fame, has thoroughly explained the derivatives market to its fullest and minutest detail possible. If you ever wanted to truly understand gambling, and market gambling fully {making book} here it is.

Infectious Greed


Get this book if you want to understand Wall Street antics.
This book is an absolute must read if you want to understand Wall Street shenanigans. Partnoy has done a phenomenal job of demystifying the world of swaps, derivatives and other exotic financial instruments. Even better, he shows how investment banker antics have affected Main Street inhabitants including yourself. How did Orange County and so many other municipalities get so deeply in trouble? The author explains.

I {Srikumar S. Rao } have a Ph.D in business and many finance courses under my belt, but I never quite understood the systemic dangers of the 'financial innovation' that is sweeping our markets. Now that I have, I will sleep much less well at night.

Partnoy describes the evolution of exotic instruments and the characters involved in this evolution. How CS First Boston made securites of virtually any type of debt, Salomon pioneered the CMO and so on. He details the specific wrongdoings of companies like Enron, Global Crossing and WorldCom. He shows you the enabling role played by gatekeepers like accounting firms, law firms, analysts and credit rating agencies.

Even more important, he shows you exactly how the collusion happened and why. He gives you both an aerial view of the markets and a down-in-the-trenches description. I often wondered why, in efficient markets, participants voluntarily involved themselves in such convoluted transactions that had high costs in terms of record-keeping and fees. The answer, as Partnoy shows, is that virtually all of these arrangements permit some set of parties to subvert law or regulation or both. This is true domestically and internationally.

He graphically describes how lobbying keeps regulators at bay and the venality and ineffectuality of politicians. The chairperson of the Commodities Futures Trading Commission, for example, exempted important parts of Enron's business from regulation and, just weeks later, joined Enron' board. There are many such stories that show exactly how self-serving our legislators and regulatory guardians are. ...{article link continued}

Frank Partnoy Link

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