Too Big to Fail … by Andrew Ross Sorkin

8 Oct

Too big to fail is a inside take on the wall street crisis of 2008.  It is about alpha male egos gambling with super high stakes consisting of somebody else’s money and finally being rescue again by taxpayers money.  This book was a little difficult for me to read since I am not familiar with the world of finance, and the plethora of names made it still difficult.  However, for somebody who is reasonable acquainted with wall street this will be a racy read.

The book starts with Jamie Dimon of JP Morgan prophetically announcing ” We need to prepare right now for Lehman Brothers filing.  And for Merrill Lynch filing.  And for AIG filing.  And for Morgan Stanley filing.  And potentially Goldman Sachs filing”.  The financial crisis is some hollywoodian alien which is devouring the financial institutions one link at a time.

Further the book clearly points fingers towards the Fed “… it cannot be denied that the federal officials – includig Paulson, Bernanke, Geithner – contributed to the market turmoil through a series of inconsistent decisions.  They offered a safety net to Bear Stearns and backstopped Fannie Mae and Freddie Mac but allowed Lehman to fall into Chapter 11, only to rescue AIG soon after….”.
Dick Fuld initially appears as an arrogant *(^$*&^$ initially, strutting in hubris in the face of imminent problems, declining the Korean deal when (definitely in hindsight … pretty clearly in foresight as well) it seems to be the only way out.  But then when Lehman is the only firm to fail rather allowed (or forced?) to fail he seems like a victim!

The summary by Buffet is very apt – “… its a little bit like Cinderella at the ball.  People may have some feeling that midnight it’s going to turn to pumpkin and mice, but it’s so darn much fun, you now, when the wine is flowing and the guys get better looking all the time and the music sounds better and you think you’ll leave at fine of twelve and all of a sudden you look up and you see there are no clocks on the wall and – bingo, you know?  It does turn to pumpkins and mice.  It’s hard to blame the band.  It’s hard to blame the guy you’re dancing with.  There’s plenty of blame to go around.  There’s no villain.”

A good book – must read.

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