The Financial Crisis

This one is different. It is written by someone who spent more than 25 years in trading, structuring, mathematical modelling, regulating and risk managing financial derivatives. He watched the crisis build then break and participated in efforts to recover and then fix the financial system trying to prevent a repeat performance. The book covers a lot of bases; analysing the industry to understand the causes of the crisis, describing the goings on in one bank to see why it was so vulnerable, considering flaws in the design and workings of the financial system that make it susceptible to crises and how they can be removed. For the really dedicated student of the crisis, detailed descriptions of some of the most widely traded financial instruments that were in the eye of the storm are provided so that their defects can be recognized. Other sections provide a different way of understanding Madoff, revealing studies of bonus culture, share buy-backs, active managers, central bankers, multiple conflicts of interest, popular follies, why some dollars are worth more than others, a rogue trader incident, bribery and legal settlements, misfiring incentive schemes, debt, shadow banking, problems caused by accounting standards and more. Having carried out this assessment, a list is provided of the parties the author considers to have been most responsible for causing the crisis. The text sparkles with original ideas and wherever problems are identified, remedies are suggested and in the concluding sections of the book, specific recommendations are pulled together. The mix of analysis, insights, anecdotes, story-telling and suggestions for change make this an entertaining and interesting read.