Customer Reviews

Derivatives: The Wild Beast of Finance

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Scary. Definitive. Spectacular. Your mind will explode. This is not an uninformed book written by an outsider. It's far more informative and frightening than that. This is a high-finance rocket scientist assessing the risky innovations that have taken over in a deregulatory world.

The author gives us a great history of derivatives going back to how they were used in 15th Century Italy (you could just invest in 10 percent of a ship - so if the whole ship went down you had limited your risk) and ancient Greece. Alfred also shows how derivatives aquired "steroids" (my term) and became supercharged in the 1970s and how if we do not reform the system, they could "blow up" and destroy the world financial system. The quote from the May 14, 1994 Economist magazine is very sobering in that regard.
Well, then came March 2008 and Bear Stearns and Sept 2008 and Fannie, Fredie, AIG, and Lehman Brothers, to show us the author was right, after all.
I think that it's not too late for President Obama, Secy of the Treasury Tim Geitner and Fed Reserve Chairman Bernanke to read this book, if they have not already.
If they have, then I would ask why they have not made a stronger case for derivatives to be regulated, before an even GREATER financial crisis occurs!
As Hegel said 150 years ago: "The only thing that History teaches us is that man does not learn from History."

A good book for looking at recent derivs controversy and related regulatory topics. Probably among the best, certainly in this price range. Highly recommended.