Mr. Market Miscalculates: The Bubble Years and Beyond [Hardcover]

James Grant (Editor)

Book Description

Publication Date: November 7, 2008

Why is America in financial crisis today? This book, better than any to date, explains it all-how we got here and where we are going. The how we got here is brilliantly described in a collection of pieces from Grant's Interest Rate Observer, the Wall Street insider's Bible. The where we are going is treated in Jim Grant's up-to-the-minute introduction. No fan of Greenspan or Bernanke, Grant tells the unvarnished truth about America.

Editorial Reviews

From Publishers Weekly

Collected from speeches and editorials by Grant, the editor of Grant's Interest Rate Observer, these essays are remarkable for their prescience: two years before subprime mortgages collapsed, the author described them as not one borrower left behind and when other analysts were worried about the effect of a Fed interest rate increase, he foresaw that the risk to house prices lies not with interest rates but with lending standards. Other chapters attack bubbles in stocks and the dollar with erudition and wit (Economics, mistaking itself for physics, is wont to turn up its nose at history, but the past has much to teach; as dress on Wall Street has become more casual, so have the monetary arrangements... the gold standard and swallowtail coats have given way to Greenspan and open-neck shirts). It's hard to imagine reading any other investment newsletter even a week after publication. Grant's is the exception; it paints on a larger canvas and is infused with the author's generous spirit and rich sense of humor. (Nov.)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

Review

James Grant's Mr. Market Miscalculates may well be the most perceptive book on the current financial crisis yet published. What is most impressive is that almost all of it was written years before the crisis finally struck in July last year.

Grant's views on the markets are well-known and consistent. A strong critic of the decision to take the dollar off the gold standard in 1971, he has used Grant's Interest Rate Observer, which he founded 25 years ago, to criticise the money-printing policies of the Federal Reserve. He has earned a steady and loyal following.

Grant ... draws his title from Benjamin Graham, the investment theorist, who coined the term "Mr. Market" in the 1930s. Thanks to Mr. Market's irrational behaviour, Graham said, it was possible for opportunistic investors to make money. Grant paraphrases Mr. Market's attitude thus: "Price is never an object; he just wants in, or he wants out. You, the sane one, could get rich just by availing yourself of the opportunities served up by your unbalanced partner."...The essays in the book show how easy the opportunities were to spot.

There are many other uncanny examples of prescience in [Grant's] diagnosis of the conditions that led to the current crisis. His trademark clarity of thought and of expression are there throughout. So, thankfully in an analyst who is generally pessimistic, is a crackling sense of humour. --Financial Times

After having read the book twice during the past four days, I can say without equivocation that it is a must-read item. Grant lays out on the table almost all of the key pieces involved in the current credit crisis that is enveloping the world, even though the last essay was written late this spring. Fortunately, James Grant gives us most of the last pieces of the puzzle in his op-ed, The Confidence Game, which was published in the Wall Street Journal on October 18, 2008. It, too, must be read in its entirety to be fully appreciated....

You can read all about the folly [of recent years] in Mr. Market Miscalculates and you should probably weep while doing so. But James Grant writes too well, thinks too clearly and is just too darn funny to distract one from the narratives that make this book worth every penny it might cost you to purchase it.

After having read the book twice during the past four days, I can say without equivocation that it is a must-read item. Grant lays out on the table almost all of the key pieces involved in the current credit crisis that is enveloping the world, even though the last essay was written late this spring. Fortunately, James Grant gives us most of the last pieces of the puzzle in his op-ed, The Confidence Game, which was published in the Wall Street Journal on October 18, 2008. It, too, must be read in its entirety to be fully appreciated....

You can read all about the folly [of recent years] in Mr. Market Miscalculates and you should probably weep while doing so. But James Grant writes too well, thinks too clearly and is just too darn funny to distract one from the narratives that make this book worth every penny it might cost you to purchase it.- LEWROCKWELL.COM

See all Editorial Reviews

Product Details

• Hardcover: 430 pages
• Publisher: Axios Press; First Edition edition (November 7, 2008)
• Language: English
• ISBN-10: 1604190086
• ISBN-13: 978-1604190083
• Product Dimensions: 9.2 x 6.3 x 1.3 inches
• Shipping Weight: 1.9 pounds (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars  See all reviews (33 customer reviews)
• Amazon Best Sellers Rank: #395,309 in Books (See Top 100 in Books)

More About the Author

James Grant founded Grant's Interest Rate Observer, a twice-monthly journal of the financial markets, in 1983.

He is the author of five books on finance and financial history: Bernard M. Baruch: The Adventures of a Wall Street Legend (Simon & Schuster, 1983), Money of the Mind (Farrar, Straus & Giroux, 1992), Minding Mr. Market (Farrar, Straus & Giroux, 1993) and The Trouble with Prosperity (Times Books, 1996), and Mr. Market Miscalculates (Axios Press, 2008). John Adams: Party of One, a biography of the second president of the United States was published in March 2005 by Farrar, Straus & Giroux.

His latest book, "Mr. Speaker! The Life and Times of Thomas B. Reed, the Man Who Broke the Filibuster," will be published in May by Simon & Schuster.

Mr. Grant's television appearances include "60 Minutes," "The Charley Rose Show," "CBS Evening News," and a 10-year stint on Wall Street Week. His journalism has appeared in a variety of periodicals, including the Financial Times, The Wall Street Journal and Foreign Affairs, and he contributed an essay to the Sixth Edition of Graham and Dodd's Security Analysis (McGraw-Hill, 2009).

Mr. Grant, a former Navy gunner's mate, is a Phi Beta Kappa alumnus of Indiana University. He earned a master's degree in international relations from Columbia University and began his career in journalism in 1972, at the Baltimore Sun. He joined the staff of Barron's in 1975 where he originated the Current Yield column.

Visit the Website for Mr. Speaker! The Life and Times of Thomas B. Reed The Man Who Broke the Filibuster at www.mrspeakerbook.com

Most Helpful Customer Reviews

66 of 69 people found the following review helpful

5.0 out of 5 stars In a Rising Market, It's More Profitable not to Ask November 2, 2008

By Arlen

Format:Hardcover|Amazon Verified Purchase

"The Cassandra industry is not so remunerative as the hedge fund business, so the professional investors and bankers stay in the race, taking the kind of risks that their better judgment tells them to avoid." states James Grant in his 'Mr. Market Miscalculates, The Bubble Years and Beyond,' a work comprised of pieces from his 'Grant's Interest Rate Observor.'

Grant has been charting the course of market excesses on a fortnightly basis for 25 years, and he has a remarkable record of getting it right. Most pointedly, Grant illuminates the human foibles to which we all fall prey and how these foibles precipitate the daily gyrations of stock and bond price levels. Grant's wealth of understanding is outstanding enough to recommend the book, but his ability to generously lace his writing with his sense of humor makes his writing simply priceless.

About the dismal financial crisis, Grant wryly remarks that there is more than enough blame to go around. Grant faults human nature in general for markets gone wild, yet he is particularly impressed by the level of incompetence exhibited by recent leaders who, according to Grant, "failed almost to the man."

The no-holds-barred book journeys through the missteps of the economic leaders of our times, and it does so with a breath-taking straightforwardness. Given the state of the world's economic affairs, I hope 'Mr. Market' becomes required reading for the legislators, the judiciary, and the executives charged with fixing the world's financial systems.

15 of 15 people found the following review helpful

4.0 out of 5 stars "Maestro" exposed May 3, 2009

By RobRoy

Format:Hardcover|Amazon Verified Purchase

Interesting book for those who wonder how we messed up our financial system. Book consists of 60 articles/essays by Grant, originally written during the years 1999-1Q08, so it takes you back in time to when the bubble was inflating. Each article is 6-10 pages long, so ordinary readers who normally avoid reading economics can enjoy and finish each one, plus Grant is a witty/skillful writer. Biggest revelation is Grant's plain-English criticism of Alan Greenspan's policies (made during Greenspan's reign). We all know the "Maestro" kept rates too low too long, now we see why. Makes you wonder why Congress and the public treat Fed chairmen with fawning exaltation.

26 of 29 people found the following review helpful

5.0 out of 5 stars 4.5 stars-Bankers started loaning hundreds of billions to speculators December 2, 2008

By Michael Emmett Brady VINE™ VOICE

Format:Hardcover

Grant has written a very nice critique of the deregulation of the financial markets that has been going on since the late 1970's.The Federal Reserve System(Fed) and SEC(Securities and Exchange Commission)simply allowed the big commercial banks and investment banks to ignore all of their OWN creditworthiness standards on who qualifies for a loan ,as well as letting them load up on all types of highly speculative types of assets, like collateralized debt obligations(CDO's). He pinpoints the major problem that led to the current collapse of both the housing bubble and the stock market bubble.It was not the low interest rate policies of the Fed.It was the decisions made to loan money to speculators and well known house flippers(in some real estate markets, 35% -40% of the housing loans were going to house flippers)that set the stage that created the housing bubble and then led to the total collapse of the construction sector in the vast majority of the 50 states.
I have deducted 1/2 of a star because the author is apparently unaware that Adam Smith spent 80 pages of The Wealth of Nations(1776;pp.260-340, especially pp.339-340) warning about the dangers of allowing banks to make loans to projectors,imprudent risk takers,and prodigals(These categories of borrower are equivalent to the speculators and rentiers responsible for creating the housing bubble of the mid-to late 1920's and the stock market bubble of the late 1920's).Smith made it clear that such categories of borrower will waste and destroy the loans generated from the savings of the bank's depositors.The central bank should aim at maintaining low rates of interest while simultaneously restricting loans to the three categories of borrower mentioned above.

13 of 13 people found the following review helpful

4.0 out of 5 stars Beware: Getting Hooked on Grant Will Cost You February 16, 2011

By James J Abodeely

Format:Hardcover

Mr. Market Miscalculates was my first sustained introduction to the writings of James Grant. I became an immediate fan-boy.

The book is a collection of essays that originally appeared in the pages of Grant's Interest Rate Observer, a must-read research publication for serious investors. The book however is organized in such a way that both professional and novice market observers will gain from. Grant's style is sophisticated and somewhat verbose, yet elegantly, if not effortlessly, weaves both history and current cultural phenomenons into his prose.

Grant takes the reader on a journey through two of the most amazing bull market turned bubble manias in history: The late 1990s Tech-Media-Telecom led boom in US stocks and the follow on act in the Housing and eventually Mortgage-backed Securities markets. The insights come mostly in "real-time" which allows us to appreciate the insanity of the times without the benefit of Monday Morning Quarterbacking. One can't help but think, had he or she been reading Grant at the time (and heeded his advice) then there would have been plenty of opportunity to not only avoid some of the largest losses of the decade, but actually prosper.

The other top level topics covered by Grant include two of his favorite: Monetary policy and the consequences for bond markets and currencies, including gold; Value investing and the immortal advantage of knowing what something is worth.

Mr. Market Miscalculates is an excellent collection of Grant's unmatched combination of style and substance. Be warned however, if you get hooked on Grant as I have, you will be forced into becoming a subscriber of his paid newsletter/research service and it will cost you. It's worth every penny.