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Chasing Goldman Sachs: How the Masters of the Universe Melted Wall Street Down . . . And Why They'll Take Us to the Brink Again Hardcover – June 15, 2010
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Business journalist McGee paints Wall Street as a utility with capital flowing through the system like an electric power grid, noting why it almost failed. She describes the pressure on the U.S. House of Representatives in 2008 to bail out Wall Street firms, why Wall Street was called an “abstraction,” and how Wall Street morphed from an intermediary (raising capital) into a casino. Goldman Sachs was the master of its universe, generating average return on equity of 25.4 percent in the decade before the financial crisis, compared with 15 percent annually for four other firms during the same period. Other firms' CEOs chased Goldman Sachs, considering it their model for boosting their own personal wealth and keeping shareholders happy. The author reports, “When left to their own devices, financial services firms . . . will focus almost monomaniacally on what is in their own best interest, seeking out ways to take earn sichigher returns and recruit top talent by paying the most lavish bonuses and offering the most enticing perks. . . . They cannot help themselves.” Excellent book. --Mary Whaley
"...masterful...exceptionally lucid, well-written"--Washington Post
“…must-read on the venerable Wall Street firm [Goldman Sachs].”— Dow Jones’ FINS
“A disturbing account of how Goldman Sachs Group Inc. became a seductively successful Pied Piper, luring rival banks down a path to destruction.”— Bloomberg
“McGee’s book is full of entertaining and enlightening material.” — Financial Times
“McGee has taken it upon herself to make the case less through assertion or argument than through anecdote and appeal to authority.” — New York Times Book Review
“…a great look at a current event for the general reader.”— Library Journal
“Excellent book.” — Booklist
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Hoo boy! Those days are long gone. Now the stock market is run by sleazebags whose reputation is enhanced by their ability to generate profits for their bank or brokerage and themselves, at the expense of, well everyone else, through 'creative' accounting & products, fees on all transactions, and of course, political lobbying to legalize (I mean deregulate) more instruments of theft, (I mean investment products).
McGee explains how Goldman Sachs was always better at making money then the others.
I certainly don't disagree with the blame meted out at some of the senior bank executives, sometimes referred to as banksters in the blogosphere. On the whole the book is readable and good as a summary. But the book also proved a little too soft and general on developments at the big banks during the Financial Crisis, and a bit too hopeful that the Obama Administration could/can bring about any changes (ie, implementation of the oft repeated Volcker Rule).
Parts of the book were quite readable. Other parts tended to repetition and news recaps. During one of my many breaks reading the book, I happened over to a bookshelf of partly read books, and found new interest in Where Are the Customers' Yachts? The book was written around 1940 (based on experiences of 1929) and has many truisms reminding us of what many brokers [bankers, etc] do for a living. Why would the author of Chasing Goldman hold faith in cosmetic changes and the Obama approach? Why would small excursions to talk to a few ex and current bankers or new independents be enough to establish the mistakes and ethical challenges of the mainstream banking elites?
I liked the first few chapters the best - after the generic introductions which I ignored. I enjoyed chapters 1-3, as there were a few engaging perspectives for me, such as the Silicon Valley bankster phase. And there were a few parts on Merrill Lynch that started getting interesting around pp 152-56. The Merrill Lynch brief critique got me thinking I might find something interesting about Citi. But I was to be disappointed again and again with shallow attempts to critique Citi. There were simply no good stories to be told on Weil, Rubin, Prince, or others. And for the other banks, the stories proved mostly superficial as well. Reasons for the superficiality, I suspect, are that deeper accounts of what went on at Citi are few and far between. This author relies much on mainstream accounts, and the interviews with current and ex industry insiders are never taken to a next level. As a result there is nothing new to learn on most of the big meltdowns.
On the whole this book does not measure up to the likes of Too Big to Fail. It reads like a narrative of what went down over the timespan of a few years, with a few short insights at times. I certainly agree with many of the points. That is until we get to what the author is saying about the future as she talks about 2010+ and Obama. There is some truth. And of course I would like the banks to be more dis-intermediated than what we have seen thus far. So examples of new firms seeking to take business from the banks is welcome. But I am not sure her coverage, in her desire to find alternatives to bulge bracket Wall Street banks, of some firms such as Citadel is deep enough or even accurate. Every once in a while she introduces financial terms such as Value at Risk, noting comments made elsewhere too that Goldman had increased its VaR during the crisis... Not that I even use it much - because I would want to make additional adjustments - but looking at a comparative chart from Reuters on VaR in commodities during 2008, Goldman indeed was right toward the high end of increasing its VaR, but, oops, Citi was actively reducing its VaR in 2008 on the same order as JPM, and, oh, Morgan Stanley, which also almost went down in 2008-09, was reducing its VaR even more. Increasing risk in commodities during the downturn proved to be the right call. The point is VaR analysis is likely pretty involved, and throwing in a few fancy terms in the book does not make it more sophisticated.
All in all, this is not a memorable book I will keep on my book shelf next to Zen Flesh, Zen Bones, Oriental Despotism and Too Big to Fail, among others.
If you've ever wondered how to make sense of the Wall Street fiasco or wondered how it could ever happen and whether it could happen again, this is a book for you. If you've ever heard financial news on the news and wondered what it really meant, again, this is a book for you. If you've heard terms like "tranches" or "clawbacks" and never knew what they meant, this is a book for you.
The author shows a remarkable knack for explaining difficult topics in easy-to-understand language in this information-packed, informative book. Highly recommended!!
Most recent customer reviews
Just a very,very broad overview but it lacked details.Read more