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Infectious Greed: How Deceit and Risk Corrupted the Financial Markets Paperback – Bargain Price, September 8, 2009
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From Publishers Weekly
Copyright 2003 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.
From Library Journal
Copyright 2002 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.
Top Customer Reviews
I have a Ph.D in business and many finance courses under my belt, but I never quite understood the systemic dangers of the 'financial innovation' that is sweeping our markets. Now that I have, I will sleep much less well at night.
Partnoy describes the evolution of exotic instruments and the characters involved in this evolution. How CS First Boston made securites of virtually any type of debt, Salomon pioneered the CMO and so on. He details the specific wrongdoings of companies like Enron, Global Crossing and WorldCom. He shows you the enabling role played by gatekeepers like accounting firms, law firms, analysts and credit rating agencies.
Even more important, he shows you exactly how the collusion happened and why. He gives you both an aerial view of the markets and a down-in-the-trenches description. I often wondered why, in efficient markets, participants voluntarily involved themselves in such convoluted transactions that had high costs in terms of record-keeping and fees. The answer, as Partnoy shows, is that virtually all of these arrangements permit some set of parties to subvert law or regulation or both. This is true domestically and internationally.
He graphically describes how lobbying keeps regulators at bay and the venality and ineffectuality of politicians.Read more ›
Other reviews have suggested that Frank is anti-derivatives but this is not at all the case. He makes it clear that derivatives are in many case useful structures with a role to play but that they have been used at other times to less beneficial ends. There is an undertone of indignation in the writing but such anger is surely more than justified considering the huge injustices which have gone more or less unpunished.
The suggestions for financial reform at the end of the book should be a blueprint for new legislation worldwide.
I do appreciate the author's sincerity of warning the public about the legal and moral problems of the real financial world with the advance in technology and financial techniques. A reviewer here said that the author was living in an ivory tower. I feel so sorry for that critic and those who thought so. As a professional trader, I assure you that the real world is indeed more dangerous and fifthy. Anyway, I do recommend this book as an indispensable material for anyone, especially govt officials (though I doubt very much they will humbly read and take this book seriously) who want to look into this. For those who just want to read for fun, FIASCO might be a better choice.
Irrespective of this double standard for investors (I want higher returns unless it goes bad then I want to sue), Partnoy brings some very valid criticism. The massive off-balance sheet investments hiding true risk were inappropriate and harmful to shareholders. I think Partnoy does an excellent job examining this risk and presenting his case with Enron and Worldcom specifically as examples. The interesting point he made in this book I wasn't aware of is that Enron's trading operation was highly profitable and was a solid going concern until the liquidity crunch of the publicity.
But derivatives that are appropriately understood can be excellent investments. In the 80s CMOs (Collateralized Mortgage Obligation) were invented allowing investors to invest in short tranches to receive lower average lives to match their funding liabilities. This was a great investment for many banks for which credit is not given in this book. Now, these type derivatives did have extension risk or prepay risk if mortgages prepaid faster or slower than anticipated.Read more ›
Most Recent Customer Reviews
More exciting than I expected it to be. They did a good job editing it for clarity, given the details and people which could so easily have run together.Published 9 months ago by Eugene G.
Most of this book describes what happened before 2003,with an update in 2010 of 22 pages. Important is that the risks pointed out in 2003 materialized in 2008. Read morePublished 17 months ago by laurens van den muyzenberg
Used this book as a reference for a term paper at college. Good for anyone wanting to know more about how our financial markets do and don't work in recent years.Published on February 28, 2014 by Jim
Read this book and learn how Wall Street and their crazy derivatives blew up the banking system and the world economy. Well written by one who was in at the inception.Published on October 27, 2013 by Donald E. Mckiernan
This is an origins story, on how certain uses of derivatives and like financial products came into use to manipulate financial statements, and how these sorts of manipulations... Read morePublished on April 1, 2013 by Phil O.
He makes it very clear that all the financial "innovation" that America has brought in for the last 20 years had not the slightest intention of "serving the... Read morePublished on January 28, 2013 by michael shanks
I really like this book- explains things clearly and concisely- I have not finished it but so far so good. Read morePublished on September 23, 2012 by dixiechicken