The End of Wall Street Hardcover – Apr 6 2010
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From Publishers Weekly
"Beep! Beep! Sheep in a jeep/on a hill that's/steep./Uh-oh!/The jeep won't go," is a fragment of Shaw's jaunty verse, heartily dramatized by Apple's colored drawings. Ages 2-5.
Copyright 1988 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.
“[The End of Wall Street] is a complex but imaginative book… [Lowenstein] is able to identify the creative instruments of financial destruction with the directness that is all-important to a book like this.”—New York Times
“Think of Roger Lowenstein's The End of Wall Street as a tuition-free class in 21st-century U.S. macroeconomics... The End of Wall Street debunks the notion that no one could have seen the economic catastrophe coming.”—USA Today
“The End of Wall Street is a calm, reasoned, and often witty tour of the current financial landscape and how it got that way.”—Philadelphia Observer
“In the flood of new books about the financial crisis, Roger Lowenstein's is a standout. Lowenstein, a highly accomplished financial journalist, lays out what may be the best explanation yet of the recent crash—and as good a prediction as any on what happens next.”—Barron’s
"Lowenstein’s strong knowledge of the source material and flair for the dramatic and doomsday title should draw readers who still wonder what went wrong and how."—Publishers Weekly
“Lowenstein does a great job of explaining…in understandable terms that unobtrusively avoids the injection of emotion and politics.”—Booklist
“Over the past year, there has been a steady stream of books trying to make sense of the crisis. The latest, and perhaps the most accessible and even-handed, is Roger Lowenstein's The End of Wall Street."—Washington Post
"The End of Wall Street is a good book: witty, well-written, heavily researched and often dramatic.”—Associated Press/Huffington Post
“A veteran financial/business journalist examines the past three years of economic collapse, chronicling actions and inactions from dozens of villains and a few heroes…A well-delineated chronicle likely to cause readers to ask who put the clowns in charge of the circus, and why aren’t they confined to prison cells.” —Kirkus
Top Customer Reviews
That from the going forth of the command
To restore and build Jerusalem
Until Messiah the Prince,
There shall be seven weeks and sixty-two weeks;
The street shall be built again, and the wall,
Even in troublesome times."
-- Daniel 9:25 (NKJV)
"The End of Wall Street" will inevitably be compared to John Kenneth Galbraith's "The Great Crash 1929." To me, Roger Lowenstein's book is the better work, both because it came out hot on the heels of the history being described and because its evaluation of what happened is sounder.
Some will doubt that Wall Street has ended, having just heard even more reports about the vast billions in earnings that Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Citigroup are reporting and the mind-boggling pay their employees take home. Mr. Lowenstein's point is that the remaining banks only survived by being bailed out to the tune of trillions of dollars that have been pumped into the financial markets and the economy by the U.S. and other governments. We can safely assume that there will be another Wall Street crisis (and probably a bigger one) in just a few years as all of this financial liquidity causes other speculative bubbles that are expanded by ridiculously low interest rates and excess borrowing . . . and probably even more negligent and criminal behavior of the sort that led to Triple A bond ratings being given to worthless securities.
I was particularly impressed by the arguments that Mr. Lowenstein makes that it was outmoded ideas based on the 1929 crash and the Great Depression that led to the regulatory mistakes this time.Read more ›
The Theory of Money and Credit, Ludwig von Mises, Vienna, June 1934, English Edition
This wildly entertaining book full of first hand narrative descriptions of detailed discussions between all the players at the time of the Wall Street shakeout of 2008 and beyond, leaves any Austrian economist perplexed as to why the apocalyptic title would even be used given the fact that credit busts are the end reality of all economic expansions recorded throughout the ages.
In typical American fashion, the ending of financial institutions long held to be indestructible creations of the American industrial complex, the author has chosen such a foreboding title to describe events that has been commonplace for much of the financial history of the American Republic. Indeed American economic history is replete with banking failures that in their time were as equally unthinkable as the events and institutions described by the author in this volume.
As the reader wanders through the pages immersed in the intimate details and discussions one has the sense of being right there alongside the champions of the financial oligopoly as the fall of banking institution after institution begins! Bringing the Republic and world commerce to a screeching halt to the outcries of humanity and central bankers everywhere of this just can't be happening in my lifetime!Read more ›
Most Helpful Customer Reviews on Amazon.com (beta)
This 298-page book begins with a list of its cast of characters that's over eight pages long. However, many of them--like Ben Bernanke, Warren Buffett, Jamie Dimon, Barney Frank, Timothy Geintner, Alan Greenspan, Larry Summers and others--hardly need an introduction. Lowenstein accurately tells the reader than it wasn't so much what followed the Lehman Brothers failure that was most important, but what preceded it. So we go back--way back--to the history of Fannie Mae and Freddie Mac. Fannie, for example, dates back to 1938. (Freddie was created in 1970.) Latter, in 1968, Lyndon Johnson wanted to sell shares to the public in order to get Fannie off the government's books. Obviously, Fannie wasn't all good news, even back then.
Although I am taking some liberty at dividing the book, here are some of the main topics through which Lowenstein tells his story: (1) Fannie, Freddie and the somewhat toothless and ineffective OFHEO (Office of Federal Housing Enterprise Oversight) that was created to watch over them; (2) Subprime loans, complete with the stories of Angelo Mozilo, Countrywide's CEO, NINA (no income, no asset) loans, New Century Mortgage, CDOs, etc.; (3) Other lenders, including JP Morgan and its more cautious CEO, Jamie Dimon; (4) Lehman before its fall; (5) The increasingly aggressive and competitive atmosphere among major banks, with special emphasis on CitiGroup; (6) The government takeover of Fannie and Freddie; (7) Lehman's collapse and its many aftershocks; (7) Hedge fund turmoil; (8) The TARP; (9) The Wachovia deal; (10) Bernanke and Paulson; (11) The Great Recession; and (12) The end--of Wall Street. It's not the really the end of Wall Street, of course. This is literary license. Interestingly, Lowenstein includes mention of Hyman Minsky's provocative "Instability Hypothesis," which is plus for the reader.
The book starts and ends with mention of Robert Rodriguez, the manager of two mutual funds for First Pacific Advisers (and amateur race car driver). According to Lowenstein, here was a man way ahead of his time in regards to seeing the building financial crisis. That may well be true, but Mr. Rodriguez isn't quite the investing genius he may seem in the pages of this book. In 2008, for example, with the conservative Mr. Rodriguez's stock-oriented mutual fund approximately 40% in cash for most of the year, he managed to lose almost 35%, compared to the (100% invested) S&P 500's 37% loss.
In closing, if what you are looking for is a lot of fresh meat regarding the recent financial crisis, I wouldn't buy this book. However, if you enjoy reading a lively, well-written and solidly informative summary primarily of the events that led up to the crisis, this is a good choice.
The book had a hero: John Meriwether, the brilliant bond trading manager who assembled a team of financial whizkids and Nobel prize winners. John Meriwether gained a measure of fame in Michael Lewis' book Liar's Poker, where he is described by Lewis as a Salomon Brothers fixed income guru and master of Liar's Poker, a game of bluff involving the guessing of numbers on hundred dollar bills which came to define the money culture of Wall Street at that time. Meriwether had grown up a bit by the time he created LTCM, but When Genius Failed retained the youthful energy that made trading floors sound like a college students' lounge, brimming with practical jokes and laughter. Greed and arrogance were tempered by team spirit and irreverence.
By contrast, The End of Wall Street is a story of cynicism and abuse, deception and fraud. The youthful enthusiasm is gone, and all is left are the cold calculating strategies of consenting adults bent on abusing each other. In Lowenstein's rendition, Meriwether was a modern Icarus, who burned his wings by trying to reach the sun. In The End of Wall Street, the book's hero is a modern Cassandra who regularly warns his contemporaries on upcoming catastrophy. This prophet of doom is named Robert Rodriguez, a fund manager who appears at every juncture of the book to foretell the troubles ahead. He interprets a nightmare on Fannie Mae and Freddie Mac's absence of audited financial statements as a fateful omen and moves clear of their government-backed debt as early as 2006. He warns of an "absence of fear" and scrubbs his bond portfolio clean of "suspicious" mortgage-backed securities in mid-2007. He consistently underscores that the core issue of the crisis is capital deficiency and not just liquidity, well before the Fed and US Treasury became ready to consider injecting capital in banks. But he is an outsider to Wall Street, and all he can do is haplessly watching the crisis unfold from a distance, while protecting his investors from the ripple effects.
To me, the most eye-opening chapter was the one on the subprime lending boom. Here I learned about NINA loans (as in "no income, no asset", referring to loans for which the borrower did not provide documentation of either) and option ARMs (for "adjustable rate mortgages") and other financial products from hell by which borrowers usually ended up owing more than they had borrowed. The method by which lenders ensured that borrowers would use their property as a primary home, described by one commercial agent as a "very serious process", was reduced to, simply, checking a box. The waiting period by which borrowers who had filed a personal bankrupcy could qualify for credit was shortened from two years to just one day. Clients could state their income and wealth without being asked to document it, making some credit officers refer to these so-called stated loans as "liar loans".
The weakening of standards and suspension of disbelief by which bankers usually scrutinize potential borrowers was not reduced to the mortgage industry. It was also extended to complex financial products, for which high ratings replaced independent judgment, and to the whole financial system that was believed to have reached a state of permanent stability, leaving the risk of a serious downturn definitively behind. High leverage and excessive risk-taking was fueled by excessive trust in the market and by Wall Street's indulgent compensation practices. And regulation of derivative products was seen as not only unnecessary, but also as potentially damaging.
The End of Wall Street is not the best book on the 2008 financial collapse. The author couches his story in moral overtones and vents his indignation at every corner, with rather gratuitous attacks on academics such as Milton Friedman and Michael Jensen. The day-to-day account of the events immediately preceding and following the Lehman shock have been described in more detail elsewhere, and sometimes read like a me-too account. The title greatly oversells the book, and no attempt is made to explore the overall significance of the disappearance of investment banks from the American financial landscape. Likewise, the web of cross-obligations and the countless conflicts of interests that still mar Wall Street and make its banks too connected to fail are not touched upon. The author concludes, without further elaboration, that "the Wild West model was supplanted with a more European-seeming arrangement, in which a few elite players thrived within government's embrace". I am not convinced.
I appreciated the manner in which Lowenstein presented the Government's reasoning for not bailing out Lehman, then recognizing the mistake they made due the market's reaction, and scrambling to not allow any of the other investment banks to fail. Furthermore, I came to realize the extent of Wall Street's leverage and the catastrophic implications that this posed for the entire economy. Lowenstein also points out that the problems the banks were facing were due to the banks' insufficient capital reserves, as opposed to the lack of liquidity that many economists (including Fed Chairman Ben Bernake) suspected. The final chapter is a great read that attempts to put the entire situation into its historical perspective and offers the reader a glimpse of what we can expect from Wall Street going forward.
I recommend this book to anyone that has an interest in finance and economics. Unlike some other books on this subject, Lowenstein does not go into a lot of detail about the securitization of mortgages, credit default swaps, CDOs or the role the ratings agencies played in this entire mess. Therefore, it might be a good idea for those readers to read other books that provide more guidance as to why the markets collapsed before reading "The End of Wall Street." I believe that with this background information, they will enjoy and appreciate this book much more.
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