Hacker News Books

>"If you weren't doing your job, the net value of the equities and derivatives markets would be pretty much exactly the same; it's just that it would be parcelled up a little differently."

This claim really does require a citation, because it is quite significant, and is not necessarily true.

Bethany McLean (author of "All the Devils are Here" and "The Smartest Guys in the Room") once made a great point about people shorting stocks; she said that they are the only ones looking for bubbles, excesses, and other problems in the stock market and asset pricing in general, their vigilance helps to pop the bubbles sooner than they would otherwise, thus reducing the impact of the tumult or recession which may follow.[1] I think this is a valid point, and you should take this kind of action into account when judging these market participants; their motives may not be beneficent, but they are still fulfilling a necessary task.

[1] http://www.c-span.org/video/?296214-1/qa-bethany-mclean-

> I don't know about your industry but the abiding memory i have from before the financial crisis of 2009 was of economists fanning the property bubble with the mantra ' the fundamental are sound' and how the worst scanario would be a "soft landing"

If you'd like to read about it, the best contemporaneous piece I've read on it is "All the Devils Are Here" - https://www.amazon.com/All-Devils-Are-Here-Financial/dp/1591...

I liked both of these books --- "The Big Short" maybe a little more than "Too Big To Fail", because Lewis is just crazy!good about pacing and character development --- but had serious concerns about how accurate/unbiased they were. Particularly Sorkin's book, which I've heard negative things about.

I'm about 2/3 of the way through _All The Devils Are Here_ by Joe Nocera and feel like it's doing a brilliant job of addressing the shortcomings for Sorkin's book, which I felt maybe sacrificed some accuracy for the sake of building an enjoyable narrative. _Devils_ also has an interesting structure, different than the others; it's a catalog of sketches of the different people/forces/companies that went into the mess, so you get a chapter on the guy who started Ameriquest, and a chapter on Fannie's struggles against the Bush administration, and a chapter on how Goldman's IPO and Merrill's cultural mismatch to trading culture caused them to screw up the market. It's great reading.

If no-one significant did anything illegal and yet the result was the financial crisis, then clearly the legal/regulatory framework was/is flawed.

The most troubling issue is that there hasn't been any significant adjustments since then. Perhaps not that surprising given the amount of influence the financial industry have in policy making, but still. It's also distressing to see an individual like Larry Summers being nominated as the next Fed Chairman. It seems very little has been learned.

For anyone interested in understanding the events that led to the crisis, I can't recommend highly enough: All the Devils Are Here[1]. Of the many books written on the subject, it provides a very objective and thorough account.

[1] http://www.amazon.com/All-Devils-Are-Here-Financial/dp/15918...

If you want to understand the student debt bubble, you need to understand financial bubbles. Take any commodity that "everyone knows is valuable", figure out how to turn it into a financial instrument and re-sell it to a third party investor who has no relationship with either consumer or lender and knows nothing about the product, and then you can create a speculative bubble because everyone starts trading in derivatives of the commodity without knowing anything about it, the level of risk involved, or even who ows them money. This happened with Tulips, it happened with Mortgages, and now its happening with Education. There are a lot of good books on bubbles if you dig for them. All the Devils are Here is a good one. The Big Short is good too - once you realize some of those people who got rich betting against housing bubble, are now betting against the education bubble, and have been for 8 years but nobody listened to them (again).

There are some really good suggestions here about the economics and finance in general. I think having a good solid understanding of the financial crisis is valuable in today's world. I recommend "All the Devils are Here" by Bethany McLean. It offers a well rounded, facts-first approach to explaining the crisis. It does not point fingers or assess blaim, which is a valuable perspective.