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Home Repair Book Store > Home Repair books beginning with F
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Financial Shock: A 360º Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crisis |
Author: Mark Zandi
Published: 2008-07-19 |
List price: $24.99
Our price: $16.49
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As of: January 05th, 2009 11:53:52 PM
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Customer comments on this selection.
 ok
ok but somehow repeatative nothing special about it, just a simple chat on the background
 Missing a critical part of the problem
The author of this book is employed by Moody's (a rating agency) and excuses himself from discussing the role that the rating agencies played. If fact you cannot fully explain how the financial meltdown occurred without fully disclosing the role the ratings agencies played and their culpability. It is not possible to avoid future meltdowns without adding reform of the debt rating system to the plan.
I was frankly amazed that a Moody's employee would even have the nerve to write a book like this. I was further disgusted to see that he excuses himself from discussing the role the ratings agencies played to avoid "a conflict of interest". I noticed that the book had a first printing in July 2008 so it was probably done sometime in 2007. That may have been before the horror show securitized products that Moody's and their ilk unleashed upon the public.
By and large, people are not NEARLY angry enough at Moody's, S&P etc and that is probably because they don't understand just how culpable they were. This book, and this author, had a unique opportunity to really explain that. However, the truth did come out in congressional hearings on C-SPAN. I'm puzzled why all the executives of these ratings agencies are not in jail.
 Good explanations but the tough questions are totally ignored
On a positive note, this book provides a good explanation of how the current financial crisis developed. Published in July 2008, it necessarily misses many of the huge developments that have occurred in recent months. To be fair, let's give Mr. Zandi credit for accurately predicting upcoming problems in the CDS market - see page 230. He is also the first critic I have found that notes the role of REITs in this crisis.
However, as many of the reviews have noted, there are numerous shortcomings that seriously limit the value of this work. His ten recommendations are in most cases absurdly simplistic (with the exception of revising mar to market rules),e.g. suggesting that people get better education on financial issues. His announcement that the worst is over has also proven to be hopelessly optimistic.
Here are some of the really important questions that Zandi ignores (in the first case intentionally):
1. How could both financial rating agencies (like S&P and Moody's) and CPA auditors completely miss the nature of the correlated risks that were emerging, especially given the repeated use of off balance sheet special purpose vehicles that were much publicized in the Enron collapse?
2. What are the implications of these failures to the Sarbanes Oxley law - has this legislation done anything positive? Or should it be repealed? What are the lessons learned here?
3. In a similar vein, what about the role of GLB ("financial modernization") law and the repeal of Glass Steagle - should this law be re-invoked?
4. What is the new normalcy that we can expect over the next decade? Zandi properly mentions that this crisis is an "inflection point" with long term implications, but he does not give us much of a picture on what the new world will look like.
Bottom line: There is a better choice that is far more prescient. Charles Morris' Trillion Dollar Meltdown - published in early 2008 - answers all the above questions. It is also short and easy for normal people to read with zero economic training. If you just buy one book on this subject, the Morris book is the best one I have yet read, by far.
Fantstic read
Mark Zandi does a terrific job of explaining the subprime mess that helped propel this financial crisis to near doomsday. The book is a detail and thorough analysis and is a good read for those who enjoy the world of finances and how interest rates and such work.
However, as with most financial crisis, it is always easier to tell how it all happened after it happens. Good information, and a good read. Give it a read.
Kindle price for this book is too high
I know this is not a review, but I don't know where else to say this: Why does this book cost 14.99 for the Kindle edition? I hope that this will not be a trend in kindle prices, now that I have one.
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