This is a book everyone should read (even if this Economist link isn’t exactly flattering). My virtual sister-in-law gave it to us for Christmas (trader/market shrink and economist/options trader in the house after all) and I am very glad she did. In these days of blaming the bankers and even capitalism for the economic descent we currently find ourselves in, it would be helpful for more people, at least in my opinion, to understand even just the first chapter.
Chances are if you are reading this, you aren’t a person who needs a refresher course on this but did you know that effectively there was a futures contract in 1500 BC? In “Iraq” no less? Or the real role of credit – over time? Having been raised in a post-depression, no debt household I actually am MORE fond of the use of debt for having read this chapter.
See the thing in my mind is NOT that the banks created structured products but that 1) they were not exchange traded 2) the overall number of market players was very limited (see #1). Then you have the rating agencies …. (talk about a Madoff-like “relationship based decision”) but what about President Bush’s “ownership society” and MOST of all, the people who took out mortgages they KNEW they couldn’t afford!
Part of me wishes I would have realized that I could get that mortgage on the 3.5 million dollar house in Old Greenwich…. but oh well, I wouldn’t have done it anyway because in my own mind, the math wouldn’t have worked – even if it did compute to the mortgage broker.
I digress…. what I meant to say is I personally think the book is worth reading even if the Economist basically trashes it.