The banking/finance/credit/housing and mortgage crisis – and those with the wit and skill to explain it (or at least, try to)

January 1, 2009 at 9:55 pm (books, Money and finance)

money

This will be a very brief post.

And yes, you are on Books to the Ceiling, where Your Faithful Blogger tries to stay within the lofty precincts of high culture – and not get down and dirty with the money men (and women – though there don’t seem to be quite as many of our sex being named in recent news coverage).

The Washington Post and The New York Times have recently run some excellent stories on various aspects of the implosion with which we are all now so lamentably familiar. I have read these and other dispatches from the financial front as diligently as possible. I’m getting a general understanding of what has gone so drastically wrong. But as with so many things, the devil, alas, is in the details. As soon as I encounter phrases like “credit default swap” and “collateralized  debt obligation,”  a dense metaphorical fog descends and envelopes my brain. I have reached, at that point, the limits of my understanding.

This is from “Printing Money and Its Price” by Peter S. Goodman,  an article that appeared in this past Sunday’s New York Times:

“For decades, businesses and consumers feasted relentlessly, as if gravity, arithmetic and the tyranny of debt had been defanged by financial engineering.

I may not understand most of the intricacies, but I’m grateful for those who do – especially those whose forceful prose is this good. “Defanged” is such a terrific word, right there, in the exact right place.

I’ve looked at two books on the subject of the current crisis. They’ve been well reviewed, and are doubtless well written and conscientiously researched – but both proved too daunting for me to tackle, at least at  the present time:

badmoney trillion

I have reserved three others that look similarly intriguing:

ascent payback

panic Here’s Daniel Gross, in a review of Panic in this past Sunday’s New York Times: “A single entry of the Irvine Housing Blog, which shows how a person in January 2005 bought a $1.157 million house with $270 down, refinanced with a funky teaser-rate mortgage and then proceeded to open up a $491,000 home equity line of credit by 2007, neatly encapsulates the lunacy.” Yes, I checked – all of the decimal points are  correctly placed!

Also appearing in the Sunday December 28 issue of the Times “Saying Yes to Anyone, WaMu Built an Empire on Shaky Loans,” by Peter S. Goodman and Gretchen Morgenson. “WaMu” is Washington Mutual, and you don’t need a degree in finance to be appalled by what was going on in recent years in that institution’s mortgage processing center:

“‘It was the Wild West,’ said Steven M. Knobel, a founder of an appraisal company, Mitchell, Maxwell & Jackson, that did business with WaMu until 2007. ‘If you were alive, they would give you a loan. Actually, I think if you were dead, they would still give you a loan.’

Finally, on this brisk New Year’s Day of 2009, this headline greeted me in the Post: “Wall Street’s Final ’08 Toll: $6.9 Trillion Wiped Out.”

Happy New Year – I think, I hope…

1 Comment

  1. Finance Guy said,

    Great post. I try to keep myself informed of our current situations, as anybody should, but I don’t claim to be able to grasp all of the intricacies involved either. I have read through parts of “The Trillion Dollar Meltdown” and am about to try to read “Panic”. I’m slowly grasping more and more out of these type of books as I go so hopefully I’ll be able to make sense of it. Thanks

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