Panic: The Story of Modern Financial Insanity

Panic: The Story of Modern Financial Insanity

From W.W. Norton & Co.

When it comes to markets, the first deadly sin is greed. Michael Lewis is our jungle guide through five of the most violent and costly upheavals in recent financial history: the crash of ‘87, the Russian default (and the subsequent collapse of Long-Term Capital Management), the Asian currency crisis of 1999, the Internet bubble, and the current sub-prime mortgage disaster. With his trademark humor and brilliant anecdotes, Lewis paints the mood and market factors leading up to each event, weaves contemporary accounts to show what people thought was happening at the time, and then, with the luxury of hindsight, analyzes what actually happened and what we should have learned from experience.

I have to admit, I read the Dave Barry segment first. In it I learned that there are three proven techniques guaranteed to lose you money in real estate: Buy an old house, buy a new house, or get a mortgage. After I finished laughing about OHDD (Old House Delusion Disease), I moved on.

This anthology has a simple idea: “to re-create the more recent financial panics, in an attempt to show how financial markets now operate.” Each of the four parts of the book has articles written during the heat of the crisis, and more penned afterwards about the causes and effects and repercussions of the event. Part I examines the stock market crash of 1987. Part II looks at the Asian currency crisis of 1999 which triggered the Russian government bond default that brought down the hedge fund Long-Term Capital Management. In Part III the Internet bubble bursts. Lastly, and most poignantly, Part IV delves into the current subprime mortgage debacle.

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