Too Big to Fail
A real-life thriller about the most tumultuous period in America's financial history by an acclaimed New York Times Reporter Andrew Ross Sorkin delivers the first true behind-the-scenes, moment-by-moment account of how the greatest financial crisis since the Great Depression developed into a global tsunami. From inside the corner office at Lehman Brothers to secret meetings in South Korea, and the corridors of Washington, Too Big to Fail is the definitive story of the most powerful men and women in finance and politics grappling with success and failure, ego and greed, and, ultimately, the fate of the world's economy. "We've got to get some foam down on the runway!" a sleepless Timothy Geithner, the then-president of the Federal Reserve of New York, would tell Henry M. Paulson, the Treasury secretary, about the catastrophic crash the world's financial system would experience. Through unprecedented access to the players involved, Too Big to Fail re-creates all the drama and turmoil, revealing neverdisclosed details and elucidating how decisions made on Wall Street over the past decade sowed the seeds of the debacle. This true story is not just a look at banks that were "too big to fail," it is a real-life thriller with a cast of bold-faced names who themselves thought they were too big to fail.
Stats for nerds
10recommend
16mentions
16people
2010–2019years
63% recommend31% neutral6% critical
Mentions per year
What Hacker News says
- 1. Team of Rivals: The Political Genius of Abraham Lincoln by Doris Kearns Goodwin
2.Too Big to Fail: Inside the Battle to Save Wall by Andrew Ross Sorkin
- True, but irrelevant for Linus. It's not a good way to get ahead[1], but if you're already far enough ahead...
Personally, I think I'm on "your" side -- as it were -- on the side of civility, but sometimes you've just got to get shit done. Properly, which sometimes means shouting the right things at the right people[2].
I do think it's unreasonable of you to say that Linus is not "being reasonable", as you've clearly implied in your comment. To my mind he's being entirely reasonable, just not very "polite" or "civil" or whatever you want to call it.
[1] As in: Rise up the corporate ladder.
[2] Sorkin's "Too Big To Fail" was a big eye-opener in this regard, FWIW.
- Too Big to Fail by Andrew Ross Sorkin only helped me to start appreciating this. It is incomprehensible that lots of the same folks are still in leadership positions. Follow the money, indeed.
- All must reads in my opinion
Fooled By Randomness - Taleb
The Black Swan - Taleb
Antifragile - Taleb
When Genius Failed - Lowenstein
Liars Poker - Lewis
The Big Short - Lewis
Flash Boys - Lewis
Too Big To Fail - Sorkin
Against the Gods - Bernstein
One Up On Wallstreet - Lynch
The Intelligent Investor - Graham
- The Lehman brothers bankruptcy was a huge cluster fuck! I don't think most people realize just how close it came to stopping the entire worlds economy.
The problem with Lehman was that it was a large prime broker for many hegde and pension funds. That essentially means its a bank that holds the holding(cash, stock and bonds) of these funds.
When it went bankrupt in the US, what was expected was that each of the funds would pull out their holdings and move them to healthier prime brokers.
This would have the double bonus of removing one unhealthy company(Lehman) and at the same time propping up other healthier companies by having them handle the assest of the funds pulling their holdings out of Lehman( sort of like letting a bank fail and having deposits put into other banks.
Unfortunately the British financial regulators, who built London on a program of pretty much anything goes style regulation, woke up that day and decided that for the first time ever they needed to actually regulate and they declared Lehman's assets frozen, meaning that otherwise healthy funds (including pension, mutual, and hedge) now had no access to their own assets.
So now hedge funds can't trade, pension funds can't pay people and mutual funds can't allow redemption's and the other banks can't take in these assets to prop themselves up. The equity markets started to seize up as funds had no assets to trade.
The capital markets nearly seized up. Repo desks are the portion of banks that lend money to each other to ensure everyone has the money they need to operate, suddenly couldn't get money and weren't allowed to lend out money for fear of lending to a company who might go bankrupt.
Almost all large companies these days operator on this over night borrowing, using this to smooth out cash flows, similar to using a line of credit.
General Electric had 2 days of cash before they couldn't continue operations. We came really, really close to having the entire world stop working!
Andrew Ross Sorkin has a great book called Too Big to Fail that goes into this. House of Cards is also a great book on the 2008 crash.
The other big firm to go under in 2008 was Bear Sterns. If you like finance read "When Genius Failed" its the history of the rise and fall of Long Term Capital Management. In the book they detail how everyone except for Bear Sterns pitches in to bail out the fund. In 2008 Bear Sterns was the one who needed the bail out and the same people who pleaded with Bear to help with the LTCM bailout just turned their bask of Bear and let them go bankrupt and then get bought for $172 a share at the end of 2006 to being bought for $2 a share in 2008.
- One the thing that is missing in the discussion of whether banks are evil or not is a better dichotomy: what he describes in this entry is primarily about transaction banking (and more particularly cash management), which one can argue is not evil as it allows for the free flow of capital through the financial system.
On the other hand, when banks start trading against their own book (ie. creating financial transactions that are used to leverage the bank's own money), then things can go wrong.
Ultimately, what failed in this crisis is that 1. The risk around mortgage distribution got to be so removed from the actual mortgages that it increased carelessness. 2. Confidence in the system was shaken, leading to a "run on the bank" for broker-dealer banks, creating a substantial crisis of confidence in the banking system as a whole.
Anyone interested in how the crisis came about should read "The Big Short", by Michael Lewis, and "Too Big to Fail" by Andrew Ross Sorkin. Those two books provide a lot of perspective on what happened in the months leading up to and the days during the crisis.
