An enlightening, scary journey.

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BOOMERANG

TRAVELS IN THE NEW THIRD WORLD

A world tour of nations that have collapsed financially or that played a role in the collapse of others.

In his previous book, The Big Short (2010), Lewis dug deep into the housing-market failure that precipitated the economic collapse of 2007-08. Here the author tours Iceland, Greece, Ireland, Germany and California to compose a broader picture of what went wrong. Like Lewis’ other bestsellers, this book is alternately wry, snarky, laugh-out-loud humorous, serious and, most importantly, filled with insights. The author is a master at explaining financially complex realms by casting them as narratives of individuals. In each place, he finds people famous, infamous and nearly anonymous who can fairly be rendered as villains or heroes. Each chapter started as an article for Vanity Fair, yet the seemingly disparate features coalesce nicely in the book. Lewis is willing to court danger by generalizing about the characteristics within each nation that led to unexpected consequences. As usual, the author delivers a nice balance of trenchant analysis and lucid writing. In regards to Greece, the most distressed nation of all, "it turned out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it."

An enlightening, scary journey.

Pub Date: Oct. 3, 2011

ISBN: 978-0-393-08181-7

Page Count: 224

Publisher: Norton

Review Posted Online: Nov. 3, 2011

Kirkus Reviews Issue: Nov. 15, 2011

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A unique examination of the limits of models and theories in understanding and predicting human behavior, and a nice...

MODELS.BEHAVING.BADLY.

WHY CONFUSING ILLUSION WITH REALITY CAN LEAD TO DISASTER, ON WALL STREET AND IN LIFE

A fascinating cross-disciplinary exploration of how and why financial and scientific models fail.

Derman (Financial Engineering/Columbia Univ.; My Life as a Quant, 2004) is a former theoretical physicist turned Wall Street financial engineer, or quantitative analyst (“quant”). Having previously written about the world of quantitative finance, he now sets out to discover why existing financial models failed to predict the economic crisis of 2007-08. Quants use mathematics and physics to create their predictions of how markets work; Derman argues that these models fail to account for the human element, or what John Maynard Keynes called “animal sprits.” Drawing on his experience as a child in Apartheid South Africa, the author exposes the failure of models and theories when applied to politics. By incorporating philosophy, physics, social theory and economics, he presents an eclectic, multidisciplinary discussion about what happens when models are taken too seriously and the human factor is ignored. “The greatest conceptual danger is idolatry; believing that someone can write down a theory that encapsulates human behavior and thereby free you of the obligation to think for yourself,” he writes. Derman draws intriguing connections between the language of physics and economics, and while the material may be complex for nonphysicists, the author’s prose writing is fluid and makes many of these complicated theories accessible.

A unique examination of the limits of models and theories in understanding and predicting human behavior, and a nice rejoinder to the equations-can-solve-or-explain-everything crowd.

Pub Date: Oct. 25, 2011

ISBN: 978-1-4391-6498-3

Page Count: 240

Publisher: Free Press

Review Posted Online: Oct. 3, 2011

Kirkus Reviews Issue: Oct. 15, 2011

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A probing study of a scandal that spread even deeper than the standard histories claim—and one that has plenty of lessons...

THE TEAPOT DOME SCANDAL

HOW BIG OIL BOUGHT THE HARDING WHITE HOUSE AND TRIED TO STEAL THE COUNTRY

If corruption is what you want, put someone with strong ties to the oil industry in the White House.

So we learn from business journalist McCartney (Across the Great Divide: Robert Stuart and the Discovery of the Oregon Trail, 2004, etc.) in this lucid account of the Teapot Dome scandal. At its root was Warren G. Harding, the Ohio senator who was a 40-1 shot to gain the Republican nomination for the presidency for 1920 until he secured the backing of Jake Hamon, Harry F. Sinclair, Edward Doheny and other oil titans. The trade-off was that Hamon was to become secretary of the interior and be given control of the Teapot Dome oil field in Wyoming, “an oil supply potentially worth several hundred million dollars—1920 dollars—a bonanza so rich that it was almost beyond comprehension.” Hamon’s wife shot and killed him before the deal could go through, but before he died Hamon sent a sealed note to Harding with orders to “get some of his friends taken care of.” The oilmen got their way with a longtime New Mexico senator named Albert Fall, hard-drinking and murderous, who had fallen on hard times and seemed in danger of losing his huge ranch holdings. No sooner was Fall installed than his money problems disappeared, the dollars flowing into his bank accounts and those of other prominent Republicans as the oil flowed out of Teapot Dome. By way of thanks, Sinclair gained access to two million barrels of public-domain oil per year, on which Harding signed off in a letter to Fall: “I am confident you have adopted the correct policy and will carry it through in a way altogether to be approved.” Of course, when all this backdoor dealing was exposed, approval was not forthcoming. Sinclair thundered that he was too rich to be jailed. He was wrong, but many others walked.

A probing study of a scandal that spread even deeper than the standard histories claim—and one that has plenty of lessons for today.

Pub Date: Feb. 12, 2008

ISBN: 978-1-4000-6316-1

Page Count: 368

Publisher: Random House

Review Posted Online: May 20, 2010

Kirkus Reviews Issue: Nov. 15, 2007

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