books:

	The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash Charles R. Morris PublicAffairs, 2008 - 224 pages average customer review:based on 36 reviews view larger image
	for more information click here

highly recommended

The Trillion Dollar Meltdown explains how we got here, and what is about to happen. After the crash our priorities will be quite different. But things are likely to get worse before they better. Whether you are an active investor, a homeowner, or a contributor to your 401(k) plan, The Trillion Dollar Meltdown will be indispensable to understanding the gross excess that has put the world economy on the brink?and what the new landscape will look like.

for more information click here

For those who really want to understand the past 25 years

While I think Kevin Phillips BAD MONEY is a very important book and well worth reading, Morris' THE TRILLION DOLLAR MELTDOW is, in some important respects, even better. Both are well qualified observers. Phillips as a brilliant, fiercely independent "tell it like it is" author of popular political and economics texts, and Morris, internationally respected ex-banker and financial analyst

The thesis of MELTDOWN is simple. The same "free market" philosophy that effected the economic recovery and expansion of the U.S. in the 1980s and early 1990's, has now brought the U.S. economy and American society almost to ruin. In other words, the economic pendulum has swung too far in one (free market) direction and there now needs to be a return to the other direction to bring things back into balance.

The "socialization of risk", in which big money was made by the sale and trading of bogus investment instruments that had to inevitably crash, at which point the "risk" or huge losses were simply handed off to taxpayers.

U.S. health care, once the envy of the world, under "free market medicine" remains the most expensive medical care in the world while one of the lowest ranked in safety and efficacy, and a single improvement that would improve the quality of U.S. medical care, and which is already in place in nearly every other industrial society, - computerization of medical records - has not been started here.

Morris talks about the free marketers' campaign to abolish social security by false and misleading information about what is really a very small actuarial problem that can be solved quite easily. (Phillips, to his credit, describes in detail how Greenspan and company quietly replaced the pre-1990 CPI, on which social security COLAs are based, with a bogus CPI that understates the true inflation rate by half. Wait until America's millions of retirees realize that they have been short changed billions of dollars!)

While both Phillips and Morris correctly point out how the student loan program has enriched lenders while impoverishing students, neither also identifies the role of the colleges and universities in "pimping" for this program. As Marty Nemko, careers columnist and author of the original, COOL CAREERS FOR DUMMIES, says "The problem is that the colleges and their lobbyists manipulate legislators into increasing govt-funded financial aid, which merely allows the colleges to raise their prices more i.e. the taxpayers are lining the colleges' pockets while providing the student borrowers with a TERRIBLE education."

Both Phillips and Morris however, agree with Warren Buffett (whom both frequently quote), that we are now in the early stage of a long and severe economic downturn and interestingly, although both theses books were published in late 2007, each contains a forecast of things to come (Morris' forecast is much more detailed) that when read today is not only nearly 100% accurate but which, when it is not, it is because they have actually understated the severity of the problem. For example, his "worst scenario" for housing is a 30% decline, which has already been passed by, and with no "bottom" in sight for the collapse of housing prices.

Anyone who has a serious interest in both the future of the American economy, and the improvement of American society, will enjoy this book and the crisp often witty manner in which it describes the rise and fall of "free market economics" in the U.S. over the past 25 years.

for more information click here

Excellent book. Really gets into the heart of this

This is a good read.

His short economic history of where we got to where we are now is really good. Even his descriptions of certain items in passing, such as his description of 'monetarism' are among the best and most readable I've had.

the problem with economics and financial books is that they are not written well, and bury simple truths in jargon. Well, Charles R. Morris is an outstanding writer who takes pains to explain things, and make them understandable. I am a bit of a specialist in this area, and I still found it highly enjoyable and a good read because it reminded me of so many things I already knew, but put them in an overall 'construct' in a way that I recognized and found both plausible and rewarding.

I may not agree with all the forecasts and predictions, but he's right on and does it in a thorough and readable book that is not all disparate facts, gloom and doom.

for more information click here

Deregulation and market instability

There are three books that shed light on today's worldwide financial crisis. Second and third are Morris and Soros (2008), the first and most basic is the one that I reviewed last year: Eichengreen's `Globalizing Capital'. The review can be found on the econophysics web page or on amazon.de.

Eichengreen presents the history of the Dollar from the gold standard until convertibility was cancelled in 1971, and from then from the early years of deregulation through 1995. Specific details of recent financial history under deregulation, which we date from 1971, are also usefully provided in Lewis' `Liars Poker' and Dunbar's `Inventing Money'. We can date the use of the Dollar as international default reserve currency since 1945, while the inflation of the worldwide credit bubble dates exactly from 1971. Morris discusses the necessary background history in summarized form, with appropriate emphasis on the onset of deregulation (1971) to the present era of worldwide financial instability.

Morris begins with the Reagan era of easy credit, lowered taxes for the wealthy, and big budget busting, and the systematic deletion of financial rules that had been set up under FDR as a result of the depression (Eichengreen correctly presents the Great Depression as a liquidity crisis that could have been avoided, we've had no depression since that time because central banks have provided adequate liquidity in financial crises--this will not likely be possible in the future due to the enormity of unregulated 'shadow banking'). Morris notes that the exercise of judgment in policy making was dropped when politicians shared the illusion of academic economists that, under the marriage of (neo-classical) economics with high-powered math, economics had become a science. Lucas' famous laissez faire policy critique represents the epitome of that illusion. The Chicago School of Economic ideology is rightly blamed by Morris for the present unstable fruits of deregulation and the corresponding loss of manufacturing capacity in the U.S.

Morris descusses various synthetic option products for the reader, especially collateralized mortgage obligations (CMOs), created in 1983 in era of the collapse of savings & loans in the U.S. as a result of splitting mortgages into derivatives (see also Lewis). CDOs, credit default swaps, and other derivatives that were useful in expanding the bubble are also described. One is the SIV (structured investment vehicle), which has been extremely useful in getting credit created by mortgages off the balance sheets of banks. The money supply is discussed by neither Morris nor Soros, but the Dollar M2 is roughly $7 trillion, M3 is about twice that. M2 describes all money (credit is counted as money) under the control of the U.S. Federal Reserve Bank. M3 includes `Eurodollars', money outside the U.S. that's used to create credit in, say, China, under the multiplier rules of Chinese banks. M3 includes all 'on balance sheet' Dollars in the world. To understand where we stand, the reader must know about 'shadow banking', also mentioned by Morris with SIVs as the prime vehicle for that form of uncontrolled money creation. Shadow banking, so far as I've managed to understand it, includes credit that is at least triple the amount of M3. This means that the U.S. is in a worse position financially than in the 19th century before the Federal Government outlawed currency printing by commercial banks. In a word, and as Morris argues convincingly, financial regulations are absolutely necessary, the free market/free trade binge is over, the Dollar cannot be salvaged under current economic and political policy. I read on the web that total Dollar mortgages are on the order of magnitude of M2-M3, meaning that mortgages are largely an unregulated form of money creation today (due to derivatives and shadow banking). The world was quite different before the Reagan-Thatcher-Friedman ideology took hold only a short 27 years ago.

for more information click here

The Trillion $ Meltdown

The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash

This is a very timely book, written in simple, direct and easy to understand language about the Credit Crisis that now threatens the financial stability of this country and the world. Morris shows that a worst-case consequence of revised risk assessment could result in write-downs totaling one trillion dollars.

Leverage in the Financial World means working with borrowed money. In the case of 4:1 leverage, you would put up $100 of your own money, borrow $400, and buy $500 of something: stocks, bonds, soybean futures, etc. When the market goes up, you earn a profit 5 times as fast as if you only played with your own money. When the market goes down, your $400 debt is still there. The lender may require you to sell some of your stuff to raise your own money enough to maintain the 4:1 ratio. If everybody's selling, the price you can get for your stuff goes down and you have to sell more.

In the stock market, it's called margin. The 1929 crash was caused by reckless margins, which are now carefully regulated to prevent a recurrence. Since then, other financial instruments and practices have grown up which are NOT regulated, and which may result in leverages as high as 100:1. Couple that with loose and predatory lending practices and you get a crisis. The subprime crunch is only the tip of the ice berg.

In simple and readable language, Charles Morris walks you through the complexities of derivatives, hedge funds, investment banks, commercial banks, insuring and rating agencies and bundled securities like CDO's. He shows how practices that began as wise and good led to escalating risks as higher profits were pursued. Computer manipulation of new mathematical formulas led to bundling of securities in a way that was intended to minimize risk, but in fact made them very vulnerable to leverage. The bundling also made it very difficult for the rating agencies like Moody's and S&P to assess their risk.

The marketplace now seems to assess many of these securities as riskier than the agencies do. Loss of confidence in Bear Stearns led to the equivalent of "a run on the bank". When Bear tried to sell some of the securities they owned in order to raise the "your money" piece of their holdings, they found no one wanted to buy them. A rescue by the Federal Government and a big bank stopped the panic from spreading to other investment bankers. The rating agencies are now reassessing these new type of securities, and have lowered some ratings from AAA to Junk. Morris shows that a worst-case consequence of revised risk assessment could result in write-downs totaling one trillion dollars.

for more information click here

The Trillion Dollar Meltdown

The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash is an incredible read for those who know little about the current international situation. It's a great book for those who know little about the great credit crisis yet can be quite challenging if you haven't taken a course in finance; sounds like an oxymoron. The jargon in the book is sophisticated, advanced, and not meant for the unenlightened reader. Charles R. Morris provides an informative, in depth explanation of the current situation, nationally as well as internationally. The Trillion Dollar Meltdown is broken down into rough sections, which explain how the International economy slowly fell into this credit mess, and explains how investment instruments are used as well as mistreated. The Trillion Dollar Meltdown provides a simple yet in depth overview of the complex and elaborate bond between the major players in this trillion (and rising) dollar credit market involving insurers, traders, credit rating agencies, banks, and housing agencies. A fascinating part of this story involves credit baron Morris describing likely scenarios of how this great credit crisis might unwind. After reading this story, its seems somewhat unrealistic to get out of this mess the credit industry has dug is in so deeply. Morris also discusses the dire market situations in the 80's and 90's and calls for more lucidity and honor in our current market and makes a several strong arguments for a shift in our social priorities to better address issues of education and health care. In the six months or so since the book was written the credit crisis has slowly dug it self deeper and deeper into a hole that our economy cannot even comprehend its final depth. When this book was written, the credit industry had lost a mere one trillion. Today, professionals predict we are close to three. This book is well worth the read and I would defiantly recommend it to anyone studying finance or in business school. If not, don't forget to bring a dictionary along.

for more information click here

reviews: page 1, 2, 3, 4, 5, 6, 7, 8

products you might be interested in

recommendations

Great Books on American Capitalism, Economics, and History
Use Your Power to Change Your Life and Our World...
The Trillion Dollar Meltdown
Business and Economics
Quantum Success

credit

	A Lesson Before Dying (Oprah's Book Club) You're Broke Because You Want to Be: How to Stop Getting By and Start ... The Total Money Makeover: A Proven Plan for Financial Fitness The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great ... The New Paradigm for Financial Markets: The Credit Crash of 2008 and ...

search for books
trillion dollar, credit, dollar, meltdown, rollers, trillion