Six Interesting Books on the Financial Crisis

OK, so I have a personal list of books to read to better understand what is going on with the financial issues of today. Feel free to add your favorite list. Some are of historical interest, others are current, while still others are informational. Why 6, because 6 is a "perfect" number. I have a few others but this is a good start.

So here goes:

1) "Changing Fortunes, The World's Money and the Threat to American Leadership" by Paul Volker and Toyoo Gyohten. [http://www.amazon.com/Changing-Fortunes-Worlds-American-Leadership/dp/0812922182/ref=sr_1_1?ie=UTF8&s=books&qid=1266111684&sr=1-12]

This was actually written in 1992. But now that Paul Volcker has some influence it is interesting to get a perspective of his thinking then. There are more contemporary Paul Volcker books that you may check out. This describes more of a macro level as opposed to the rest that deal with financial markets. So more from government policy issues as opposed to market issues. Explains the Bretton Woods era, the place of gold.

2) "When Genuis Failed, The Rise and Fall of Long-Term Capital Management" by Roger Lowenstein. [http://www.amazon.com/When-Genius-Failed-Long-Term-Management/dp/0375758259/ref=sr_1_1?ie=UTF8&s=books&qid=1266111402&sr=8-1 ]

This has become a classic in understanding how brilliant minds, Nobel Prize winners almost brought down the financial system. How the Fed gathered the leading bankers of the time for a Sunday meeting and told them that they would bail out LTCM. A story of how a "David" hedge fund can bring down a "Goliath" financial system.

3) "Against the Gods, The Remarkable Story of Risk" by Peter L. Bernstein [http://www.amazon.com/Against-Gods-Remarkable-Story-Risk/dp/0471295639/ref=sr_1_1?ie=UTF8&s=books&qid=1266111436&sr=1-1 ].

This is a historical narrative on, of course, risk and how we should not fear it. Ha! It explains from a historical perspective of how risk came under control over the years. It start with the Greeks and ends in the modern era. The book was written before the current crisis.

4) "Stabilizing an Unstable Economy" by Hyman P. Minsky [ http://www.amazon.com/Stabilizing-Unstable-Economy-Hyman-Minsky/dp/0071592997/ref=sr_1_1?ie=UTF8&s=books&qid=1266111482&sr=1-1 ]

This is tough read. From the cover (Wall St Journal) it says basically that Minsky fostered the idea that financial system are inherently flawed and thus susceptible to speculation leading to crises. As if we haven't learned that lesson the hard way. Anyway, if you have the will power this is a good read. This is by far the most technical of the books in this list, but well worth it, I think.

5) "The Panic of 1907, Lessons Learned from the Market's Perfect Storm" by Robert F. Bruner and Sean D. Carr [http://www.amazon.com/Panic-1907-Lessons-Learned-Markets/dp/0470452587/ref=sr_1_1?ie=UTF8&s=books&qid=1266111523&sr=1-1 ]

The 1907 Crisis lead to the creation of the Federal Reserve System (the Fed). In this story, the government stayed out and J. Pierpont Morgan came to the rescue. It all started with the San Francisco earthquake. This is a great read from a historical perspective. Nice historical "novel", by that I mean it is a relatively easy read.

6) "A Demon of our own Design, Markets, Hedge Funds, and Perils of Financial Innovations" by Richard Bookstaber [http://www.amazon.com/Demon-Our-Own-Design-Innovation/dp/0470393750/ref=sr_1_1?ie=UTF8&s=books&qid=1266111561&sr=1-1 ]

Not well understood by mere mortals are hedge funds, derivatives and other machinations and so this book hopefully explains some of those concepts. For me, it made me shiver as it started talking about Jack Grubman and WorldCom. Having lived through those times, it brought back memories. It does revisit LTCM.