Monday, May 03, 2010

"The Devil's Casino", Vicky Ward - a review

From here.

This is the second time my attention has been captivated by a book about recent "American" history that has in reality shaped the world. The previous one was Standard Operating Procedure: A War Story, about the Abu Ghraib atrocities. As with that book, Ward has moved well past the headlines, into the personalities and events which shaped them.

This is the story of the biggest bankruptcy in American history - the fall of Lehman. The history of Lehman is explored, back to the time when the people who were running the company in 2008 first appeared (and how they managed to make it into such a large company). It looks at how the company moved from the idealistic vision of those who set it up, to be different from the rest of Wall Street, to a company that hid the scale of its financial troubles from the market until it was too late. At the end, somebody says that "it's not a tragedy, it's a story of hubris." But as Booker points out in The Seven Basic Plots: Why We Tell Stories,
that is exactly what tragedy always is.

A couple of quibbles. Firstly, the sheer number of names. It's inevitable, I suppose, in a thirty year history, that there will be large numbers of people who walk in and out, and the most important people (Dick Fuld, Chris Pettit, Joe Gregory) acquire their own momentum. But a lot of the names simply became a blur, after a while. Ward sought to temper this by having a list of names - a kind of dramatis personae - at the beginning - but it was still pretty overwhelming.

The other quibble is the financial technical speak. I really hoped that having read the book, I would have some better understanding of what it was that was actually happening with the money. But I can't say that I did. I understood how money that had been advanced on property prices that were falling could be under threat (though I still don't really see why, as with negative equity, it wasn't possible to simply wait for prices to rise again - or if the borrowers couldn't pay, how come they were lent to in the first place). I don't understand the bond trading - the concepts of government borrowing, yes, but not how you can make money buying and selling government borrowing. Not real money, the sort that you can then give people as a fat bonus at the end of the year. Ward's book simply takes a lot of this for granted, and a lot of the people puzzled by the banking crisis would really like to know how it works.

But this is an excellent work, despite these "weaknesses", and Ward has done a remarkable and thorough job of telling the human story behind one of the seminal events of our time.

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