There is a new chapter on whether the Reform legislation will fix much of anything (take a guess where I fall no this). The cover has reviews instead of blurbs, but other than that, it is the same book you saw before.

You can search the full book here, and posted a chapter posted in the Book section.

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Bailout Nation, with New Post-Crisis Update: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy

May 28 (Bloomberg) — With so many business books spilling from the shelves, we’re often asked for a comprehensive list of recommendations. Here are 50 of our favorite titles published since Jan. 1, 2009.

“Animal Spirits” by George A. Akerlof and Robert J. Shiller (Princeton). The two economists explore how psychology drove us from boom to bust.

“Bailout Nation” by Barry Ritholtz (Wiley). A financial blogger chronicles why the U.S. came to embrace bailouts.

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Source:
Top 50 Business Books, ‘Animal Spirits’ to ‘What the Dog Saw
James Pressley
Bloomberg, May 28 2010
http://www.bloomberg.com/apps/news?pid=20601088&sid=aPJsasCVoVEk

“If you read nothing else about money, read [this}:

There has been no shortage of books to explain our recent recession, but to understand what the hell we all just lived through and how the fallout is going to affect us for a loooong time to come, read Barry Ritholtz’s Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy. Ritholtz is a scarily smart and righteously angry financial insider, and this book, which rips Wall Street a new one, is gripping and completely comprehensible even if you’ve never bought a stock in your life.”

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Source:
New Rules of Personal Finance and Complete Fiscal Sanity
BY JOEL LOVELL, DANIEL RILEY, SARAH GOLDSTEIN, NATE PENN, AND MARK KIRBY GQ, April 2010
http://www.gq.com/how-to/rest-of-your-life/201004/new-rules-personal-finance-article?currentPage=4#ixzz0mRmeKxUk

USA Today: “Best books to make sense of financial crisis of 2009”
Miami Herald: “Best business books of 2009”
Stock Trader’s Almanac: “Investment Book of the Year”

“Succeeds in laying out all that transpired in easy-to-understand language. If you want to know how we got into this mess and what might still be coming, this is the book for you.”
-Wall Street Journal

“The author writes with the fury of an insider mortified by the behavior of his heretical peers . . . There is much to be said for the book’s irreverence. Mr. Ritholtz has written an important book about a complicated subject, and yet you could still read it at the beach. Here’s hoping that some policy makers in Washington take it with them on vacation this month.”
-New York Times

“Ritholtz makes a valuable new contribution to our understanding of how we arrived at this sorry juncture. He’s smart, sassy and often amusing. If you’re looking for an all-in-one place explanation of what went wrong and why, this is the book for you (or your confused neighbor).”
-Bloomberg

Bailout Nation’s straightforward, compelling account puts the crisis in context, explains why the US government responded so stupidly, offers solutions, and advises how to prevent a repeat. Ritholtz’s indictment of the financial and political establishment is devastatingly accurate.
-Asia Times

“Before the housing and credit bubbles popped, Barry Ritholtz, a lawyer turned blogger and money manager, was one of the voices crying in the wilderness. His caustic (and occasionally profane) blog, The Big Picture, dissected macroeconomic news and relentlessly cut through spin. His book takes a long view of the roots of the economic crisis, tracing the history of a series of ever more expensive taxpayer-funded bailouts of failed industries.”
-Newsweek

“Ritholtz’s book seeks to explain how the United States, once so proud, became “a nanny state for well-paid bankers. Ritholtz may be just the right person to explain the transition to both the disillusioned amateur and the finance junkie. He doesn’t pull his punches or bury the truth in layers of finance-speak, caveats, and disclaimers. Since he began blogging seven years ago, in-the-know readers of his popular blog, The Big Picture, have turned to Ritholtz for his prescient, refreshingly honest commentary on the economy. Anyone interested in understanding the roots of our current crisis should check out the book..”
-Freakonomics

“A comprehensive crisis scrapbook compiled by the money manager behind the popular financial blog the Big Picture in a quippy, no-nonsense voice…”
-New York Magazine

“These are some of the provocative and even dangerous questions that Barry Ritholtz takes on in Bailout Nation…Above all, Bailout Nation is about the socialization of risk and the privatization of profits.
-Forbes

HTTP://WWW.MIAMIHERALD.COM/BUSINESS/STORY/1399600.HTML

I didn’t — couldn’t — read every business book published during the past year, but I was still gob-smacked by the number of books that I did read in 2009, including a few just for fun. (Imagine that!) But among those that I read and reviewed in this space, these titles represent the ones that I thought were exceptional, have lasting value and were worth my time — and yours.
A few things that may have deserved inclusion didn’t make the cut for one reason or another, and some worthy titles that came out in 2009 won’t get reviewed until January. Them’s the breaks. You may have a few choices that aren’t here either. If you’d like to share, I’m always happy to get e-mail from readers. After all, you make this all possible.

Thanks for reading!

(Books listed in chronological order by review. Date of original review follows each title. Full reviews of all books on this list are online at www.richardpachter.com)

Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy. Barry Ritholtz. Wiley. 332 pages. 6/1/09

Economist and investment guru Barry Ritholtz’s blog, The Big Picture, is a mandatory daily stop for many. This honest, unvarnished look at the forces that screwed up the U.S. economy is a worthy candidate for a time capsule so that future financial operators can avoid the same traps that we fell into. Or at least howl when history repeats itself.

“Our results show that political connections play an important role in a firm’s access to capital. The effects of political ties on federal capital investment are strongest for companies with weaker fundamentals, lower liquidity and poorer performance — which suggests that political ties shift capital allocation towards underperforming institutions.”

-Ran Duchin and Denis Sosyura, University of Michigan School of Business

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File this one under “Duh!”

U.S. banks that spent more money on lobbying, were politically connected with the Fed, or had close ties with Pols, were more likely to get government bailout money.

That stunner is according to a new study released this week by two professors at the University of Michigan, Ross School of Business.

Profs Ran Duchin and Denis Sosyura paper also found that “TARP investment amounts” were positively correlated to banks’ political contributions and lobbying expenditures. Overall, the effect of political influence was strongest for the most poorly performing banks.

Here’s a Reuter’s excerpt:

“U.S. banks that spent more money on lobbying were more likely to get government bailout money, according to a study released on Monday.

Banks whose executives served on Federal Reserve boards were more likely to receive government bailout funds from the Troubled Asset Relief Program, according to the study from Ran Duchin and Denis Sosyura, professors at the University of Michigan’s Ross School of Business.

Banks with headquarters in the district of a U.S. House of Representatives member who serves on a committee or subcommittee relating to TARP also received more funds.

Political influence was most helpful for poorly performing banks, the study found.

Banks with an executive who sat on the board of a Federal Reserve Bank were 31% more likely to get bailouts through TARP’s Capital Purchase Program, the study showed. Banks with ties to a finance committee member were 26% more likely to get capital purchase program funds.”

Is there anyone in this country that finds this data remotely surprising . . . ?

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Sources:
Banks and Bailouts: Playing politics?
Ran Duchin and Denis Sosyura
University of Michigan, 12/21/2009
Ross professors

http://www.bus.umich.edu/NewsRoom/ArticleDisplay.asp?news_id=18270

Banks with political ties got bailouts, study shows
Steve Eder
Reuters, Dec 21 2009

http://www.reuters.com/article/idCNN2124009320091221?rpc=44

http://www.usatoday.com/money/books/2009-12-20-years-best-business-books_N.htm

After the collapse of Lehman Bros. in September 2008, Federal Reserve Chairman Ben Bernanke, then-Treasury secretary Henry Paulson and then-New York Fed president Timothy Geithner stood on the brink of catastrophe. Their decision not to bail out Lehman set off a near panic among investors and lenders worldwide.

In response, the government implemented a $700 billion bailout and has since adopted a series of rescue measures that put U.S. taxpayers on the hook for a potential $14 trillion, author Barry Ritholtz says.

The panic and the U.S. reaction spawned a wave of books. Money Bookshelf editor Gary H. Rawlins picks some of the better ones. The selection includes books that point the finger at Wall Street firms and their CEOs, that blast the government for excessive bailouts, that assail the U.S. economic policy triumvirate for letting the inflation genie out of the bottle, and that explain arcane financial derivatives and how they acted as viral agents spreading the crisis to the global economy.

•Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System — and Themselves by Andrew Sorkin (Viking Adult, $33). Arguably the definitive history of the banking crisis, a blow-by-blow account of how decisions made on Wall Street and in Washington in the past decade led to the crash of the global financial system.

•Bailout Nation: How, Greed and Easy Money Corrupted Wall Street and Shook the World Economy by Barry Ritholtz (Wiley, $25). Explores how the U.S. evolved from a rugged independent nation to a soft Bailout Nation, where financial firms are allowed to self-regulate in good times, but are bailed out by taxpayers in bad times.

•The Sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System by Charles Gasparino (HarperBusiness, $28). Argues that the financial collapse was just the latest in a 30-year pattern of executive excesses, unsustainable leverage, massive hidden losses and unreliable computer models. Gasparino is not optimistic that something similar won’t happen again.

•The Great Money Binge: Spending Our Way to Socialism by George Melloan (Threshold Editions, $26). Champions the cause of supply-side economics, believing President Obama’s adoption of Keynesianism ultimately will result in rising interest rates, higher taxes and disastrous inflation.

•The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street by Justin Fox (HarperBusiness, $28). Attempts to explode once and for all the efficient-market hypothesis, a canon of capitalism. That’s the hypothesis that asserts that prices of traded assets reflect all available information, a tough claim to make in the aftermath of the mortgage meltdown.

•Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase by Duff McDonald (Simon & Schuster, $28). Quilts together Dimon anecdotes from first-person sources, resulting in a business bio that’s flattering but not fawning. Reveals an able banker who burnishes the reputation of JPMorgan at a time when other Wall Street CEOs watch their companies crumble.

•Fool’s Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe by Gillian Tett (Free Press, $26). Digs to the origins of the financial crisis guided by in-depth access to members of the JPMorgan team that developed collateralized debt obligations, revealing how the exotic investment product was conceived on a weekend at the luxurious Boca Raton Hotel in June 1994.

•Collateral Damaged: The Marketing of Consumer Debt to America by Charles Geisst (Bloomberg Press, $28). Traces America’s credit history and finds it riddled with sleepy regulators, congressional do-badders and slippery financial firms making euphemistic pitches to consumers to drum up business.

•How Capitalism Will Save Us: Why Free People and Free Markets Are the Best Answer in Today’s Economy by Steve Forbes and Elizabeth Ames (Crown Business, $25). A rebuttal to those writing free-market capitalism’s obituary. Explains how capitalism really works, arguing that the system is the world’s great economic success story despite the financial crisis and the worst recession in decades.

•House of Cards: A Tale of Hubris and Wretched Excess on Wall Street by William Cohan (Doubleday, $28). A minute-by-minute account of the last 10 days of Bear Stearns, the 85-year-old investment bank that caved under the weight of a huge position in mortgage-backed securities accumulated without regard to the instability of underlying subprime loans.

•This Time is Different: Eight Centuries of Financial Folly by Carmen Reinhart and Kenneth Rogoff (Princeton University Press, $35). A history of financial debacles up to the current crisis, revealing the unending cycle of boom and bust and how politicians and regulators chronically fail to divine recurring signs of bubbles.

•The Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers by Lawrence McDonald (Crown Business, $27). A Wall Street insider and former Lehman trader reflects on the collapse of the nation’s oldest investment bank, a venerable vessel run aground by executives with a reckless addiction to financial leverage and a simplistic grasp of structured finance.

•In Fed We Trust: Ben Bernanke’s War on the Great Panic by David Wessel (Crown Business, $27). Explains how Bernanke, steeped in the history of miscues by the Federal Reserve during the Great Depression, acted boldly in spearheading the biggest government intervention in more than half a century, effectively making the Fed the fourth branch of government.

•The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History by Gregory Zuckerman (Broadway Books, $26). Story of how a renegade hedge fund manager outwitted the mortgage-market cognoscenti, betting the market was headed for a major fall, a bet that earned more than $15 billion for his firm.

•Meltdown Iceland: Lessons on the World Financial Crisis from a Small Bankrupt Island by Roger Boyes (Bloomsbury USA, $25). A tale of irrational exuberance and miscalculation by perhaps no more than 30 bankers that wrecked the economy of an island nation of 300,000 people, wiping out all the wealth accumulated the previous decade.

by kevin

Barry Ritholtz has written a must read book (assuming you’re interested in how we got in the pickle we’re in) called Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy.  Basically I underlined the entire book when I read it.

Bailout Nation

Bill Fleckenstein (Foreword). Wiley 2009, Hardcover, 332 pages, $14.55

Reading back over my notes I was re-struck (is that a word?) by Barry’s point of view on what drove the vaunted American Consumer-led economy (we buy all the world’s doo dads): Real Estate.

According to a 2005 study by Asha Bangalore of Northern Trust Company, 43 percent of all new job creation between November 2001 and April 2005 was real estate related.

So what did that mean . . .

The housing boom was creating jobs for builders, contractors, real estate agents, mortgage brokers, and even employees at Home Depot and Lowe’s. But the most significant impact to the economy came from home equity lines of credit (HELOCs) and cash-out mortgage refinancings. With wages stagnant, Americans turned to home equity withdrawals in order to maintain their standard of living.

This was one of the single biggest and most unexpected elements of the debt-driven economic expansion. Outside of real estate, employment gains were modest and real wage gains flat. It was debt that drove the increase in consumer spending. Mortgage equity withdrawals normally a small portion of consumer debt‚exploded.

Without this home equity-based consumption, the nation would have been in recession territory, with GDP flat to 1 percent. At least, according to an unofficial Fed study by none other than Alan Greenspan

And this . . .

The wealth effect of home price appreciation is much more widely distributed than stocks. This made the generational-low interest rates the single largest factor that resuscitated the economy. Sure, tax cuts, deficit spending, increased money supply, war spending, and the like all played a role‚but it was the ultralow rates and the mortgage equity withdrawal they allowed that dominated U.S. economic activity.

As a result, the economy will continue to look  crappy to wage earners for some time to come (assets are still mispriced).

The book is just brilliant. Read it.

PERMALINK

Blogged with the Flock Browser

Turns out, not so much:

“Three professors at Harvard are disputing that logic in a new study, saying it is an urban myth that executives at Bear and Lehman were wiped out along with their companies.

Though the chiefs at both investment banks lost more than $900 million in their stock holdings, the professors argue that it is important to also consider all the riches the bankers took off the table in the years preceding the crisis.

At Lehman, the top five executives received cash bonuses and proceeds from stock sales totaling $1 billion between 2000 and 2008, and at Bear, the top five received more than $1.4 billion, according to the study, which was released on Sunday night on the Web site of the Program on Corporate Governance at Harvard Law School.

The payouts came in the form of cash bonuses as well as thousands of shares of stock that the executives sold as the share prices of their companies soared. Most of the executives sold far more shares during that period than the number they held when their companies hit bottom.”

Another myth of the Bailout era dies . . .

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Source:
Executives Kept Wealth as Firms Failed, Study Says
LOUISE STORY
NYT, November 22, 2009

http://www.nytimes.com/2009/11/23/business/23pay.html