Extreme Money: Masters of the Universe and the Cult of Risk (Paperback)
©2012 |FT Press | Available
©2012 |FT Press | Available
Once used to value and exchange ordinary goods, money has become the main way to make money. To make a billion dollars, it is no longer necessary to actually make anything. The master narrative of the world is now economic and financial as much as social, cultural, or political. Ordinary people borrow money to buy houses, cars, and things. They save for their children's education, holiday, or retirement. Financiers invest the savings in markets to make more money. The money is invested in private equity funds that borrow heavily to buy companies, cut staff and costs, strip them of assets, and then re-sell them at vast profits to other investors. Hedge funds try to make money placing complex bets on minuscule price movements or on an event taking or not taking place. Extreme money is money made endless, capable of infinite multiplication, completely unreal. It changed everything: individual life, business, and even countries. At the heart of this new economy, voodoo banking increases bankers' profits. False gods and fake prophets. The Masters of the Universe and their cult of risk dominated economies and lives. The human race created money and the finance economy; somewhere thereafter, it recreated us, and not always for the better. Mankind mistook money, a lubricant of society and the economy, for an end in itself. Finance became eviscerated reality—the monetary shadow of real things. Extreme money is that story. It is also essentially the story of the modern world.
“A true insider’s devastating analysis of the financial alchemy of the last 30 years and its destructive consequences. With his intimate first-hand knowledge, Das takes a knife to global finance and financiers to reveal the inner workings without fear or favor.”
–Nouriel Roubini, Professor of Economics at NYU Stern School of Business and Chairman of Roubini Global Economics
“Das describes the causes of the financial crisis with the insight and understanding of a financial wizard, the candor and objectivity of an impartial observer, and a wry sense of humor that reveals the folly in it all.”
–Brooksley Born, Former Chairperson of the U.S. Commodity Futures Trading Commission (CFTC)
“This is the best book yet to come out of the financial crisis. Das is a graceful, witty writer, with an unusually broad range of reference. He is also a long-time master of the arcana of the netherworlds of finance and nicely balances historical sweep with illuminating detail. Extreme Money is lively, scathing, and wise. ”
–Charles Morris, Author of The Two Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash
“Like Hunter S. Thompson’s Fear and Loathing in Las Vegas, Extreme Money launches you into a fascinating and disturbing alternative view of reality. But now greed predominates, the distorted world of finance is completely global, and the people making crazy decisions can ruin us all. This is an informative, entertaining, and deeply scary account of Hades’s new realm. Read it while you can. ”
–Simon Johnson, Ronald A. Kurtz Professor of Entrepreneurship at MIT Sloan School of Management and Author of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown
“You know when Lewis Caroll, Max Weber, Alan Greenspan, and Sigmund Freud all appear on the same early page that you are about to read an intellectual tour de force. Das is an authoritative and colorful critic of modern markets, and here he weaves financial history and popular culture into an entertaining and blistering social critique of how so many people have come to chase endless financial reflections of the real economy. Extreme Money speaks truth to power. ”
–Frank Partnoy, George E. Barrett Professor of Law and Finance at the University of San Diego and Author of F.I.A.S.C.O, Infectious Greed, and The Match King
How money and finance have captured the world–and enslaved humanity to the pursuit of artificial growth, prosperity, and wealth.
Prologue: Hubris 1
Part I: Faith
Chapter 1: Mirror of the Times 21
Chapter 2: Money Changes Everything 38
Chapter 3: Business of Business 52
Chapter 4: Money for Sale 65
Chapter 5: Yellow Brick Road 78
Chapter 6: Money Honey 89
Part II: Fundamentalism
Chapter 7: Los Cee-Ca-Go Boys 101
Chapter 8: False Gods, Fake Prophecies 116
Part III: Alchemy
Chapter 9: Learning to Love Debt 133
Chapter 10: Private Vices 153
Chapter 11: Dice with Debt 168
Chapter 12: The Doomsday Debt Machine 188
Chapter 13: Risk Supermarkets 208
Chapter 14: Financial Arms Race 226
Chapter 15: Woodstock for Hedge Funds 239
Chapter 16: Minsky Machines 253
Part IV: Oligarchy
Chapter 17: War Games 264
Chapter 18: Shell Games 279
Chapter 19: Cult of Risk 294
Chapter 20: Masters of the Universe 307
Chapter 21: Financial Nihilism 321
Part V: Cracks
Chapter 22: Financial Gravity 337
Chapter 23: Unusually Uncertain 348
Epilogue: Nemesis 367
Select Bibliography 420
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Satyajit Das is an international specialist in the area of financial derivatives, risk management, and capital markets, with a global reputation.
Das presciently anticipated many aspects of the Global Financial Crisis in his 2006 book Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives. In a speech that year—“The Coming Credit Crash”—he argued that: “an informed analysis of the structured credit markets shows that risk is not better spread but more leveraged and (arguably) more concentrated amongst hedge funds and a small group of dealers. This does not improve the overall stability and security of the financial system but exposes it to increased risk of a ‘crash’ during a credit downturn.” He has continued to be a respected commentator on subsequent developments in the crisis.
He was featured in Charles Ferguson’s 2010 Oscar-winning documentary Inside Job and a 2009 BBC TV documentary Tricks with Risk. He has appeared on TV and radio—ABC and SBS (Australia); BBC (UK); Bloomberg (USA); CNBC (UK and Asia); SABC, Summit TV and e-TV (South Africa); Canadian Broadcasting and Business New Network (Canada); and NZ Radio. He is a frequent interviewee and widely quoted in the financial press in the United States, Canada, UK/ Europe, South Africa, Australia, New Zealand, and Asia.
Between 1988 and 1994, Das was the Treasurer of the TNT Group, an international transport and logistics company with responsibility for the Global Treasury function. Between 1977 and 1987, he worked in banking with the Commonwealth Bank of Australia, Citicorp Investment Bank, and Merrill Lynch.
Since 1994, Das has acted as a consultant to financial institutions and corporations in Europe, North America, Asia, and Australia. He provides advice on trading, pricing/valuation, and risk management of derivative transactions/financial products. He also presents advanced seminars on financial derivatives/ risk management and capital markets for derivatives and finance professionals throughout the world. Between 2000 and 2007, he was a consultant to and Director of Rand Merchant Bank, a division of First Rand Group of South Africa.
He is the author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives—Revised Edition (2006 and 2010), an insider’s account of derivatives trading and the financial products business filled with black humor and satire. The book has been described by the Financial Times, London as “fascinating reading…explaining not only the high-minded theory behind the business and its various products but the sometimes sordid reality of the industry.” James Pressley at Bloomberg included the revised edition of the book in his list of 50 top business titles published since January 1, 2009.
Das is also the author of a number of key reference works on derivatives and risk management including Swaps/ Financial Derivatives Library—Third Edition (2005) (a four-volume, 4,200-page reference work for practitioners on derivatives) and Credit Derivatives, CDOs and Structured Credit Products—Third Edition (2005).
He has published widely on financial issues in professional journals and newspapers.
His blogs can be found on a number of online financial sites, including www.nakedcapitalism.com, www.roubini.com, www.minyanville.com, www.eurointelligence.com and www.prudentbear.com.
Das is also the author (with Jade Novakovic) of In Search of the Pangolin: The Accidental Eco-Tourist (2006, New Holland), a travel narrative on eco-tourism.
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