How I caused the Credit Crunch
Posted on August 22, 2009 in Books, Finance
I recently used my flight to Iceland for a three week visit to read Tetsuya Ishikawa’s book, How I Caused The Credit Crunch. Unlike Michel Lewis’ much acclaimed Liar’s Poker which I also read recently, Ishikawa chooses to portray his story through a fictitious character by the name of Andrew Dover. Dover is based on Ishikawa himself but he creates this fake persona to incorporate not only his own experience but the experience of those around him into a single individual. In the book he also uses fake names for almost all financial institutions and individuals. However, people with their fingers on the pulse of the financial world should easily recognise all the banks, hedge funds and insurance companies easily.
The story starts of when Dover joins the medium sized bank Vandebro (ABN AMORO) in the credit department. The book then goes on to tell the tale of him rising to the top of the credit derivatives game and moving on to Originator (Goldman Sachs) and ending his career close to the peak of the Credit Crunch at Irwin May (Morgan Stanley).
The book show the evolution of the credit markets and other capital markets from the view of a insider as well as showing the evolution of Andrew Dover from a mild mannered man of the British middle class to a cocky and arrogant investment banker and member of the $1 buck club (earning more than $1 million in total compensation for one year). The insight into the creation of the credit products being constructed is easy to understand and for those that may not be familiar with finance at all a helpful glossary is included at the back of the book. The reasoning for the creation of these products is also explained and is sound and valid up to the point where it gets to CDOs squared and cubed, then Dover starts to question the validity of what he is doing but refrains from being the one to scream fire at the money making factory even though everything was on fire and burning down.
This book is a great read for anyone looking to get a bit of insider information about the development in credit markets which did much is pushing the global financial markets over the edge and plunged us into the current financial crisis.
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