The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash | 
 enlarge | Author: Charles R. Morris
Publisher: PublicAffairs
Category: Book
List Price: $22.95
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Avg. Customer Rating:  28 reviews
Sales Rank: 233
Media: Hardcover
Number Of Items: 1
Pages: 224
Shipping Weight (lbs): 0.8
Dimensions (in): 8.4 x 5.6 x 1.1
ISBN: 1586485636
Dewey Decimal Number: 332.04150973
EAN: 9781586485634
ASIN: 1586485636
Publication Date: March 3, 2008
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Product Description
We are living in the most reckless financial environment in recent history. Arcane credit derivative bets are now well into the tens of trillions. According to Charles R. Morris, the astronomical leverage at investment banks and their hedge fund and private equity clients virtually guarantees massive disruption in global markets. The crash, when it comes, will have no firebreaks. A quarter century of free-market zealotry that extolled asset stripping, abusive lending, and hedge fund secrecy will come crashing down with it. The Trillion Dollar Meltdown explains how we got here, and what is about to happen. After the crash our priorities will be quite different. But things are likely to get worse before they better. Whether you are an active investor, a homeowner, or a contributor to your 401(k) plan, The Trillion Dollar Meltdown will be indispensable to understanding the gross excess that has put the world economy on the brink—and what the new landscape will look like.
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| Customer Reviews: Read 23 more reviews...
 An engagingly tragic narrative... May 11, 2008
The author brings into focus that the current economic malaise is not only the fault of an inflated housing market and subprime problem, and estimates that writedowns and defaults of residential and commercial mortgages, junk bonds, bad loans and complex securitized bonds could reach US one trillion dollars...citing possible scenarios which could double or triple this amount once a widespread global panic occur. Morris expounds on Keynesian liberalism that gave government a role in achieving low inflation and unemployment but fast economic growth and then the change and the rise of the Chicago School free-market capitalism (Nobel laureate Milton Friedman). Morris then explores the three trends that conspired to create the great credit bubble, and then citing Alan Greenspan, the former Fed chairman as the final culprit. In clear, concise language, he then explains why the US economy is now in a long term decline and what to do about it. Even if you don't agree with the author, you can still benefit from his insights. It's a great and timely read!
Recommended reading for every market watcher/player May 9, 2008
An easy read. Morris provides an informative, layman's explanation of what we're dealing with in the American and global credit market crisis. The book brings into focus a picture of how we got into this credit mess, what the various derivative, debt obligation and structured investment instruments are and how they're used and abused. The book provides a simple yet reasonable overview of the complex and intricate relationship between and function of the primary players in this multi-trillion dollar surreal credit game involving traders, banks, insurers, credit rating agencies, investment houses, the central bank and the economic and political environment in which this derivative game is played. Morris discusses how various economic schools of thought of the past 50-years have helped or hindered economic progress. Morris describes likely scenarios of how this crisis might unwind. While recognizing the merits of the market driven approach in the 80's and 90's he asserts it is time to implement some form of regulatory oversight. He calls for more transparency and integrity in the credit process and makes a case for a shift in our social priorities to better address issues of education and health care. In the six months or so since the book was written the credit crisis unwind has inched forward narrowly averting one disaster after another. After finishing the book I have wondered what the author would say today about the Fed's open discount window policies and seemingly unbridled willingness to swap US Treasuries for toxic derivative waste. This book is well worth the read.
 The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash May 8, 2008
1 out of 1 found this review helpful
Interesting reading: the facts and figures are well explained and help to understand the workings of this nebulous part of the Financial markets. However, later in the book, the author drifts into politica. One does not necessarilty join him in all his conclusions and predictions. There is a lack of balance there. Too bad, as it detracts from the value of the book.
Khalil
The Perils of Unregulated Finance May 6, 2008
3 out of 3 found this review helpful
As a lawyer and former investment banker, Charles Morris can appreciate the power of free-market capitalism to drive economic growth and financial innovation. Now, however, he believes the era of market fundamentalism has come to an end, just as Keynesian interventionism came to an end in the 1970s. He estimates conservatively that the recent writedowns and defaults of residential mortgages, corporate debt, credit card debt, and bonds will be about $1 trillion. But this book was written before even more recent revelations such as the Bear Sterns insolvency. It is now estimated that the bill could be 3 or 4 times as high.
Morris gives a brief but excellent history of events that led up to the current credit crunch that is paralyzing global financial markets. Disasters have many fathers, but Morris lays much of the blame on bond rating agencies, financial insurance companies and the Federal Reserve under Alan Greenspan. After 9/11 the Federal Reserve lowered the interest rates below the rate of inflation, essentially giving banks free money. Banks then lent money for fees up front and then repackaged the loans - turned them into securitized debt - and sold them to investors. It was basically cost free and risk free, so they lent money as if there was no tomorrow.
These securitized debts or CDOs (collaterilized debt obligations) were sold and resold throughout the global financial system and no longer did anyone know how to measure their value or their risk.
Add to this the fact that homeowners were using the rising equity of their homes as atms and pumping another $4 trillion into the economy.
Also add to the mix $700 billion annual trade deficit that indicates that much more consumption over production. The party was really in full swing.
But the party couldn't last forever. The bubble started to deflate last summer when housing prices began to fall and homeowners began to default on their mortgages. The government initially thought it was just a typical market adjustment, but with the imminent collapse of Bear Stearns they finally took decisive action. Bear Stearns was holding $46 billion worth of securitized mortgages with an estimated value of 30 cents on the dollar.
As the crisis has been unfolding, it has been estimated that the federal government has authorized about $1 trillion in new lending through agencies such as Fannie Mae, Freddie Mac, Federal Housing Finance Board, and the Federal Reserve. This was done solely to keep the economy afloat. But no one knows yet where this will end. Massive infusions of money will lead to a weaker dollar, as we have already seen. A weaker dollar against the background of rising oil and food prices tells us the crisis is far from over.
Morris does not tell us exactly how we will get out of this mess, but he is sure that in the end a new system of financial regulation will be in place.
K.I.S.S. May 4, 2008
1 out of 1 found this review helpful
The book was well written and easy to understand. It read like a long article as opposed to some dense and boring book. The author did right by keeping his views and opinions to the last two chapters. The reader can go along making his/her own assumptions up until the end where you can either agree or disagree with the author. Ultimate point of current crisis undermining the trust the international community placed on the American financial system.
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